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Obama Signs the Stimulus: What's in Store for Clean Energy

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It’s official: The government haggling over how to revive the U.S. economy ended with the stroke of President Obama’s pen on the $787 billion stimulus bill this afternoon at the solar-powered Denver Museum of Nature & Science. Now begins a new round of jockeying — this time among companies — for the loans, grants and incentives awarded to their industry. Below is a look at key pieces of the final package for clean energy, from the $43 billion allocated for energy to the $111 billion that will go toward infrastructure and science.


Clean Power Grants: One of the biggest wins for clean energy developers comes in the form of grants for up to 30 percent of the cost of projects started in the next two years. According to the Solar Energy Industries Association, it’s one of three critical provisions for solar, along with a more streamlined loan guarantee program and manufacturing investment credits. As Oerlikon Solar CEO Jeanine Sargent explained in a release last night, the industry expects these grants to “loosen gridlock in the capital markets with funding for shovel-ready solar projects that have been on hold due to lack of available financing.” The American Wind Energy Association is calling the grants a key measure for the industry, one that’s “essential to sustaining growth.” What’s all the fuss about? As the number of tax equity investors has dwindled, energy developers increasingly need help in earlier stages, before they have enough income to take full advantage of tax credits.

Not everyone is thrilled with the grants for clean energy projects, however. Ed Fenster, CEO of residential solar financier SunRun, said in an email today that he expects the stimulus package to increase the price of solar. While the package will help developers who are struggling to raise tax equity, he wrote, “it will not help these companies monetize bonus and accelerated depreciation, which is almost as valuable as the tax credit itself.” He added that while wind projects can qualify for increased subsidies, the package “only increases the availability of financing for and demand for solar projects,” resulting in higher solar prices.

Renewable Energy Tax Credits: The package extends production tax credits for wind energy, as well as for geothermal, biomass and hydropower, to 2012. “This is the first time in the U.S. we have ever seen such long regulatory stability,” said Peter Brun, senior V-P of government relations for turbine maker Vestas, in a release today. The company expects the changes to help stabilize the wind market and lure new buyers, as the Denver Business Journal reports. According to the Geothermal Energy Association, this also represents one of the most important pieces of the stimulus for geothermal energy, for which lawmakers extended the production tax credit (along with biomass, geothermal and hydropower) through to 2013.

Renewable Energy Manufacturing: Lawmakers created a new tax credit worth up to $2 billion for facilities manufacturing components for renewable energy production. Factories making equipment such as wind turbines and advanced battery technology can qualify for a 30 percent investment tax credit.

Transmission Lines: The stimulus includes $2 billion for transmission grid improvements and $6.5 billion in low-interest loans for the Bonneville Power Administration and the Western Area Power Administration, which could use some of the money to build transmission lines. The Federal Energy Regulatory Commission’s Jon Wellinghoff, acting chairman, considers the funds no more than seed money, according to the Washington Post. He expects the real adrenaline shot for the U.S. transmission system to come from private investors. “We need $100 billion to $200 billion worth of investment, and I believe we’ll see that money coming from the private sector,” he told the Post. The President himself focused a fair chunk of his remarks at the signing ceremony today on the need for a “nationwide transmission superhighway“:

Today, the electricity we use is carried along a grid of lines and wires that dates back to Thomas Edison –- a grid that can’t support the demands of clean energy. This means we’re using 19th and 20th century technologies to battle 21st century problems like climate change and energy security. It also means that places like North Dakota can produce a lot of wind energy, but can’t deliver it to communities that want it, leading to a gap between how much clean energy we are using and how much we could be using. The investment we are making today will create a newer, smarter electric grid that will allow for the broader use of alternative energy.

Smart Grid: The stimulus allocates $4.4 billion for “modernization of the electric grid,” which is basically installing various hardware and software to make the power grid an intelligent 2-way digital network (check out our smart grid FAQ). Expect these funds to be a boon for smart meter makers, companies developing energy management technologies, demand response program developers, and utilities, which will be able to manage the power grid more efficiently.

Small Wind, Solar and Geothermal: Distributed clean energy generation gets a boost of $872 million over 10 years, with tax credits for things like solar hot water heaters and small windmills.

Green Homes: The stimulus package expands tax credits for more energy-efficient appliances and insulation improvements, for a value of $2 billion over 10 years. It also provides $300 million in matching funds for state rebates on energy efficient appliances and increases government spending on weatherization for low- and middle-income homes (annual income of $32,000 or so for a family of four, depending on the state, according to CNNMoney) to $5 billion, up from the current $500 million per year. Public housing projects get $250 million for energy-saving upgrades.

Geoff Chapin, CEO of retrofit company Next Step Living Inc., told us earlier this month that his company was “heartened” by the focus on weatherization in the stimulus, but noted two concerns: How quickly the government can distribute these hundreds of billions of dollars, and how effectively industry can spend them. “It will be critical that the focus on accountability and results that President Obama touts for his administration in general, and this stimulus package in particular, be driven all the way through to the organizations implementing these services,” he said. “The sector will need to grow quickly to absorb the money but still spend it effectively. That takes smart planning and strategic bets on models that can scale while still achieving results.”

32 Responses to “Obama Signs the Stimulus: What's in Store for Clean Energy”



    PAM V.

  2. Diana Luckett

    Could you please send information on the appliance stimulas package, we will be needing to purchase a new refrigerator soon and dwould like to know how to take advantage of the rebate.