DOE gives conditional approval of loan guarantee for huge Agua Caliente solar PV project in Arizona

NRG Energy announced in December that its solar subsidiary had reached an agreement with First Solar to buy the Agua Caliente project and planned to invest up to $800 million in equity, on the condition of the approval of the DOE loan guarantee.

The power plant (equivalent to about 348MW [DC]) will be designed, built, and operated by First Solar and will be equipped with around 4 million of the company’s cadmium-telluride thin-film PV modules. Some 400 construction and other jobs will be created over the course of the project.

When completed, the project will be the largest utility-scale PV generation facility in the world, according to the companies and DOE.

Pacific Gas & Electric has already signed a 25-year power purchase agreement for the electricity generated by Agua Caliente, which will be carried by the existing Hassayampa-North Gila 500KV transmission line adjacent to the site.

For the first time on a utility-scale U.S. PV plant, fault ride-through and dynamic voltage regulation technologies will be used to help deal with voltage sag and swell and other power system disturbances, and maintain the reliability and stability of the grid transmission systems.

Although the announcement means the final award of the loan guarantee is likely, it is not a done deal.  

NRG spokesman David Knox told PV-Tech via email that the “actual financial close” of the loan guarantee “is subject to customary condition precedents to any financing,” including “delivery of final documentation, completion of due diligence, receipt of final credit rating, and receipt of all final approvals related to the project and the loan.”

While it cannot predict the exact timeline, the company anticipates “a minimum of two months will be needed to fulfill” those precedents to achieve a closing of the loan agreement.

The size of the loan guarantee could also change, according to Knox.

“The amount is subject to DOE completing its due diligence and confirming the amount of costs that are eligible to be financed under the DOE Loan Guarantee program,” he explained. “Among other things, changes in cost and interest rate could affect the amount of the loan.”

The NRG spokesman also confirmed that the company will not raise any other financing at the project level, explaining that it “will rely on its existing cash on-hand and liquidity facilities to provide cash equity and letters of credit.”

At the project site, “switchyard site preparation and access road construction began in Q3 2010,” said First Solar spokesman Alan Bernheimer in an email to PV-Tech. “Construction will not ramp until the close of financing, which is expected in Q2 2011.”

Bernheimer, who noted that no permitting or other regulatory issues remain to be settled, said that the Agua Caliente project “is expected to synchronize with the power grid and start to sell initial power under its power sales contract with PG&E in late 2011 or early 2012.”

He stated that First Solar has not disclosed what type of inverters or other balance of systems gear will be deployed for the project, nor whether the company’s newly acquired RayTracker tracking systems will be used on the former White Wing Ranch site.