Solyndra fall-out could tank solar for military bases

The SolarStrong project to put rooftop solar panels in Department of Defense bases risks being derailed because of a Congressional-led slowdown in DOE loan guarantee process.

SolarCity said today that the Department of Energy has not been able to finalize a loan guarantee for a project to install rooftop solar panels on military bases, blaming the political furor caused by bankrupt solar company Solyndra.

Earlier this month, the Department of Energy announced a $344 million conditional loan guarantee agreement with SolarCity to install solar photovoltaic panels at Department of Defense bases in 33 states. The distributed solar project, called SolarStrong, would have doubled the number of residential solar installations in the U.S. and would have been the largest rooftop solar project.

The DOE told SolarCity that it has been unable to finalize the loan guarantee by a September 30 deadline because of requests for additional oversight from Congress over loan guarantee project proposals. Without the loan guarantee, the project is at "severe risk," according to SolarCity CEO Lyndon Rive.

SolarCity is requesting that the deadline to finalize loan guarantees be extended beyond the September 30 deadline. "The additional oversight is understood. We have no issue with that. It's the arbitrary deadline of September 30," Rive said.

The failure of solar manufacturer Solyndra, which received a $535 million loan guarantee from the DOE, is having a negative effect on the solar entire industry.

During a hearing today, Solyndra's CEO and CFO today were accused of misleading the DOE about the company's finances. In addition, some politicians are now attacking incentives for solar power, in general, and scrutinizing the loan guarantee program which was established in 2005 to help bring new technologies to market at large scale.

SolarCity's residential solar project is substantially different than providing a loan guarantee for a solar manufacturing facility, as was the case with Solyndra. SolarCity installs rooftop solar panels and provides financing through banks to offer homeowners a lease. Rather than purchase the solar panels, the homeowner pays a lease fee and their monthly electricity bills go down.

There have been four loan guarantees provided to solar manufacturing. The other solar-related loans were for projects, such as utilty-scale solar power plants, which are considered less risky financially.

The SolarStrong project is less risky than large-scale solar projects, Rive said. The DOE loan would be used to guarantee the solar leases in the case of a default, rather than new technology development or project construction, he said. Additional oversight of the loan guarantee application causes significant delay because it is thousands of documents and was a year in the making, he added.

"Unfortunately, Project SolarStrong, together with the thousands of job years it would create and the benefits it would bring to our country's military communities, is at risk of becoming an unintended casualty of the controversy over Solyndra," Rive wrote in a letter to chairmen on the Subcommittee on Energy and Power and to the Chairman Subcommittee on Oversight and Investigations.

The DOE has been able to move ahead with other loan guarantees before the September 30 deadline. Today, it finalized loan guarantees for three renewable energy projects although none were in solar.

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