SunPower Corp., a solar company proposing to build an estimated $1 billion photovoltaic power plant on the Carrizo Plain, has signed an agreement with another energy company to finance the project.
Under the deal announced Tuesday, NRG Solar would finance the construction, and eventually assume ownership, of the 250-megawatt California Valley Solar Ranch. SunPower will design, build and operate the plant.
NRG Solar plans to invest up to $450 million of equity in the project. The total price tag is expected to be in excess of $1 billion, with the rest of the money coming in the form of loans, said Greg Blue, SunPower’s project manager. NRG would pay back the loans.
SunPower also announced Tuesday that it has applied for federal loan guarantees from the Department of Energy. Under this program designed to stimulate renewable energy projects, the government would assume the loans if there was a default. Most large-scale commercial solar projects pursue federal loan guarantees as a means of increasing the likelihood of obtaining financing.
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Bringing in a partner such as NRG Solar is consistent with SunPower’s business model of building and operating solar plants, but not owning them, Blue said.
“This is a routine step in the development of a project like this,” he said. “We were never planning on being the long-term owner of the project.”
Tom Doyle, president of NRG Solar, said the SunPower project will be a good addition to the company’s renewable energy portfolio.
“We are pursuing large-scale photovoltaic projects across the Southwest and working with like-minded companies that can ensure that our projects will be exceptionally successful,” he said.
SunPower is in the process of getting approval for the project from San Luis Obispo County. The county Planning Commission is scheduled to hold a public workshop on the project Dec. 9. If approved, construction would start in the second half of next year and take three years to complete.
Unlike another solar project proposed for the Carrizo Plain, SunPower will not prepare a federal environmental impact report in order to obtain the federal loan guarantees. Instead, the company will prepare an environmental assessment with a “finding of no significant impact,” which is a less detailed and time-consuming document to prepare than a full environmental impact statement, Blue said.
The company believes the finding will be sufficient because of the amount of mitigation planned to protect endangered giant kangaroo rats living in the area of the project. The company significantly redesigned the layout of the solar farm to avoid and protect almost all of the underground dens the rats live in.
“The process of getting the loan guarantees will run in parallel with the county’s permitting process,” Blue said. “We remain confident that we will stay on schedule.”
In order to qualify for the loan guarantees, SunPower must begin construction on the project by the end of September 2011.
In a separate project, First Solar of Tempe, Ariz., is proposing building a 550-megawatt solar farm west of the SunPower project and is seeking similar federal loan guarantees.
Based in San Jose, SunPower has been designing and permitting the California Valley Solar Ranch for the past two years. NRG Solar is a subsidiary of NRG Energy, a Princeton, N.J.-based company that provides nearly 26,000 megawatts of generation capacity.
NRG Energy stock is listed on the New York Stock Exchange (ticker: NRG). It closed down 17 cents per share Tuesday to $19.38. SunPower stock is listed on Nasdaq (tickers: SPWRA and SPWRB). Shares closed Tuesday at $11.65, down 30 cents.
Reach David Sneed at 781-7930.