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Federal Stimulus Provides Green Energy Incentives April 3, 2009

Filed under: Energy efficiency,General — salemdk @ 5:03 pm
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The American Recovery and Reinvestment Act of 2009 is a significant and historical spending bill that was recently passed by the 111th Congress and signed into law by President Barack Obama.  This stimulus package is an aggressive and hopeful attempt to get the heartbeat of the American economy pumping again.  Among the various tax cuts, provisions, benefits, and programs are significant investments for renewable energy and energy efficiency that are meant to create a greener and more productive economy.
Of course, within the renewable energy sector, solar and wind power have much to offer for a cleaner future since they have the ability to produce electricity without pollution.  However, one of the great impediments that have limited the growth of these viable energy sources is the feasibility for system installation.  There were tax incentives capitol_building-v2in select states such as California to promote the growth of renewable energy, particularly for solar power that has helped the industry to expand, albeit in a limited fashion.  At the beginning of the year, the federal government changed the tax credit to 30% of the cost of the solar system, but capped it at $2000.  However, this measure made in the heat of the economic downturn has hardly advanced the solar industry.
Fortunately, the stimulus package brings various clean energy businesses to the forefront of the economy with additional tax incentives, bonds, grants, and loan guarantees.  For example, two measures that will help renewable energy, and solar in particular, are the grants and the loan guarantees.  The stimulus permits those installing solar systems to apply for a cash grant instead of a tax credit and receive the money back in 60 days.  These grants are meant to ensure industry growth by bringing investors back into solar and wind, whereas tax credits in the current economy would not allow for profit.
The stimulus package also makes more credit available by providing loan guarantees.  Solar energy is considered one of the safest and lowest risk investments, which should provide access to less stringent credit.  However, the recent credit crunch made if quite difficult for even safe investments like solar to obtain credit.  The government gets lenders to start lending again by backing up the loans, which should lead to the installation of more systems.
In addition, the stimulus package provides incentives for low-income families to make their homes more energy efficient through projects like adding insulation.
The benefits should percolate the economy.  The efforts that the government has put in place should provide green sector jobs and businesses with the means to operate, while creating a more sustainable economy.
The following link by the New York Times is a categorized breakdown of the 787 billion stimulus package. Following are additional web-sites provide more detailed information and other links:

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One Response to “Federal Stimulus Provides Green Energy Incentives”

  1. The April 2009 North American WIndPower magazine has a very good covery story that talks about the new issues of financing windpower. Unfortunately the article is not on their web site.

    The article discusses production tax credit vs. investment tax credit, partnership-flip and sale-leaseback transactions.

    ‘Under the American Recovery and Reinvestment Act, many popular mechanisms for wind farm finance have been substantially altered.’


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