|March 09, 2009|
Stimulus Spending Will Help Renewable Energy
|GLOBE-Net - The American Recovery and Reinvestment Act of 2009 (Stimulus Act) signed into law on February 17, 2009, by President Obama will provide a major stimulus to all renewable energy sectors in the nation. |
Political players call the Stimulus Act a product of bipartisan cooperation, and many special interest groups have claimed victory for their role in its passage. But from a business perspective, there are significant financial and tax incentives for the development of energy resources, including incentives for the further development of transmission facilities and wind, solar, and geothermal projects that will no doubt reshape the renewable energy landscape for years to come.
The Stimulus Act will make up to $4.5 billion available to help fund electricity delivery and energy reliability activities, including efforts to:
This represents an increase in federal funding for approved projects from 20 percent to 50 percent.
As well, recipients of the federal largess will be required to utilize open protocols and standards when available so that lessons learned during various demonstration projects will be available to help others to deploy smart grid infrastructure.
The authority of the Western Area and Bonneville Power Administrations (WAPA and BPA) to borrow funds from the U. S. Treasury will be increased to $6.5 billion under the Stimulus Act. For WAPA, such funds may be deployed as loans to support projects involving:
Loans provided by the WAPA will be repaid by revenues derived from the use of the projects financed under the Stimulus Act.
BPA’s borrowing authority will be made available under similar terms to assist in financing the construction, acquisition, and replacement of transmission systems in the Pacific Northwest.
The loan guarantee provisions of the Energy Policy Act of 2005 (Energy Act) that were amended by the Stimulus Act allow 50 percent participation in projects that commence construction no later than September 30, 2011, involving:
Six billion dollars is being made available to better fund the projects contemplated by the Energy Act. In determining which projects to fund, the Secretary of Energy will consider (i) the viability of the project without guarantees, (ii) the availability of other Federal and State incentives, (iii) the importance of the project in meeting reliability needs, and (iv) the effect of the project in meeting a State or region’s environmental and energy goals.
Under the Stimulus Act, $3.4 billion will be made available for Fossil Energy Research and Development.
Various tax incentives related to renewable energy projects and systems are also included in the Stimulus Act. Such incentives --
Even before the ink was dry on the President’s Stimulus Bill, U.S. legislators were stepping up efforts to get energy companies to deliver minimum quantities of renewable power. A new Renewable Energy Standard bill would require utilities to generate six per cent of their energy from renewable sources by 2012, rising to a quarter by 2025.
President Obama’s election campaign energy platform called for a quarter of the U.S. energy to come from renewable sources by 2025, but there has been no announcement on whether these targets will be formally adopted.
The Obama administration is also calling for a tough cap and trade system to control greenhouse gas emissions, and preliminary estimates of revenue from such a system could stimulate in excess of $150 billion in clean energy technology investments over the 10 years from 2012 through 2019.
Data for this article was drawn from several sources, including an article by Steven W. Snarr, of U.S. Law Firm Holland & Hart LLP.