Renewable Energy Industries Face Halt in Growth When Stimulus Funds Run Out
Wind power projects like this one could falter when federal stimulus funds run out. (image: huffingtonpost.com)
The massive government stimulus package, a.k.a. the American Recovery and Reinvestment Act (ARRA), contains billions for renewable energy development. Among the hoped-for results are reduced dependence on fossil fuels, cleaner air, and millions of jobs in new, green industries. The money is already flowing, but much remains to be distributed to companies developing solar and wind power technologies, biofuels and more. It’s all very exciting. But a New York Times article that appeared in Sunday’s Green. Inc. column posed an interesting and scary question: what happens to these new projects when the stimulus money runs out as it’s scheduled to do in the next year or two?
One big player, Google, has voiced concerns over this question. As reported here on The HEAT Zone, Google is exploring the promising potential of solar mirrors, or heliostats, which concentrate the sun’s heat to make steam. The Times quotes Dan W. Reicher, the director of climate change and energy initiatives at Google: “One of my big fears is that we will fall off a cliff” (when the money runs out), he said in an interview last week.
The article also quotes Lowell Ungar, policy director for the Alliance to Save Energy, an efficiency advocacy group, who said, “The concern is that you spend billions of dollars building up this industry, training people and creating new jobs and new companies, and it all disappears.”
The renewable energy industry, here and elsewhere, has grown in fits and starts, plagued by uncertain funding which makes long term planning difficult. In the United States, a tax credit for wind energy development, for example, has threatened to expire every year or two over the past decade. Although Congress has repeatedly extended the credit, manufacturers of wind turbines have been hesitant to move ahead aggressively. The three-year extension provided in the stimulus package has given them a measure of stability, but only a temporary one.
The current state of the economy remains a big issue. In another article, the Times reported that, despite the boost from the government, experts say that financial markets remain frozen. If the situation does not improve, stimulus provisions may not immediately restart industries that grew rapidly in the last few years but were forced to lay off workers and cut back projects after the banking crisis hit.
“Unfortunately, the tight debt markets will still keep many projects from moving forward immediately,” said Craig Mataczynski, president of Renewable Energy Systems Americas, a wind developer. “When the debt market thaws a little, we could see a number of new projects move forward.”
The hope is that a combination of the stimulus funds and a recovering economy will be enough to restart green industry and then keep it going. The industry is planning for the period after the stimulus package, to avoid a falloff, reports the Times. “There is already discussion in the market about what comes next, when the stimulus spending has run its course,” said Tom Amis, head of the renewable energy group at the law firm Alston & Bird.
We’ll continue to visit the green energy funding issue as it unfolds here on The HEAT Zone.
