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Summary:

A new report out of the Department of Energy’s National Renewable Energy Labs says that the $9 billion clean power cash grant program (formally called the 1603 grant program), which expired at the end of 2011, was actually working and creating jobs and economic output.

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A new report out of the Department of Energy’s National Renewable Energy Labs says that the $9 billion clean power cash grant program (formally called the 1603 grant program), which expired at the end of 2011, was working and creating jobs and economic output. The report says that the program created up to 75,000 jobs, directly and indirectly, and delivered $44 billion in total economic output through the creation of wind and solar panel projects.

The cash grant program was funded from the stimulus package as a way to help spur clean power project development, particularly in the wake of the 2008/2009 recession and for small clean power developers. Clean power projects have long been able to take advantage of the production tax credits (PTC) and investment tax credits (ITC), which give clean power companies 30 percent of total eligible costs of a project in the form of tax credits that can be used to offset taxes paid on company profits.

However, because many clean power companies are small and have tax liabilities that are less than the value of their available tax credits, some of the companies couldn’t take immediate advantage of the ITC and the PTC. Commonly those smaller companies would turn to tax equity investors to make up for the shortfall, but the recession made the tax equity market a lot weaker. To help combat all of these issues, the DOE created the 1603 cash grant program, which gave clean power companies an option to take a one-time cash grant that was equal to what they would have gotten from the ITC/PTC, so 30 percent of the cost of the project.

The report says that the $9 billion cash grant program supported the installation of 23,000 clean power projects — both large scale wind and solar panel projects — which is the equivalent of adding 13.5 GW of clean power to the grid (or enough to power 3.4 million U.S. homes). Those projects also attracted more than $20 billion in direct investment from private, regional, and state sources, says the report. The report also finds that these projects will deliver $1.8 billion per year in economic output for the next 20 to 30 years, or the lifetimes of the systems.

As Politico points out, the bulk of the jobs created through the grant program were indirectly, like for parts manufacturing, and a smaller portion of jobs were created for the design and development of the actual renewable energy systems. In addition, it’s hard to tell if the clean power projects would have been installed anyways, with or without the cash grants.

In a campaign year, we’ll see how popular extending a clean power program will be. President Obama is calling for extension of the program, while the report was delivered just a week after Speaker John Boehner called on the DOE to provide proof that its programs create jobs.

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  1. Albert Hartman Monday, April 9, 2012

    The messiest part of a new growing technology is the early days when it is still worse than the entrenched incumbent industries for all but a niche set of users. But it steadily continues to get better (see Clayton Christensen Innovator’s Dilemma). Today’s industries are fully sized and staffed by today’s jobs. Tomorrow’s jobs will require tomorrow’s industries.

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