Workers install solar panels on a home in Santa Ana, Calif. (Newscom/File)
‘Green’ energy a tiny share of stimulus plan
Supporters see the plan's $24 billion on renewables as a first step toward a new energy economy.
By Mark Clayton | Staff writer of The Christian Science Monitor/ January 27, 2009 edition
For all the hope and hoopla surrounding the largest public works program since the Interstate Highway System in the 1950s, the share spent on long-term “green” investments is surprisingly small.
Most of the stimulus package goes to temporary measures, such as tax cuts, emergency aid to the states, and the extension of unemployment benefits.
Nearly a third of the $550 billion Congress is set to allocate in direct spending is called “green,” including money to modernize electricity transmission and experiment with a “smart grid.” But just $8 billion is destined for renewable power and electricity-related spending, according to an analysis by FBR Capital Markets. Another $16 billion in tax credits – of $275 billion of overall tax credits – is devoted directly to green-energy development.
Is that green investment of $24 billion enough to meet President Obama’s goals of creating tens of thousands of new jobs and doubling renewable-energy capacity in three years?
No, say renewable-energy advocates. They see the stimulus as only a down payment on green-energy development that will be fulfilled in a separate energy bill not yet formulated. Even the success of the stimulus’s “down payment” will depend crucially on how details of the plan are implemented, especially renewable energy tax credits, they add.
“In order to achieve President Obama’s goal of doubling energy in three years, we will have to triple utilization of these tax credits,” says Rhone Resch, president of the Solar Energy Industries Association. That’s tricky, unless the industry can find a way to let companies trade credits for cash. “Without the tax-credit market, it’s going to be difficult to achieve that.”
Renewables now at 7 percent
As of 2007, renewable energy sources supplied only a tiny sliver of US energy supplies, about 7 percent. (Petroleum supplied 40 percent, coal 22 percent.) Of that renewable sliver, energy from biomass (such as corn ethanol) accounted for 53 percent, hydroelectric 36 percent, geothermal 5 percent, wind power 5 percent, and solar energy 1 percent.
The Obama administration has set ambitious goals for the energy portion of the stimulus plan. Of the 3.7 million jobs that the plan is supposed to create or save, about 460,000 would come from energy-related expenditures. A large but undetermined portion of those jobs would be in the renewable-energy sector.
“A new energy economy is going to be part of what creates the millions of new jobs that we need,” Mr. Obama told reporters last month. “That’s why my economic recovery plan is going to be focused on how can we make a series of down payments on things we should have done 10, 20, 30 years ago.”
The money would represent a big boost to alternative-energy industries. For OptiSolar, a manufacturer of solar panels in Hayward, Calif., the stimulus package cannot come soon enough. With credit hard to get and customer demand falling, the company laid off 300 workers this month, about half its staff.
The problems extend to the wind industry. On the heels of banner growth in 2008, turbine-tower manufacturer D.M.I. Industries this month laid off 20 percent of its factory work force in Oklahoma and North Dakota, as well as Ontario, Canada. Without aid, 25 to 50 percent of planned wind-power capacity won’t be built this year, the American Wind Energy Association warns.
Convert credits to cash?
The most crucial piece involves tax credits. In the past, investment banks and other deep-pocketed investors could spend huge amounts on wind farms and other renewable-energy projects and then reap production tax credits, which they could use to offset taxes on profits elsewhere. But the severe economic downturn has reduced profits and the number of major renewable-energy investors from 20 to about five. Thus, the tax credits are far less valuable than they were.
So, wind and solar industries want essentially to convert those tax credits into grants from the US Department of Energy. In legislation last week, the House version of the stimulus bill allowed the switch; the Senate version did not.
“A couple of things in the House measure are going to alarm fiscal conservatives – and one of those is loan guarantees being replaced by explicit payments,” says Kevin Book, vice president for energy policy, oil, and alternative energy with FBR Capital Markets. “If Congress approves this, it absolutely will have investors looking at this as a green light” to invest in green-energy projects, he says.
In other areas, the House and Senate are in lock step. Both would provide $13 billion to extend the important “production tax credit” for wind power for another three years. Without it, credits would be unavailable for projects not completed by the end of this year.
Another provision in both bills is a 30 percent investment tax credit that had been given only to solar and will now be extended to wind, biomass, geothermal, hydropower, and landfill gas. That would enable the latter projects to get a tax credit in just one year rather than a production tax credit over 10 years.
Some $8 billion from the Department of Energy would also be available for loan guarantees for clean-power projects. But it’s not yet clear if those projects must be “advanced” and “innovative.” If not, this could give a boost to wind and solar.
Such a boost would be key to achieving the president’s goal of doubling renewable-energy capacity nationwide within three years. Much of that plan is yet to come in an expected energy bill. And there is reason to believe the jobs Obama wants to see can indeed be created, experts say.
“The stimulus package would turbocharge our efforts to use energy more efficiently and build more renewable electricity facilities,” says Daniel Weiss, director of climate strategy at the Center for American Progress, who has analyzed the stimulus provisions.
Wind, solar employ 80,000
Together the wind and solar industries employed about 80,000 workers last year, barely a blip in a US labor force of 154 million. Sales of renewable-energy equipment reached $25 billion – tiny in terms of the overall economy, but more than double renewable energy’s level four years ago.
A big part of the growth was the wind industry. It added the equivalent of eight coal-fired power plants and 65 new manufacturing facilities nationwide – along with 10,000 jobs in the past two years.
( More stories )
Comments
2. Solar Sasch | 01.28.09
I understand the stimulus package is providing funds for utility companies to upgrade their transmission lines for green energy. This is the equivalent of saying in the mid-90’s we’re going to provide funds for mainframes in a time when the people need PCs/Macs. The beauty of renewable energy systems is that lend themselves very well to be a distributed power system (i.e. installed as grid tie system on homes and businesses) and not part of the old fashioned centralized power systems that… oooh, oooh, wait for it… need very large and expensive transmission lines!
It’s unfortunate that the Obama administration may have had its ears pulled a little too close to the utility companies needs and not the needs of the many more renewable energy workers and installers across the nation that are involved in residential and business solar and wind power installations.
Our current old fashioned electrical network of centralized power loses on the order of 50% of the power generated just to those very long transmission lines. In a distributed network, the bulk of the energy is produced very close to your neighborhood and little is lost to transmission. Other than normal utility line maintenance essentially no types of upgrades need to be made to the electrical grid to support this new distributed green power systems.
Additionally, a big advantage of distributed green energy network is that it is much less susceptible to blackouts. Just like the thousands of routers of the internet, if one power system goes down (e.g. your neighbor’s solar panel system stops working) the whole network doesn’t go down. However, with old fashioned centralized grid power, you knock out the centralized power plant and potentially millions lose power.
Then last but not least - putting more money towards installations of solar and wind energy systems on distributed home and business level will create many more jobs than giving giant lumps of change to the utility companies to further centralize their power/control.
Let’s be smart about choosing renewable energy for our country. Let’s create as many green jobs as possible, create a robust electrical network and literally put the electrical power into our own hands and neighborhoods.
3. Robert Moen | 01.28.09
I research energy issues for http://www.energyplanusa.com . I can’t help think that a 30% refundable investment tax credit for wind will launch many marginal projects that will blight our landscape for years. Question: Are these projects even required to produce and sell electricity to the public before they qualify for the ITC?
4. save the deserts | 01.28.09
man, this is such a Big Energy boondoggle! you want “return on investment” for your stimulus dollars? then leave Big Wind, Big Solar and Big Transmission out, and focus on something that will WORK, not to re-entrench generation monopolies and slaughter our wilderness, while forcing families from their homes, but will work to democratize the grid, promote GREEN energy instead of greenWASHED energy, and will eliminate the extortionate practices we have repeatedly seen from big Energy, including supply and pricing manipulations, externalization of 100% of costs onto ratepayers, taxpayers and the environment, and other anti-competitive behaviors.
i refer, of course, to RATEPAYER GENERATOR loans and incentives like feed in tariffs. allowing ratepayers to own and produce renewable power, and to sell it to the grid for profits is a no-brainer. unless you are in the pocket of Big Energy. 100% of US electricity, according to the DOE, could easily and affordably be produced RIGHT WHERE IT IS NEEDED with cheap thin-film PV. so why would we need to kill millions of acres of our taxpayer-owned public lands to SHARPLY INCREASE GHG EMISSIONS for the next 15 years at least, just to re-entrench Big Energy monopolies?
You all need to call your reps and DEMAND that Big Energy giveaways be PULLED from these bills (HR 1 and S 1) and that they all be focused on POINT OF USE SOLUTIONS THAT DO NOT KILL OUR PLANET, namely guaranteed loans to ratepayers, permission to ratepayer generators to oversize their systems (currently prohibited), and per kwh payments that make the investment worth our while.
this program will IMPROVE PROPERTY VALUES, CREATE MORE JOBS, cost taxpayers NOTHING, cost ratepayers FAR LESS than the massive infrastructure boondoggles, will create modest incomes among ratepayer generators (stimulus), and will spare families from eminent domain, destroyed property values, loss of use of public lands, and blighted viewsheds.
in other words, ratepayer generator stimulus is a TOTAL WIN, Big Energy Boondoggles are a TOTAL LOSS.
5. C Kezar | 01.28.09
I agree with the above — they are putting so much money into renewables that the DOE will not know what to do with the money.
CAK
6. James | 01.28.09
There could be no better investment than to invest in America becoming energy independent. We need to utilize everything in out power to reduce our dependence on foreign oil including using our own natural resources.OPEC will continue to cut production until they achieve their desired 80-100. per barrel. The high cost of fuel this past year seriously damaged our economy and society. Oil is finite. We are using oil globally at the rate of 2X faster than new oil is being discovered. We need to take some of these billions in bail out bucks and bail ourselves out of our dependence on foreign oil. Jeff Wilson has a really good new book out called The Manhattan Project of 2009 Energy Independence Now. He explores our uses of oil besides gasoline, our depletion, out reserves and stores as well as viable options to replace oil.Oil is finite, it will run out in the not too distant future. WE need to take some of these billions in bail out bucks and bail America out of it’s dependence on foreign oil. The historic high price of gas this past year did serious damage to our economy and society.If all gasoline cars, trucks, and SUV’s instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. WE should never allow others to have that much power over our economy again. Every member of congress needs to read this book.
7. G.D. | 01.28.09
Of course the existing energy cartels don’t want to see any change, so they hire people like commenter #1 to clog the comments. The reason is that renewable fuels are free - sunlight and wind only require some land area, and the business runs around selling and servicing equipment, not fuel. Switching to renewables means giving up the profits associated with selling coal, oil, uranium or natural gas to electric utilities - that’s the central issue. Over half of Wall Street is directly invested in the energy business, as well.
They like the public’s ignorance about renewable energy, and are in no hurry to see that change.
8. RW | 01.29.09
Wind energy is the most cost-effective/environment-friendly way to create electricity. This is a fact.
And yes, we need a national electrical grid in order to be able to make wind energy the next major U.S. industry. Let’s get this done a.s.a.p. Once such a system is in place, many more entrepreneurs will be starting wind-farm businesses.
~
The “brown-fields” seem to be suitable places to set up massive wind farms.
Does anyone know the availability of these places?
9. Money. | 01.30.09
of course. if you wanna se whats going on, follow the money…. its what matters these days.
10. JAA | 02.04.09
Brownfields would be great sites, but they are in urban areas and people do not want to see windfarms. For this many are built in remote areas, basically creating a new wave of industrialization on wild and rural landscapes. The difficult thing to know is how this really balances against fossil fuels in terms of environmental impact aside from the CO2 issue. What forms cause greatest disruption to ecosystems, the jury is out because the studies have not been done.
11. Jim Stack | 02.04.09
The value of Solar is much greater than wind since solar comes at peak hours. Wind mostly comes off peak when our utilities dump mega watts since there is very low use and they can’t just ramp down coal or nuclear.
The value of the plug-in vehicles is very big since it lets us make more vaule of the intermittent wind and off peak waste. Imagine a few million electric vehicles helping reduce our oil imports and pollution, charging at night to help reduce the mega watt waste and even selling back during peak time of day to reduce the loads. V2G Vehicle to Grid and renewables make a great team.
I also agree we want all the new renewable energy made at homes and places of business (distributed) which reduces the loads on transformers and transmission lines. This also eliminates the 5% or more losses in the grid. Power right where you use it.
12. Haldun Abdullah | 02.06.09
How come NREL (the DOE one) and its contributions to renewable energy are never mentioned with such posts that touch upon energy matters? I think that a wider audience (other than technical people)should be exposed to such hope building works for humanities sake.
p.s. I don’t work for, nor am I affiliated in any way to the above organization. I just happen to have visited the laboratories during a congress on renewable energy in 1996.
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2. Today’s Science Policy News for January, 28th 2009 - Scientists & Engineers for America Action Fund | 01.28.09
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1. Lance Matteson | 01.27.09
Some of the economic development and infrastructure spending in the stimulus package will be for “green” projects. The article’s arithmetic ignores this.