By Cassandra Sweet
Exelon Corp. (>> Exelon Corporation) said Thursday that money from a federal loan backing construction of the giant Antelope Valley solar farm near Los Angeles has started to flow.
Exelon bought the project from First Solar Inc. (>> First Solar, Inc.) and will pay the solar firm to build and operate the plant in a deal worth up to $1.36 billion.
Exelon spokesman Paul Elsberg said the company was drawing down funds from $646 million in loans that the U.S. Department of Energy had approved for the project, although he declined to say how much.
The department's approval of the draw-down of loan funds was a critical milestone in Exelon's deal with First Solar.
"What it means is, the project is squarely Exelon's," Elsberg said.
Although Exelon had closed its acquisition of the project by earlier this year, it had an agreement with First Solar that gave Exelon the right to sell the project back to First Solar if the loan wasn't funded by a certain date. Now that loan funds have started to flow, that requirement has been met, Elsberg said.
First Solar said it expects to begin recording revenue from the project in the second quarter.
The loan was held up by several weeks while First Solar waited for Los Angeles County agencies to approve a slight change in the company's construction permit that had to do with the amount of dirt it could remove at the construction site. The agencies approved the change in mid-February.
The delay of Exelon's loan came in the wake of political scrutiny of the Energy Department and the loan guarantees it approved for renewable-energy companies following the September bankruptcy of California solar-panel maker Solyndra LLC, which received more than $500 million in federal loans.
Some companies that received loan guarantees reported that the department became increasingly strict in its administration of the loans after the Solyndra bankruptcy, and in some cases established new requirements for companies that obtained loan guarantees and loans.
In February, for example, SunPower Corp. (SPWR) said the federal government held up payment on loans backed by a $1.24 billion loan guarantee for a 250-megawatt solar farm in San Luis Obispo, Calif., after the Energy Department demanded new financial requirements. SunPower, which is building the solar farm for NRG Energy Inc. (NRG), said it met the new requirements and expected the first payment from the federal loans by the end of March.
In September, Exelon agreed to buy the 230-megawatt Antelope Valley solar farm in the arid Antelope Valley near Los Angeles and pay First Solar to build and operate the facility in a package of deals worth about $1.36 billion.
County planners said they had to make sure that the grading that First Solar wants to do complies with state environmental rules and is allowed under the permit the county issued for the project. The change required modifying First Solar's construction permit for the project.
The solar power plant will generate enough electricity to serve about 75,000 California homes and displace about 140,000 metric tons of carbon dioxide emissions each year, according to First Solar.
PG&E Corp.'s (PCG) California utility has agreed to buy the electricity from the solar facility under a long-term contract.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; [email protected]