The American Recovery and Reinvestment Act of 2009 will drive new national strategies in renewable energy, smart grid, transmission, advanced vehicles, energy efficiency and many other aspects of energy, environment, climate and sustainability.
New Energy Finance Chairman and CEO said on the passing of the bill in Congress: “The passage of this bill would mark an historic day for the development of clean energy worldwide. … When this bill is passed, the US will have a great chance to be the growth engine for our industry over the next several years.”
The American Council On Renewable Energy (ACORE) has given a breakdown of what the stimulus bill means for the renewable energy sector.
Tax incentives
The bill provides a three-year extension of the Production Tax Credit (PTC) for electricity derived from wind facilities through 2012, as well as for geothermal, biomass, hydropower, landfill gas, waste-to-energy and marine facilities through 2013. It also provides project developers of wind, geothermal, biomass and other technologies eligible for the PTC, the option of instead utilising the 30% Investment Tax Credit (ITC) that previously only applied to solar and other clean technology projects. Both businesses and individuals could qualify for the full amount of the ITC.
Project developers can apply for a grant from the Treasury Department in lieu of the ITC. The grant will be equal to 30% of the cost of eligible projects that start construction in 2009 or 2010.
The bill also increases the size of credits for installing alternative fuel pumps at petrol stations from 30% to 50% (US$30,000 to US$50,000) for 2009-2010. It also provides US$2 billion worth of energy related manufacturing investment credits at a 30% rate. These credits apply to projects creating or retooling manufacturing facilities to make components used to generate renewable energy, storage systems for use in electric or hybrid-electric cars, power grid components supporting addition of renewable sources, and equipment for carbon capture and storage (CCS).
The tax credit for qualified plug-in electric vehicles will be increased for the first 200,000 placed in service. The base amount of the credit is US$2500. Batteries with at least 5 kWh of capacity have a credit of US$2917. The credit is further increased by $417 for every kWh in excess of 5 kWh, but cannot exceed $5000.
Direct spending
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Quicker spending
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Steven Chu, the new Energy Secretary, has said he wants half of provisions proposed for the Energy Department programmes to be spent within a year.
He has publicly criticised the amount of time it takes for funding to get through the Department of Energy, and in an interview with the Wall Street Journal, Wu was quoted as saying he expects a pace of five months, not three years: “We’re trying to understand, why the heck did it take so long before?”
“I think this is solvable. And not only solvable – we’ve got to do it. Otherwise it’s just going to be a bust. If we take two years to get the loans out, that’s not what the country needs. We’ve got to get it out much more quickly than that,” Wu said.
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The bill provides US$16.8 billion in direct spending for renewable energy and energy efficiency programmes over the next ten years. US$4.5 billion will be spent on modernising the electricity grid with smart grid technology. Federal matching grants for the Smart Grid Investment Program are increased from 20% to 50%.
Renewable energy and energy efficiency R&D, demonstration and deployment activities will see US$2.5 billion. Another US$6.5 million is available for capital investments by certain federal power marketing administrations in electric power transmission systems. Manufacturing of advanced batteries and components will get US$2 billion in grants. This includes advanced lithium ion batteries and hybrid electrical systems.
The bill requires the Secretary of Energy to include a study of the transmission issues facing renewable energy in the pending study of electric transmission congestion that is due to be issued in August 2009.
Bond and loan programmes
The bill provides US$1.6 billion of new clean energy renewable bonds to finance wind, closed- and open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewable, and trash combustion facilities.
The bill provides US$6 billion for a temporary loan guarantee programme for renewable energy power generation and transmission projects that begin construction by September 30, 2011. Up to US$500 million of the overall US$6 billion can be used for the development of biofuels that have been demonstrated and have commercial promise to substantially reduce greenhouse gas emissions.