The impact of the 2009 American Recovery and Reinvestment Act (ARRA) funds on the U.S. economy has been hotly debated in Washington. Was it money well spent?

As part of the package, the government set aside more than $70 billion for renewable energy and energy efficiency programs. Despite the political wrangling over that package, indications are strong that the Recovery Act is aiding the U.S. in attaining its goal of doubling renewable generation capacity over the next two years.

Consider the following examples:

·          Aided by ARRA investments, The Council of Economic Advisors (CEA) reports that domestic manufacturing capacity for solar photovoltaic (PV) modules is forecasted to grow from <1 GW per year in 2008 to nearly 4 GW per year in 2012.

·          ARRA investments are accelerating the rate of innovation in solar photovoltaics and according to the CEA, the new technology will drive down the cost of solar panels over the next five years; possibly by 50%.

·          U.S. wind power capacity grew 40% in 2009 over the prior year, despite weak economic and investment conditions. In July 2010, the CEA reported that ARRA was responsible for approximately 6 GW of wind capacity installation that might not otherwise have occurred in 2009. Although there were only 5 GW of installations in 2010 – a 50% drop from 2009 – the grant program created through ARRA was responsible for bringing a large number of those online. In addition, the American Wind Energy Association reported recently that 5,600 MW of projects are already in the construction phase this year – again, spurred by the grant program.

·          U.S. manufacturing capacity for components such as gearboxes, generators, and large casted steel parts, has lagged behind actual demand. The 48C Manufacturing Tax Credit program awarded $346 million in tax credits to 52 wind manufacturing projects to facilitate additional U.S. manufacturing capacity to ensure the U.S. is able to supply a growing domestic market through domestic production.

·          An April 2010 U.S. Geothermal Energy Association (GEA) survey indicated a 26% increase in new projects under development in 2009 and concludes that the stimulus funding played an important role in propelling geothermal growth amidst recessionary economic conditions.

Overall, the Energy Information Administration (EIA) estimates that U.S. renewable generation capacity will increase 32% more than without ARRA support – reaching 155 GW in 2015. Two years after the enactment of ARRA, it is clear that the funds have provided the industry with a significant boost when it was needed most.