Bloomberg News

Nordic Windpower May Withdraw Bid for Loan Guarantee From U.S.

October 04, 2011

Oct. 4 (Bloomberg) -- Nordic Windpower Ltd., a manufacturer of two-blade wind turbines, said it may drop out of a U.S. Energy Department loan guarantee program, citing delays in the process.

The company received a conditional commitment for a $16 million loan guarantee in July 2009 and the agency switched its application back and forth between two programs since then, said Chief Executive Officer Jeff Brown. Nordic hasn’t received its guarantee and may abandon its application.

Brown said the process for completing a loan guarantee had become more rigorous in the two years since the Kansas City, Missouri-based company’s application was conditionally approved, even before the bankruptcy of Solyndra LLC Sept. 6 increased scrutiny of the program. Separately, MEMC Electronic Materials Inc. withdrew its application for a guarantee to build a 20- megawatt solar photovoltaic power plant in Nevada.

“It’s been ‘congratulations you won,’ then you just have to do a couple more things, then you have to do a couple more things,” Brown said in a telephone interview yesterday. “With a changing process, you don’t know where the goal line is. You don’t know when you’re done.”

MEMC said its unit developing the SunEdison project decided to drop out of the guarantee process because it wasn’t able to complete the paperwork before the program’s Sept. 30 deadline, Mark Mendenhall, SunEdison’s president for North America, said in an interview yesterday.

Nordic’s Effort

Brown said Nordic hired consultants and lawyers to help with the lengthy evaluation process. Their fees cost the closely held company a “significant” portion of the loan’s value.

“There’s been so much uncertainty on time, there’s been so much uncertainty on cost, that we can’t depend on it,” he said. “We’ve just taken a time out and we’ll evaluate whether we want to go forward or not.”

Nordic’s guarantee was initially approved under the Energy Department’s 1703 program, Brown said. It was later moved to the agency’s 1705 program, under which some costs to recipients were covered by the stimulus act.

Guarantees for the 1705 program had to close by its Sept. 30 deadline. Brown said Nordic was notified by the agency “this summer” that its application couldn’t be completed in time, and it would be moved back to 1703, which is still available.

Idaho Plan

Nordic initially planned to use the guarantee to expand a factory in Pocatello, Idaho. It decided in December to move its manufacturing operations and headquarters to Kansas City.

Other companies have dropped applications for loan guarantees. CaliSolar Inc., a closely held solar manufacturer that was planning a factory in Ohio, withdrew its application after deciding to build it in Mississippi instead. Valero Energy Corp. turned down a guarantee in May after the process became “too cumbersome and too costly.”

Solar Millennium AG dropped its application after deciding in August to use photovoltaic panels for a California project instead of solar-thermal systems as it had initially planned.

SolarCity Corp., a developer of residential rooftop solar systems, said Sept. 24 it would not get a $275 million loan guarantee before the deadline because of additional requirements added to the process after Solyndra’s bankruptcy. The Energy Department said then it hasn’t changed the process, and Damien LaVera, an agency spokesman, said today in an e-mailed statement that it won’t approve a guarantee until the “rigorous technical, legal and financial review was completed.”

--Editors: Will Wade, Charles Siler

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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