Stimulus Bill Contains Boons To Renewable Energy Sector

February 12, 2009 by Jeff Shepard

The US Congress has finally come to an agreement on the American Recovery and Reinvestment Act, known as the economic "stimulus bill." Although the agreement cut the total value of the bill to $789 billion, many observers think it will be a boon for the renewable energy industry. Overall, there is $50 billion for energy programs, much of it focused on energy efficiency and renewable energy, and $20 billion in tax incentives for renewable energy and efficiency.

The new bill contains $20 billion for tax incentives for renewable energy and energy efficiency over the next 10 years including: a three-year extension of the production tax credit (PTC) for electricity derived from wind (through 2012) and for electricity derived from biomass, geothermal, hydropower, landfill gas, waste-to-energy and marine facilities (through 2013); grants of up to 30% of the cost of building a new renewable energy facility to address current renewable energy credit market concerns; establishment of a new manufacturing investment tax credit (ITC) for investment in advanced energy facilities, such as facilities that manufacture components for the production of renewable energy, advanced battery technology and other innovative next-generation green technologies; clean renewable energy bonds for state and local governments; and a tax credit for families that purchase plug-in hybrid vehicles of up to $7,500.

In addition, $30 billion will go to smart power grid, advanced battery technology and energy efficiency measures including the Smart Grid Investment Program to modernize the electricity grid to make it more efficient and reliable, U.S. development of advanced vehicle batteries and battery systems through loans and grants.

The bill also provides $400 million to establish the Advanced Research Project Agency-Energy (ARPA-E) to support research into energy sources and energy efficiency in collaboration with industry as well as $580 million for the National Institute of Standards and Technology, including the Technology Innovation Program and the Manufacturing Extension Partnership.

There is $2 billion for advanced battery manufacturing and over $2 billion for carbon capture and storage demonstration projects. In transportation, there is $8.4 billion for mass transit and $8 billion for construction of high-speed railways.

To retrofit existing homes to be more efficient, the bill extends and expands tax credits for purchase such as new furnaces, energy-efficient windows and doors, or insulation. The House and Senate versions extended these credits to 2010 and increased the level to 30% with a cap of $1,500 on combined purchases. Solar hot-water systems will be more attractive because the $2,000 cap on the 30% tax credit is lifted.