First Solar, Inc. (MM) (NASDAQ:FSLR)
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5 Years : From Apr 2012 to Apr 2017
First Solar Inc. (FSLR) said Thursday that the Department of Energy will not provide a loan guarantee to help finance construction of a large California solar farm, but the company is in "advanced discussions" to sell the project.
The Tempe, Ariz.-based solar-panel maker and solar-farm developer said that the DOE informed the company that there was not enough time to process the company's $1.9 billion loan guarantee application for the 550-megawatt Topaz solar farm to meet a Sept. 30 deadline for closing the transaction.
"We weren't able to meet the requirements in time for the deadline," said First Solar spokesman Ted Meyer. He added that the company was in "advanced talks with potential buyers" to sell the solar power plant and would "utilize a different transaction structure that does not require a DOE loan guarantee."
Meyer declined to name the potential buyers or provide details on the sale.
The DOE's disqualification of First Solar's Topaz project loan guarantee comes as the department faces intense scrutiny following the bankruptcy of solar panel startup Solyndra Inc., which obtained a $535 million loan guarantee and a $527 million government loan to build a factory in Fremont, Calif. Solyndra is the subject of a federal criminal probe into whether the company misled the government in connection with the 2009 loan guarantee. It filed for bankruptcy protection earlier this month.
The loss of the loan guarantee for the Topaz project sent First Solar shares tumbling to their lowest point in a year.
Shares of First Solar were recently trading down 6% at about $67.66, paring earlier losses during which the stock hit a 52-week low of $66.20.
In June, the DOE offered First Solar a $1.9 billion conditional loan guarantee to help finance the Topaz solar farm. First Solar partnered with Royal Bank of Scotland Group PLC (RBS.LN, RBS) and a group of institutional investors and commercial banks.
First Solar has two conditional loan guarantees still pending, a $1.8 billion guarantee for a 550-megawatt solar farm in Riverside County, Calif., called Desert Sunlight, and a $680 million guarantee for a 230-megawatt solar farm in Lancaster, Calif., called Antelope Valley.
First Solar obtained a $967 million loan guarantee for the 290-megawatt Agua Caliente solar farm in Yuma County, Ariz., which the company sold to NRG Energy Inc. (NRG). PG&E Corp.'s (PCG) San Francisco-based utility has signed a long-term contract to buy the output from the facility, which is currently under construction.
Together, the four projects are expected to create about 1,750 construction jobs and 53 permanent jobs, and generate enough electricity to serve about 470,000 homes.
In July, First Solar obtained a key construction permit to build the Topaz solar farm on previously disturbed land in San Luis Obispo County, Calif. PG&E has signed a long-term contract to buy the output from the Topaz facility.
In August, two local citizens groups filed a lawsuit against the Topaz project with the San Luis Obispo Superior Court. The groups did not file a request for an injunction that could delay construction, allowing the company to start building anytime.
First Solar initially planned to start construction on Topaz Sept. 30 to qualify for the loan guarantee. But the company said Thursday that it does not have a timetable for starting construction.
The company is likely to start construction for most, if not all, its shovel-ready projects by Dec. 31, when a key government incentive for renewable energy projects is currently set to expire.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; firstname.lastname@example.org