photo: Todd Woody
Fifty-four billion dollars is nothing to sneeze at, of course. That’s the amount in the $825 billion economic stimulus package – introduced by House Democrats Thursday – set aside for renewable energy, electric car batteries, energy efficiency and other green projects.
It’s a start, but that’s less than 7% of the entire stimulus package (or, about enough to pay for the Iraq war for five months, or somewhat more than what the federal government is spending to bail out Bank of America). The lion’s share of the cash is devoted to smart grid technology and transmission lines, with a second big chunk going toward energy efficiency retrofits of public housing and weatherization of low-income homes.
That’s good news for a host of startups developing smart grid technology. But the the bill does not address the most pressing issue facing renewable energy companies today: the credit crunch has dried up financing just as billions are needed to fund factories and the construction of solar power plants and wind farms that will be connected to smart grids and new transmission lines. In recent weeks, layoffs have hit the solar industry. OptiSolar – a Bay Area thin-film solar startup that’s building a 550-megawatt photovoltaic power plant to supply electricity to utility PG&E (PCG) – reported to have furloughed half its workforce. And according to The Oregonian newspaper, SpectraWatt, a solar cell maker spun off from chip giant Intel (INTC) last year, has shelved plans for a factory in Hillsboro, Ore. Friday morning, Kate Galbraith at The New York Times’ Green Inc. blog reported that layoffs have now hit the wind industry.
The retrenchment comes as utilities are counting on solar power plants and wind farms to come online in the next two years to help them meet mandates to obtain a growing percentage of the electricity they sell from renewable sources. In California, for instance, PG&E, Southern California Edison (EIX) and San Diego Gas & Electric (SRE) have signed more than four gigawatts’ worth of contracts for electricity to be produced by large-scale solar power stations that will cost billions to build.
Solar startups rely on a provision that allows them to take a 30% tax credit on the cost of building a power plant. Now most of these companies are startups and have no way to use those tax credits as they’re not profitable. Instead, a solar company must essentially trade the tax credits to a firm that can use them in exchange for cash to finance construction. But investors in these deals have all but disappeared as the financial crisis takes its toll. Which is why solar and wind lobbyists are pushing Congress to make the tax credits “refundable” – meaning those companies that don’t have tax liabilities can trade the credits for cash that can be used to finance power plants. “Due to the recession, projects are now being put on hold, factories are closing and workers face potential layoffs unless Congress refines the tax credits now so they work as originally intended,” said Solar Energy Industries Association CEO Rhone Resch in a statement.
The stimulus package unveiled Thursday undoubtedly will be subject to change, but as written it will boost efforts to modernize and digitize the United States’ aging analog power grid. The bill includes:
- $11 billion for smart grid research and development, pilot projects and the construction of new transmission lines to connect green energy power plants to the power grid. The government will fund 50% of the cost of utilities’ smart grid investments.
- $8 billion in loan guarantees for renewable energy transmission projects.
- $6.9 billion in grants to state and local governments for energy efficiency and carbon reduction programs.
- $6.7 billion for renovation of federal buildings, of which $6 billion must be used for energy efficiency retrofits.
- $6.2 billion for home weatherization programs for low-income families.
- $2.5 billion for energy efficiency retrofits of public housing.
- $2.4 billion for carbon sequestration – so-called clean coal – demonstration projects.
- $2 billion for energy efficiency and renewable energy research (which includes $800 million for biomass and $400 million for geothermal research).
- $2 billion in loan guarantees and grants for advanced vehicle battery research.
The smart grid billions will be a boon to companies like Silver Spring Networks, Gridpoint and eMeter that develop software to allow utilities to monitor and manage electricity use in real-time and provide that data to their customers. “We think 2009 is going to be a good year for us,” eMeter president Larsh M. Johnson told Green Wombat last month. “We’ve seen continued demand from utilities for our services.”
But the billions for the smart grid can be considered a down payment: According to an estimate by research firm New Energy Finance, the price tag for modernizing the power grid over the next 15 years will be $450 billion.
We need a good feed-in tariff
We need a carbon
there are other reforms that are needed, but this should solve the problem
Agreed, its amazing with all going on in automotive and all the talk on advanced batteries that investment in this industry, which is critical to the survival of the US auto base and DOD/DOE missions for energy independence, that only $2B is allocated. Japanese manufacturers backed by their governments have announced ~ $5B investment this year on facilities alone. You know we are in trouble when Carbon Sequestration gets more funding than Advanced Batteries. Spending 10X more on food stamps than Advanced Batteries is a bad omen for what to expect from the incoming administration.
“Due to the recession, projects are now being put on hold, factories are closing and workers face potential layoffs unless Congress refines the tax credits now so they work as originally intended,”
Projects are being put on hold because oil is cheap again. The recession has little to do with it.
But don’t forget about solar cooling. Could be a big big energy saver too!!
http://www.solarnext.eu/eng/sol/solarcooling.shtml
http://www.solel.com/products/icooling/solar_cooling/trento/
Would someone explain what is a smart grid? Does that mean presently we have a dumb grid? And all along I thought that the grid was the wires and controls that transmitted electricity from the producers to the consumers, does that mean we are going to mine smarter copper and where is this smart copper???
Many moons ago, OK it was only March 2007, I suggested as I’m sure others have is that we need a Marshall Plan to move the US to green.
1. Massively decreased health care spending as pollution that attacks us chronically and causes all sorts of chronic diseases disappates.
2.No more paying massive sums of money to duplicitous regimes for oil and gas.
3. Increased independence for homeowners as the solar panels on their homes that supply engergy to home and car mean technically, practically the only thing the have to consistantly work for their entire lives is food. That means frugality will be rewarded in very tangible ways, quite the opposite of today.
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Now my newest proposal, drumroll please, and prepare to be shocked and know that control freak and greedy politicians will reflexively resist:
Any home that is taken off the grid to be 100% powered by solar and wind energy (the greenest by most estimations) will also be 100% taken off the property tax roles FORVER!
Talk about an incentive to go green and stay green.
Your house becomes very desirable on the market. People race to make unsold houses 100% energy independent as people race to buy 100% energy independent houses.
Fannie Mae and Freddie Mac ‘socialize’ home ownership loans for the next 23 years (yes, anybody making less than $1,000,000 a year can opt in, current mortages can opt in, and they garnish wages to pay for your home and you must work 35 hours a week or more to ‘buy’ one). And sorry, higher income levels can afford to have more wages garnished and therefore buy nicer houses.
Of course, schools will have to be funded with other consumption taxes (and the rich are very good at that).
I don’t think this is, by any means, the sum total of the plan. The energy-efficiency retrofits are the low-hanging fruit in this proposition, so, yes, it makes sense to get those done in the initial effort.
There are a lot of people with a vested interest in “clean coal” development. It seems to me that if their plan were all that viable, however, they would have built their own demo plant by now. So far, there’s no such thing as clean coal, and CO2 sequestration looks like a long shot to me.
Upgrading the grid is clearly as urgent as saving the financial system from insolvency. It’s one of those critical prerequisites to everything else.
There needs to be a hydrocarbon tax, but it’s probably wise to leave that one for later, as there are some very rich people that are going to be greatly offended when their hydrocarbon investment returns are diminished to actual adoption of green power.
Let’s just stay aware that what we’re looking at here isn’t the whole game. This is only the first move.
There is no more low hanging fruit at federal institutions. If the Government wants to move forward with Green Energy and maintain some form of capitalism, then it must subsidize energy efficient efforts.
The previous Bush Administration signed into law the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, both of which require significant energy reductions in all new federal buildings; some of those requirements are beyond current engineering and construction practice, and will require advancement of federal expenditures in what used to be standard building design.
I have been involved in the design of federal facilities and with energy performance contracting for 15 years. There is no more low hanging fruit. There are limited steps that either the construction industry or the energy industry can make without significant funding into R&D, not into new ideas, but towards the practical application of the good ideas that are already in existence.
Ken of Dallas,
Southern Company has a small scale demo plant in Alabama, and using their IGCC technology to build a plant in Mississippi using this same technology. I’m sure other utilities(AEP, Duke,etc.)have similar projects, that you can look up on the DOE website. Your premise of an electric utility to spend a lot of money for R & D to develop clean coal technology is simply inane. The structure of their business doesn’t allow it, could you believe the rate payers outrage at paying for a failed endeavor in clean coal technology? Government grants or awards is the only answer for our current system.