A month after Energy Secretary Steven Chu pledged to accelerate approval of long-awaited federal loan guarantees under Title XVII of the 2005 Energy Policy Act, the Department of Energy (DOE) has conditionally approved a $535 million loan for Solyndra Inc., a manufacturer of cylindrical solar photovoltaic panels.

As long as the California-based company meets an equity commitment and other conditions, it can borrow the funds from the U.S. Treasury to support construction of a second commercial-scale manufacturing plant.

“Before offering a conditional commitment, DOE takes significant steps to ensure risks are properly mitigated for each project prior to approval for closing of a loan guarantee. The Department performs due diligence on all projects, including a thorough investigation and analysis of each project’s financial, technical and legal strengths and weaknesses. In addition to the underwriting and due diligence process, each project is reviewed in consultation with independent consultants,” the agency said in a statement.

The loan will be supported by the $787 billion economic recovery bill signed by President Barack Obama. The DOE has the authority to issue $32.7 billion in grants and another $6 billion in loan guarantees for alternative and advanced energy technologies. Chu had previously said the DOE would likely disperse 70% of the total $38.7 billion the department received in the stimulus package by the end of 2010.

The loan guarantee program has been heavily criticized for its slow pace. It was called for in a 2005 law but was not established until 2007. Through December 2008, the DOE had issued five solicitations for projects, and it had received 11 applications requesting about $8.2 billion in loan guarantees.

Solyndra’s is the first application approved to date. The company applied for the loan in 2006. In 2007 it was selected as one of 16 finalists from among 143 applications that solicited more than $27 billion.

Solyndra’s proprietary design transforms glass tubes into high-performance photovoltaic panels that can be installed on commercial rooftops. The company claims that the systems generate more solar electricity per rooftop at a lower installed cost than conventional flat panel PV technologies. The guaranteed loan is expected to provide debt financing for about 73% of project costs for the construction of a facility that is capable of building solar panels accounting for 500 MW a year.

Other companies that made the finalist shortlist could also soon see offers. These include Beacon Power—a Massachusetts-based energy storage developer, which has applied to get up to $45 million to build a 20-MW storage facility in New York State—and BrightSource Energy, the developer of a large-scale solar-thermal plant in Nevada.

The list also includes two integrated gasification combined-cycle projects: Mississippi Power Co.’s 582-MW plant in Kempner County, Miss., and Excelsior Energy’s Mesaba Energy Project—a 603-MW plant that will use ConocoPhillips E-Gas coal gasification technology—which is under development on Minnesota’s Iron Range.

Sources: DOE, Solyndra, POWERnews