UPDATE:Stimulus To Fund Renewables, Energy Efficiency, Grid
February 12 2009 - 6:12PM
Dow Jones News
Congress will funnel more than $40 billion into clean energy and
efficiency programs - and offer around $20 billion in tax breaks -
as part of a near $800 billion stimulus bill designed to jolt
industries into life across the economy.
The provisions in the bill - a deal hammered out between House
and Senate negotiators late Wednesday that still needs to be passed
by both chambers - will primarily give a major boost to renewable
energy, electricity transmission and energy efficiency sectors.
It also gives money for pilot carbon dioxide storage projects
and grants for advanced battery technologies. Based on preliminary
summaries of the deal, a controversial provision that could have
provided up to $50 billion in nuclear loan guarantees was
dropped.
U.S. President Barack Obama said the recovery package will
create or save millions of jobs. The portions designed to increase
the efficient use of energy and shift the country away from
reliance on fossil fuels will help axe greenhouse gases thought to
contribute to global warming, he said. Final votes are expected by
the week's end.
"The plan...will save or create more than 3.5 million jobs over
the next two years...will ignite spending by businesses and
consumers and make the investments necessary for lasting economic
growth and prosperity," Obama said Wednesday at a stop in East
Peoria, Ill., one of many towns across the country hit hard by the
economic meltdown.
One of the biggest ticket items - at $11 billion - is aimed at
creating a "smart" grid, an artificially intelligent electricity
transmission system that is necessary to more efficiently transmit
electrons, especially from sources such as wind, solar and power
stored in batteries. Although in the past decade demand for
electricity has grown 20%, the grid has only expanded by about 5%,
and that growth hasn't adequately taken into account distributed
renewable energy generation.
Speaking to reporters at a Platts Energy event, Federal Energy
Regulatory Commission Acting Chairman Jon Wellinghoff said the
funding was "seed money...but it really isn't enough money to make
huge advances in the overall backbone grid that we're talking about
to integrate substantial amounts of wind."
The full investment to meet the type of renewable growth that
Obama's targeted would cost more than $200 billion, he said.
With record growth to around 25 gigawatts of total wind capacity
last year, the U.S. is now one of the world's biggest producers of
renewable energy. But between 200 gigawatts to 300 gigawatts of
drafted wind projects remain stranded on paper because there isn't
the transmission capacity to link them to demand.
Companies such as Ambient Corp. (OBB), Echelon Corp. (ELON) and
Direct Energy, a unit of Centrica (CNA.LN) could benefit from the
package.
In addition to nearly $20 billion in efficiency and renewable
energy tax credits over the next 10 years, lawmakers have set aside
$6 billion in loan guarantees and $2.5 billion in research grants
for the renewable energy sector. One of the tax provisions - worth
up to $2.3 billion - is for a newly-created manufacturing credit
for investment in advanced energy facilities, such as plants that
manufacture components for the production of renewable energy,
advanced battery technology, and other innovative next-generation
green technologies.
"This bill is a critical down payment on long-term policies
needed to meet the President's ambitious renewable energy goals,
enhance America's energy security, grow our economy and reduce
global warming pollution," said Greg Wetstone, senior director for
governmental affairs at the American Wind Energy Association.
Despite record growth last year, the financial crisis had stalled
development.
Wind turbine manufacturers such as GE Energy, a unit of the
General Electric Co. (GE), Spain's Iberdrola (IBE.MC), India's
Suzlon Energy (532667.BY) and Denmark's Vestas Wind Systems
(VWS.OS), as well as solar firms such as Norway's Renewable Energy
Corp. ASA (REC.OS), and U.S.-headquartered First Solar Inc. (FSLR)
and Evergreen Solar Inc. (ESLR) would benefit from the
measures.
Another major chunk of the funding goes toward energy efficiency
and conservation grants, including $6.3 billion for the government
to distribute at the state level to increase energy efficiency in
buildings, homes and businesses. Although some electricity
companies have lobbied hard against the caveat, the grants could be
conditioned on requiring utilities to reform their rates so that
power firms aren't encouraged to base their profits on how much
they sell, a restructuring designed to increase efficiency. Around
$4.5 billion would be spent to retrofit federal facilities for
efficiency and to use green technology.
On the tax side, lawmakers provided for $2 billion in credits
for energy efficiency improvements in existing homes.
In an effort to transform the transportation industry from a
fossil fuel consuming sector to one powered by electricity, there
is $2 billion in grant funding for manufacturing advanced
batteries, storage units that are lighter and can power longer than
existing technology.
The deal includes $3.4 billion in funding for "fossil energy"
research, primarily what is called carbon dioxide sequestration
projects, which could turn one of the country's largest greenhouse
gas emitters - the coal generation industry - into a zero carbon
power source. Environmentalists have battled against the measure,
saying that such "clean coal" projects are fantasy, though industry
experts estimate the technology could be commercial in about a
decade.
-By Ian Talley, Dow Jones Newswires; 202-862-9285;
ian.talley@dowjones.com