A2X Consulting

Everyone seems to be talking about The American Recovery and Reinvestment Act, better known as the “Stimulus Package,” and how it affects them as homeowners, taxpayers and income earners but what does it offer in the way of sustainability and small businesses? This 1000 plus page document can be a daunting read so we’re summarizing it to make it more accessible for you – the business owner or operator.

The American Recovery and Reinvestment Act is dedicating $70 billion dollars for renewable energy and energy efficiency measures. The renewable energy industry has received little support from U.S. policymakers for the past several years. The new stimulus bill is slated to double the renewable energy production in the U.S. in the next three years.

The $70 billion stimulus package will not only help produce renewable energy domestically, it will also make the power transmission network smart, and build inroads into lessening the use of fossil energy.

Renewable Energy Highlights

Here are some notable highlights of the renewable energy stimulus package:

1. There will be a Production Tax credit (30% of the investment) extension for wind energy for three years; Geothermal and biomass energy projects get a tax credit extension until the end of 2013.
2. $11 billion for smart-grid related activities including modernization of the electric grid.
3. Loan guarantees of $6 billion for renewable energy projects and electricity transmission projects.
4. $6.3 billion for Energy Efficiency and Conservation Grants.
5. $3.4 billion for Fossil Energy research & development.
6. $2.5 billion for Energy Efficiency and Renewable Energy research.

Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), expects the solar energy industry to create 60,0000 jobs in 2009 and 110,000 jobs in the next two years. As it has in the past two years, the Geothermal Energy Association (GEA) estimates that the geothermal power industry will continue to add thousands of jobs. The allocation of funds for the modernization of the electric grid to make the power grid an intelligent digital network, could prove a windfall for manufacturers of smart meter, energy management technologies, and demand response program developers.

More on Stimulus Benefits

Grants: Renewable energy investors can now apply for a loan of up to 30% of the project cost from the government. The same applies to electricity transmission projects with conditions such as “construction must begin” by the end of 2010 (which was earlier “in service” by the end of 2010) and “be completed” by 2012 (wind). Completion times for other renewable projects are defined in section 45 & 48 of the bill.

The Energy Department has been criticized for its slow approval process and they have passed grant management to the Treasury Department which has set a time limit of “60 days from the receipt of application” for processing loan applications. However, the severity of the current economic downturn raises the question of whether companies can raise the remaining 70% of the project cost?

Clean Renewable Energy Bonds (CREB) funding: The additional $1.6 billion CREB will allow public utility companies, municipal corporations and co-operatives to fund renewable energy projects through special bonds subsidized by the government to provide tax credits.

Loan guarantees: The $6 billion loan guarantee for renewable energy projects will be administered by the Department of Energy. However the Energy Department has been criticized for not dispensing funds quickly enough. This loan guarantee program may face similar challenges.

Manufacturing tax credit: The new 30% manufacturing tax credit has been provided for manufacturing renewable energy generating equipment such as solar panels. It will also be used for “advanced energy property” to assist manufacturing facilities. This is expected to preserve American manufacturing jobs, and promote innovation.

Conclusion

Clean Energy has received a lot of attention in the Stimulus Package. Clearly, it will create several opportunities for green business, such as:

1. Weatherization services, energy audits and energy efficiency products and services.
2. Green construction and renovation, renewable energy projects.
3. Deployment of “Smart Meters” in homes and buildings, grid infrastructure services, and job training services.
4. Research and Development of innovative technologies:

Opportunities for businesses that can help dirty systems be more clean.

Opportunities for biofuels R&D.

Opportunities for renovation and construction of research facilities.

Opportunities for R&D in advanced energy technologies.

However, at this point it is not clear how the money will be spent at the state and federal level. Once the programs for dispensing Stimulus money are in place, we will provide tips on how green business companies can take advantage of the government’s financial aid.