First Solar (Nasdaq: FSLR) announced that the 550-megawatt Topaz project in San Luis Obispo County, California will not meet the September 30 deadline to receive a federal loan guarantee from the DOE. According to the firm, there was insufficient time to process all requirements by the deadline specified in Section 1705 of the Energy Policy Act of 2005.

The project, which is expected to generate 1.1 million megawatt-hours of energy, received a conditional commitment for a $1.9 billion loan guarantee from the DOE in June. Expected online in 2014, First Solar was to sell energy from the project to Pacific Gas & Electric through a 20-year power purchase agreement.

First Solar is in talks regarding the sale and financing of the project with potential buyers that will use a different transaction structure, absent the DOE loan guarantee.

First Solar's 550-megawatt Desert Sunlight project and 230-megawatt Antelope Valley Solar Ranch 1 (AVSR1) project, also recipients of conditional commitments for DOE loan guarantees on June 30, remain in the DOE loan pipeline.

Interestingly, First Solar had purchased the land option from Ausra, which had an option to buy land for developing a proposed 177-megawattsolarthermal power plant in San Luis Obispo County. Ausra sold the option for an undisclosed sum to First Solar. First Solar bought the Topaz project from OptiSolar.

First Solar's stock is down today, as are most solar stocks.

It remains to be seen if this event has anything to do with the DOE being a bit more careful with loan guarantees, in light of the Solyndra affair. However, this type of solar investment has a much different risk profile than the Solyndra wager.