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Loan guarantee discussions hurt ongoing geothermal projects

Drilling rig at Neal Hot Springs, Oregon (source: US Geothermal)
Alexander Richter 19 Oct 2011

The ongoing debate about the DOE loan guarantees is hurting geothermal projects, among them a project by U.S. Geothermal that likely will not receive another loan guarantee it asked for for its San Emidio geothermal plant.

The ongoing discussions on the DOE loan guarantee program in the U.S. after the failing of a solar panel manufacturer backed by a loan guarantee, are hurting the geothermal industry.

A recent article from Idaho looks into the case of U.S. Geothermal that has received a US$96.8 million loan guarantee for its Neal Hot Spring project in Oregon. The project is now caught in the middle of the discussions on the program. It now seems to be under special observation by DOE, that already has done a two-and-a-half year review with the company having paid for independent engineering review and a separate legal review. But it is caught in the debate surrounding Solyndra.

Independent from the political stand in this debate, it simply is hurting businesses and investors investing in renewable energy projects.

U.S. Geothermal’s CEO Dan Kunz said, ““DOE has a great program and put together a first-rate team to do loans, but ran out of time,” he said. “Congress imposed a hard stop.”

Again the differences between the Solyndra case and a loan guarantee for a geothermal project are of importance in this discussions. Guarantees for geothermal companies are given to individual projects that already have secured a power purchase agreement, so they already are backed up. Furthermore are they project-bound meaning if the company is in trouble, the project still would be able to pay for the guarantee.

Essentially loan guarantees support investors otherwise not willing to take the risk, and as Dan Kunz says “If they want us to take these risks, then don’t make this partisan”. So party politics don’t help ,

Source: Idaho Statesman