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February 26, 2009
Economic Stimulus Is Expected to Spur Investment in Renewable Energy
by Robert Kropp
The renewable energy industry and sustainable investors believe stimulus will provide significant
investment in green energy infrastructure. Second in a two-part series.
SocialFunds.com --
The $790 billion American Recovery and Reinvestment Act of 2009 recently signed into law by
President Obama contains substantial tax and spending provisions for the renewable energy industry,
and has been met with enthusiasm by the industry and sustainable investors alike. As Joe Keefe,
President and CEO of Pax World, a mutual
funds company recognized as a leader in sustainable investing, told SocialFunds.com, "The stimulus
package is the first significant investment in green energy infrastructure that has ever been
attempted in the US."
 Stu Dalheim, Director of Shareholder Advocacy at the Calvert Group, a fund company that includes a
number of prominent SRI funds, said, "The investment and tax provisions, the commitment to
government deployment of existing technologies, the plans to modernize the electricity grid, and
the advanced research into alternative energy amount to a significant move toward a more
sustainable energy system."
One of the companies in which Calvert invests is groSolar, a Vermont-based distributor,
installer and integrator of solar energy systems for residential and commercial installations whose
recent acquisition of the residential solar division of the El Cajon, CA-based Borrego Solar Systems makes groSolar the fourth-largest
residential solar power installer in the US.
Jeff Wolfe, CEO of groSolar, noted that the
stimulus removes all caps on renewable energy tax credits, which equal 30% of the cost of qualified
solar energy systems, geothermal heat pumps, small wind turbines and fuel cell systems. The
stimulus also eliminates a reduction in credits for installations that utilize subsidized
financing.
"For residential solar business, Berkeley-style financing makes it easier for
homeowners to receive a loan for solar installations and pay it off as part of their tax bills,"
Wolfe said.
The Berkeley FIRST financing
initiative referred to by Wolfe is a solar financing program offered by the City of Berkeley, CA
that allows homeowners an opportunity to borrow money to install solar photovoltaic electric
systems and allow the cost to be repaid over 20 years through an annual special tax on their
property tax bill.
The Solar Energy Industries
Association estimates that solar energy provisions in the stimulus will help create 60,000 jobs
in the solar industry in 2009 alone and a total of 110,000 over the next two years. The American Wind Energy Association (AWEA), noting that
the US wind energy industry in 2008 installed about 42% of all the new electric generating capacity
added that year and created 35,000 jobs, expects that the stimulus will encourage additional clean
energy investment and job creation.
Michael Eckhart, founding President of the American Council on Renewable Energy (ACORE),
spoke to SocialFunds.com from the floor of the Las Vegas Convention Center, where ACORE's RETECH
2009 Renewable Energy Technology Conference was held, and noted the significant effect on
investment in green technologies of the extension of the Production Tax Credit (PTC) as well as the
expansion of the Investment Tax Credit (ITC) on renewable facility expenditures.
The
stimulus bill extends the PTC placed-in-service date for wind facilities to December 31, 2012. For
other renewable technologies, such as biomass and geothermal facilities, the bill extends the
placed-in-service date to December 31, 2013.
The stimulus also allows technologies that
traditionally qualify for the PTC to instead receive an ITC. It provides renewable technology
companies with an option to receive a 30% ITC on expenditures on renewable electricity facilities.
Wolfe of groSolar also noted, "For commercial solar, the stimulus also provides grants
through 2010 that will replace the ITC and contains loan guarantees so that long-term projects have
a better chance at receiving loans and at better terms."
The grant program reimburses a
percentage of investments in renewable energy projects placed into service in 2009 and 2010 and
projects for which construction began in 2009 or 2010. The grants consist of up to 30% of the basis
of wind, biomass, geothermal and solar properties.
Dalheim of Calvert said, "The extension
of the tax credits for renewable energy production will help promote the kind of investment that we
believe make wind, solar, and geothermal companies strong long term investments. This support is
particularly important now, given the credit crisis which is hampering investment across a range of
sectors."
The stimulus package also includes $9.5 billion for weatherization and other
energy-efficiency improvements, $11 billion for a modernization of the electric grid, $17.5 billion
for investment in public transportation, and subsidies for buyers of plug-in cars.
In his
speech before Congress on February 24, President Obama made it clear that his administration's
commitment to investment in green technologies is unwavering, despite the economic crisis.
"We have known for decades that our survival depends on finding new sources of energy, yet we
import more oil today than ever before," the President said. "We know the country that harnesses
the power of clean, renewable energy will lead the 21st century. Thanks to our recovery plan, we
will double this nation's supply of renewable energy in the next three years."
As Wolfe of
groSolar noted, "Not once in the President's speech did he utter the word 'drill'."
Congress is also considering legislation to establish a federal renewable portfolio standard
(RPS) that would require electric utilities to produce 25% of their electricity from wind, solar
and other renewable energy sources by 2025.
Supporters of renewable energy development
recognize, however, that without a cap-and-trade system to reduce greenhouse gas emissions,
investment in green technologies will continue to lag behind its potential.
"To produce
the major and necessary shift in the ways we source and use energy, government needs to put a price
on carbon," said Dalheim of Calvert. "So, while we celebrate the forward looking provisions in the
stimulus bill we will continue to call for comprehensive legislation to address climate change."
Keefe of Pax World added, "The upcoming efforts of the Environmental Protection Agency to
regulate carbon dioxide and greenhouse gas emissions have the potential to create a real boom in
sustainable investment."
©
SRI World Group, Inc. All Rights Reserved.
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