By Elizabeth Cutright
The wait is finally over. On February 17, 2009, President Obama signed, sealed, and delivered a $787 billion stimulus package to a country anxious about the future and hungry for solutions. The hype behind the stimulus package-aka The American Recovery and Reinvestment Act-has been building for weeks, with many concessions and reversals adding dramatic twists and turns as the legislation made its way through Congress. While signing the bill at the solar-powered Denver Museum of Nature and Science, President Obama took a moment to reiterate his administration’s commitment to a “green energy economy,” stating, “We are laying the groundwork for a green energy economy that can create countless green jobs. We will transform the way we use energy.”
In anticipation of the possibilities to breath new life into struggling local economies with funding from the stimulus package, many communities have spent the first months of 2009 tabulating and numbering their wants and needs, and it seems those requests will not be in vain. With money and motivation, many lingering projects will find new life, and many innovative technologies may finally get that much-needed boost into the mainstream.
So, what can we expect from the American Recovery and Reinvestment Act? First, the Act creates a program to oversee approximately $60 billion worth of loan guarantees to offset the costs associated with new renewable energy projects. According to the Solar Energy Industries Association, these loan guarantees will provide funding for everything from manufacturing renewable energy equipment, to developing renewable power projects to building electric transmission lines. Of particular importance for those of us in the distributed energy industry, the Act includes a 30% investment tax credit for companies that make equipment for renewable energy systems, including energy-storage equipment and energy-efficient lighting (along with companies involved in electric transmission and distribution, carbon capture and sequestration, and smart-grid applications).
But that’s not all. Wind, solar, and building efficiency are all specifically included in the stimulus package, mostly in the form of tax credits, but also with grants for up to 30% of the cost of projects started in the next two years. For manufacturers of wind technologies, the production tax credit has been extended through 2012 (adding an extra year to the extension granted by Congress in October 2008). For wind-energy developers, a 30% investment tax credit is also available to offset wind farm construction. A 30% tax credit is available to businesses using small, onsite wind projects, and-significantly-the tax credit is no longer capped at $4,000. Finally, the production tax credit for biomass, geothermal, and hydropower projects has been extended through 2013.
On the solar side of things, rather than providing another round of tax credits, grants will be made available to home and business owners interested in installing solar power onsite. There are some limitations on these grants (it applies only to systems installed in 2009 and 2010, and details of the program have been handed off to the Department of the Treasury to sort out), but the switch from an after-the-fact tax credit to a pre-project grant means that commercial and residential customers who’ve toyed with the idea of solar in the past will now have the resources to act on those plans. Additionally, energy developers-who in the past have depended upon tax equity investors (who have dwindled in recent years)-can use these grants to jumpstart projects by acquiring funding at an early stage in the process.
Other onsite powerrelated details include $4.5 billion set aside for grid improvements, including demand-response equipment and energy storage research and deployment. Up to $2 billion has also been set aside for grants to fund advanced battery technology. Additionally, $872 million will be disbursed over 10 years for “distributed clean energy generation” in the form of tax credits for solar hot water heaters and small windmills. Finally, the act includes provisions specifically designed to promote energy efficiency, including $5.5 billion to fund energy efficiency in federal buildings.
Loans, grants, tax credits there’s no doubt that there’s funding to be had, but the question is how will the money trickle down to real brick and mortar projects? Even more importantly, what safeguards are there in place to guarantee that the money won’t be squandered on studies and conceptual projects that will never see the light of day? Out of that $787 billion, $43 billion is allocated for energy and $111 set aside for infrastructure and science-a lot of money, but how much oversight? Finally, we must ask: Now that help is here, how quickly can this money be distributed, and how effectively can the money be spent?
Elizabeth Cutright is a previous editor of Business Energy.
