Emily K. Slagle

October 22, 2010

The Federal Stimulus Bill, passed in February 2009, extended tax credits and created a grant program for renewable power producers. The grant program has been an attractive option to many producers, especially those with incomplete projects who have needed funding for completion. To date, approximately 5.2 billion dollars has been distributed to fund major renewable energy projects. As the Federal stimulus tax credit and grant program expiration date approaches, debate surrounding the effectiveness of the program has begun. Many of the companies that have received these grants are dependent on continued federal funding to operate in a volatile renewable energy market. Supporters of the program encourage a continuation of stimulus funding to further strengthen the renewable energy industry. In contrast, critics assert that enough money has already been thrown at these projects and demand an end to further federal support.

Supporters of the grant program point to successes that have been achieved, highlighting the number of new projects that would not have been completed but for the grant program. Examples of such projects are evident across New England. Federal Stimulus money has been used to create the Massachusetts Solar Stimulus Program which helps fund solar projects across the state. Stimulus money has also been used to help fund the federal tax credit that is helping a solar power developer in Vergennes, Vermont. Wind power has also greatly benefited from this program with over 2 billion dollars going to wind power development nationwide.

Supporters also point out that the federal money has been necessary because of the economic downturn. Many projects that were underway when the market collapsed were left in a state of uncertainty as investors backed out. These projects were unable to find new investors because these new and risky projects had great financial uncertainty. The Federal grant program helped create the capital needed to finish the projects and also helped to spur confidence from private investors. Every federal dollar spent on these projects resulted in nearly two dollars of private investment. Federal money also helped create new jobs and save existing jobs in the green energy field. Further, supporters assert that although the economy has shown improvement in the past year, the economic downturn is not over and continued support is needed.

However, critics of this program question the actual number of American jobs created, pointing to the number of parts made outside the U.S. and to energy development companies that are owned by foreign entities. They also charge that the grants were meant to spur development, not subsidize existing projects that would have occurred with or without government aid, labeling projects that received grants after production had started as "free riders." Additionally, critics argue that the program emphasizes building over the production of power, noting the lack of efficiency of some of the major wind power producers.

The certainty of future funding for renewable energy projects currently hangs in the balance. Republicans have threatened to block an extension of stimulus funding, which would include funds used to support the renewable energy industry. Even supporters of the stimulus are critical of the overall the effectiveness of the program, but point out that more government support, not less, is needed to create a stable green energy industry.

Sources:

Anne C. Mulkern, Stimulus Cash Flowed to Completed, Underway Projects, Greenwire, (Oct. 14, 2010), http://www.eenews.net/public/Greenwire/2010/10/14/1.

Terri Hallenbeck, Vermont Solar Projects Cross Party Lines, , Burlington Free Press.com (Oct.21, 2010), http://www.burlingtonfreepress.com/apps/pbcs.dll/article?AID=2010101020037.

Michael Grunwald, GOP Attacks on Stimulus Wind Power Money: Hot Air, Time (Oct. 15, 2010), http://www.time.com/time/politics/article/0,8599,2025886-2,00.html.

James Cartledge, Massachusetts State Buildings In Switch To Solar Power, Brighter Energy, (Oct. 20, 2010), http://www.brighterenergy.org/17944/news/solar/massachusetts-state-buildings-in-switch-to-solar-power/.

Devon Swezey, Critics of Clean Energy Stimulus Program Miss the Point, The Huffington Post, (Oct. 20, 2010), http://www.huffingtonpost.com/devon-swezey/critics-of-clean-energy-s_b_770236.html.