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In a remote desert spot in northern Nevada, there is a geothermal plant run by a politically connected clean energy start-up that has relied heavily on an Obama administration loan guarantee and is now facing financial turmoil. The company is Nevada Geothermal Power, which like Solyndra, the now-famous California solar company, is struggling with debt after encountering problems at its only operating plant.
After a series of technical missteps that are draining Nevada Geothermal’s cash reserves, its own auditor concluded in a filing released last week that there was “significant doubt about the company’s ability to continue as a going concern.”
Just last month, again with Mr. Reid’s support, Ormat secured its own Energy Department loan guarantee, worth $350 million, to help support three other Nevada geothermal projects that are expected to produce 113 megawatts of power.
During the tour, Mr. Reid had a chance to see electric generation equipment installed by a company called Ormat Technology, which is a Nevada Geothermal partner. Ormat’s lobbyist in Washington, Kai Anderson, and one of the company’s top executives, Paul Thomsen, are former aides to Mr. Reid.
Mr. Reid has received some support from the industry, in the form of at least $43,000 worth of campaign contributions from the geothermal industry since 2009, according to an analysis of federal campaign finance records.
Yet when the plant started up in October 2009, only 27 megawatts of net power were initially generated from the hot water pumped from the earth. That was not enough for the company to honor its commitment to the electric utility company, or to pay back a $91 million loan — carrying 14 percent interest — that it has with a Washington-based investment firm.
Through modifications at the Blue Mountain site in Nevada — drilling new wells to produce more steam — the company has been able to get the net power output up to a steady 35 megawatts. But, as the annual report released last week reiterated, that was still not enough production to cover the company’s loans and operating costs.
Early last year, it was forced to shut down for more than a month, after a “faulty layout of underground cables” caused a short circuit, a company statement said. Tests by the company also show that because of mistakes made in how the wells were set up, the water temperature is dropping, potentially meaning a drop in future power production.
That explains why in recent months, shares of geothermal companies have collapsed, dropping far more than the shares of most renewable energy businesses. Nevada Geothermal, as of the market close Friday, was trading at 10 cents a share, down from $1.24 when its plant opened in 2009.
Obama administration officials knew about most of these difficulties before the Energy Department agreed in September 2010 to partly guarantee a second major loan to Nevada Geothermal, worth $98.5 million.
Nevada Geothermal executives, meanwhile, are working to renegotiate their $91 million, high-interest loan to avoid a default, which could come as soon as December. They have teamed up with Ormat to drill at a new Nevada site, and hope perhaps to do future drilling at the Blue Mountain site to increase the energy output there.
MacMurray D. Whale, an engineer and research analyst at Cormark Securities, wrote a report last week on Nevada Geothermal warning that “looming default overshadows financial results.”
“If there is not sufficient cash flow to service that debt, then the loan guarantee will be invoked,” Mr. Whale said.
Originally posted by Asktheanimals
I have to wonder if every clean energy company they're helping prop up with loans is being sabotaged to ensure that they fail financially.
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Green Energy Industry Staggers
As the Energy Department hustled to get another $4.7 billion in loan guarantees for green tech companies out the door before time ran out and the program ended last week, yet another solar panel manufacturer was wilting in the sun, and the green jobs scam was looking more threadbare than ever.
That way they can say "See? there is no clean energy solution, OIL is the only sensible energy source".
We've seen how many nuclear power plant incidents in the last year? I can name 5 or 6. More than all the last decade put together.
Are the oil companies the ones making sure every alternative fails?
Just wondering out loud here.