The U.S. Export-Import Bank inked a $2 billion clean-energy loan offer with South Africa to help fund the country’s green-energy push and drum up sales for America’s renewable industry, according to an announcement made last week.
The 18-year loans will target wind, solar and thermal power in particular, said Fred Hochberg, Ex-Im chairman and president. They could provide additional business to a host of clean-energy manufacturers, including California-based SolarReserve.
SolarReserve received a $737 million Department of Energy loan guarantee in 2011, and estimated to create 45 permanent jobs once construction is complete. The company’s 110-megawatt solar plant will begin operations in late 2013.
The Export-Import Bank, which provides taxpayer-subsidized loans to U.S. exporters, has faced criticism for distorting the market and engaging in crony capitalism. It was recently reauthorized by President Obama and Congress despite strong objections from conservatives.
Weakness in the international commercial market for solar – Chinese companies alone have suffered billions in losses – driven by diminished subsidies in Europe make the loans dicey, particularly given the Obama administration’s poor record of picking green-energy manufacturers to support.
“To now, Ex-Im Bank has not cost the taxpayer money. But there are strong reasons to think this loan is a mistake. When SolarReserve or some of its South African partners go under in the next couple years, Ex-Im will face renewed congressional demands that it be curbed or closed,” said Heritage’s Derek Scissors, senior research fellow in Asian Studies.
This is not SolarReserve’s first South African foray. In late 2011, the company announced a joint venture with two South African firms on two 75-megawatt solar projects awarded by the South African Department of Energy.
“This award of preferred bidder status from the South Africa DOE for the Letsatsi and Lesedi projects is a substantial milestone for SolarReserve as we continue expanding our diversified portfolio of photovoltaic and concentrated solar power (CSP) projects globally,” said Kevin Smith, CEO of SolarReserve, in the company’s announcement.
The expected cost of the project, more than $600 million, will fund about 100 permanent jobs as part of the South African government’s Integrated Resource Plan and South African Renewable Initiative. In May 2012, SolarReserve announced an additional 88-megawatt project with its South African partners, giving the company an estimated 20 percent share of the country’s solar-energy sector.