Economic Stimulus Package, Energy Jobs and You

The American Recovery and Reinvestment Act of 2009 (ARRA or Economic Stimulus Package as is more commonally known) was finally passed. As an energy professional should you jump with joy for the new career opportunities or fear the weight of new taxes pay back this massive federal loan?

The ARRA will provide important short term cash in a period that started in fall 2008 and still in summer of 2009 where it is very difficlut to finance power projects. Existing energy projects will see limited benefit, but there are many "shovel ready" renewable or clean projects that were frozen due to a lack of financing (equity, tax equity or debt). The new funding should ensure at least some of these projects get built.

The package covers diverse areas such as;

1) Renewables (wind, solar, biomass)

2) Energy Efficiency

3) Alternative Fuels

3) Advanced Vehicles (plug-in)

4) Transmission and Smart Grids

 

It is helpful to look at exactly where funding will be dedicated. The items identified below reflect an analysis of the over 1,100 page bill. If you see an update that is needed, please contact PowerPlantPro. Funding specifically includes:

1) Loan Guarnantee- $6 billion appropriated to support $60 billion in loans

2) Smart Grids- $4.5 billion

3) Federal Power Agencies- $6.5 billion

4) Energy Efficency and Renewable Energy

  - $5 billion weatherization

  - $3.2 billion block grants states

  - $3.1 billion State Energy Program

  - $2.5 billion R&D

  - $2 billion Advanced Batteries

  - $400 million Transportation (electric)

  - $300 million Alternative Fuel Vehicle Grants

  - $300 million Energy Efficient Appliances

5) Fossil Energy Research $3.4 billion for carbon capture

6) National Energy Labs- $1.6 billion

7) Water Quality- $6 billion

8) Environmental Cleanup- $1.6 billion

Many of you are professionals in the business of creating electricity. Let's focus on items that should increase the number of new renewable power projects.

New Clean Energy jobs will come from building new renewable projects. This will come from benefit in three distinct areas:

1) Tax Credit Incentives

  - Production Tax Credit (PTC): extended for 3 years. Typically $0.021/kWh

  - Investment Tax Credit (ITC): Allows wind to elect for ITC for 30%.

  - Cash Grant: Allows firms to apply for cash grant for 30% project cost if in service in 2009 or 2010. Grant is 10% for microtubine, combined heat and power, and geothermal heat pumps. If elect for cash grant, can not receive PTC or ITC

  - Depreciation: Can elect MACRS depreciation in addition PTC, ITC or cash grant.

2) Tax Exemptions- Now renewable energy facilities can use tax exempt financing as well as tax credits.

3) Loan Guarantees- The old DOE loan guarantee program selected 14 projects, but never issued a loan. The new loan program has $6 billion appropriated which supports $60 billion in loans. It can be used for up to 80% of investment cost for projects that generate thermal energy or electricity.

The stimulus bill's impact on green jobs (clean energy jobs) can be summarized in one word, "yes". You will see projects built sooner than without the bill. Only time will tell if the cost was worth it.

 

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