Grant Program Supported up to 75,000 Wind and Solar Jobs: Congress Killed It Anyway

Stephen Lacey, Climate Progress
April 10, 2012 | 21 Comments

A federal grant program created to boost renewable energy development during the height of the economic crisis supported 75,000 jobs and more than $25 billion in economic activity, according to a new analysis from the Department of Energy.

The grant program was created in February of 2009 as part of the stimulus package. It allowed developers to take a cash grant through the Treasury in lieu of a tax credit, helping thaw out the frozen capital markets and stimulate strong activity in the renewable energy sector.

According to the report, Treasury grants supported 23,000 projects across the U.S. and helped add more than 13,000 megawatts of wind and solar capacity to the grid.

Between January of 2010 and December of 2011, the solar market grew 176 percent — driven in part by the availability of grants. The wind sector, which took a deep nosedive after the financial crisis, was able to develop more than 12,000 MW of projects with the support of the program.

In spite of this success, Congress failed to extend the program last year.

The incentive was also offered to biomass, landfill gas, hydro and geothermal technologies; however, the majority of grants went toward wind and solar. The Department of Energy report only tracked job creation and development figures for those two sectors.

It is difficult to isolate the exact influence that grants had on each installation. Some projects may have gone forward without the grant, others may have not. But the analysis does show that the gross economic impact was substantial, particularly along the component supply chain:

Construction- and installation-related expenditures are estimated to have supported an average of 52,000–75,000 direct and indirect jobs per year over the program’s operational period (2009–2011). This represents a total of 150,000–220,000 job-years.These expenditures are also estimated to have supported $9 billion–$14 billion in total earnings and $26 billion–$44 billion in economic output over this period. This represents an average of $3.2 billion–$4.9 billion per year in total earnings and $9 billion–$15 billion per year in output.

Indirect jobs, or jobs in the manufacturing and associated supply-chain sectors, account for a significantly larger share of the estimated jobs (43,000–66,000 jobs per year) than those directly supporting the design, development, and construction/installation of systems (9,400 per year).
The annual operation and maintenance (O&M) of these PV and wind systems are estimated to support between 5,100 and 5,500 direct and indirect jobs per year on an ongoing basis over the 20- to 30-year estimated life of the systems. Similar to the construction phase, the number of jobs directly supporting the O&M of the systems is significantly less than the number of jobs supporting manufacturing and associated supply chains (910 and 4,200–4,600 jobs per year, respectively).

The findings of this Department of Energy report are line with previous analyses. One report from EuPD Research concluded that an extension of the Treasury grant program through 2015 would create an additional 65,000 jobs in the solar industry alone.

However, Congressional leaders have shown no willingness to extend the successful program. In addition, a key tax credit for the wind industry, the Production Tax Credit, is set to expire at the end of the year. That could destroy another 37,000 jobs in the wind sector, according to industry estimates.

This article was originally published on Climate Progress and was republished with permission.

21 Comments

ANONYMOUS
April 21, 2012

All of the previous posts claiming that federal RE subsidies "work" or "create jobs" are entirely subjective. Let me make it clear that I'm a firm proponent of advancing RE technology, but only where it make economic sense.

The notion that the federal government can "create" jobs with subsidies ignores reality. Every dollar the federal government hands out in subsidies is a dollar taken from taxpayers or private business.

Many posters have lamented the recent drop in NG costs due to improved production technology. But they also ignore the massive benefits to the US economy and trade, and huge increase to federal revenues it has produced. These economic benefits are several orders of magnitude greater than the impact of jobs lost from termination of the federal PTC.

Mike Holly
April 15, 2012

@Phil You are a waste of time to even argue with - no facts and name calling (eg fool).

Phil Manke
April 15, 2012

As I stated above, tho now simpler for some; Biomass burning for electricity at all is a disaster in the basic sense. Only a fool would burn the life support system for GNP of a corrupt political establishment. I'm sure some of you make Pickens happy, but as he says, "how you fill in around gas burning is not my problem".
I say, if you must burn gas at all, do it with solar energy.

Mike Holly
April 14, 2012

The Lawrence Berkely National Lab found transmission cost are proportional to the capacity factor of the generation. Since wind only produces 30% of the power, the lines are only used 1/3 of the time compared to a base-load source with a 90% CF.

Cogeneration doesnt require storage. It is often a base load generation. It simply involves using the waste heat from generation for processing or heating. So instead of 30% fuel efficiency at conventional plants or 56% for combined cycle you can get up to 90% for gas, doubles biomass fuel efficiency.

bruce gladstone
April 14, 2012

Mike, can you explain in more detail some of what you raised in comment 13 ? I too am skeptical of over-enthusiasm for wind at this time, but I don;t understand your comments about distribution and power factor. Cogeneration is an issue that needs to be examined, but what about storage? I know that it can help the rate of decline, which improves the value of wind. How often are you assuming the cogeneration has to be run? gas peaker ? other? If someone has botched their numbers, let's make better assumptions and get better numbers.

James Tyson
April 14, 2012

The solar industry would be happy to see the elimination of all subsidies, and is more than willing to compete on a level playing field with fossil fuels. This would require the fossil fuel industry to pay for the full consequences of the air and water they pollute. A study done recently has shown that this would double or triple the cost of fossil-fueled electricity. (See http://thinkprogress.org/climate/2011/02/16/207534/life-cycle-study-coal-harvard-epstein-health/ for details.)

At that price level, the solar industry would be booming without any governmental supports. So, to those who advocate removable of governmental supports for the energy industry, I say--if you are willing to create a truly level playing field--bring it on!!

Mike Holly
April 14, 2012

@ Phil That is a good descritption for using intermittent renewable energy sources like wind that requires as much gas to back it up as just using more efficient gas generation without wind.

Unless of course you are a hippy living in a commune where you can sit around until the wind can pump your water up the well.

Phil Manke
April 14, 2012

Burning of biomass is akin to finding another vein for the drug of cheap burn-tec addiction, and certainly closer to the heart, in that the effects and detrimental symptoms will be more suddenly catastrophic.

"Me go kill meat now..... other guy lookin pretty fat..........

Mike Holly
April 13, 2012

Mandates and subsidies should be limited in time but also size. Most importantly, they should not be used to favor wind power and push more economic renewable energy technologies like biomass out of the market.

The US electricity industry is favoring wind power with about 5 cents/kWh in tax shelters, 2 cents of additional transmission (wind is three times higher than other power sources due to the low capacity factor) and as much as 6 cents needed to back up the unreliable power source with peaking power that emits huge amounts of CO2.

These benefits are used to rig avoided cost calculations and competitive bidding, and also deregulated markets, in favor of high-cost, unreliable and environmentally-worthless wind power over low-cost and reliable biomass that actually cuts CO2 emissions.

In exchange, the wind power industry is supporting utilities in their efforts to monopolize the power industry, thus stifling investor interest in researching and developing new technologies like biomass energy crops. Regulators, not utility monopolies, should be setting avoided costs and conducting competitive bidding of renewable energy technologies in regulated markets.

bruce gladstone
April 13, 2012

We have to ask ourselves : what is the purpose of subsidies or grants or whatever you call them ?

It can only be to incentivise and stimulate technologies and economies of sale that might otherwise not come into being, when our country (economy/society/environment) stands to benefit.

The purpose CANNOT be just to gain a temporary burst of activity that goes away after the money dries up. There has to be reasonable chance that the economic system that has been started will continue.

The solar and wind subsidies ( or whatever word you prefer) have been enormously successful I believe. To stop subsidies just because the prices have fallen X % is arbitrary and uncalled for. Of course, the subsidies and government support cannot and should not go on forever. They should be reduced gradually, so that making a profit for the companies in the ecosystem becomes gradually more painful. Suddenly removing or changing the policy is destructive.

Mike Holly
April 12, 2012

@ Mark The people you know obviously don't have biomass wastes available in the plant as free fuel nor heat needs for use of cogeneration (eg paper manufacturing). Sending out a bunch of wood chippers to collect biomass and burning the fuel inefficiently without cogen makes no sense. The people you know don't belong in the business.

But the utilities have discouraged economic biomass by refusing to pay fair avoided costs and even giving paper companies low rates if they dont cognerate. The US needs free markets.

Mark Randall
April 12, 2012

The people I know in the biomass business tell me that they won't even get out of bed for a PPA price of less than 12 cents/ kWh and a 20 year PPA. Utility companies are forcing prices and profitability downward by accepting bids from desperate developers and waiting for the shoe to drop. All of this is with incentives in place and a market flooded with cheap Chinese technology. Its all good for the utility companies that want to maintain their investments in fossil technology as long as possible. It is only with local, state, federal, and international government action, that actions to address the numerous detrimental effects of fossil energy dependence will shift to cleaner, more sustainable technologies. Simple reliance on markets will only exacerbate the problems and hand off the consequence of our own arrogance and selfishness to future generations.

ANONYMOUS
April 12, 2012

It is truly a chilling concept to assert that the earth's finite resources might also belong to future generations. However, those who propose using incentives to exploit them now are analogous to athletes on steroids. It is practically un-American to think anyone should conserve resources or consider their long term environmental impacts because both limit economic growth. However, now that world oil production is peaking, we will soon learn how the earth handles imbalance. Energy production in general will most likely peak within a decade after the oil peak.

Steroids dramatically improve almost all types of physical performance. Simply inject the steroid and performance rises immediately. Petroleum does the same thing to a nation's economy. Inject cheap fossil fuels and performance abounds. The downside is when steroids are withdrawn or when organs fail under imbalance. The downside for petroleum use will be when we expect to continue current use and growing ambitions elsewhere and a decline in supply hit simultaneously. When US oil production peaked in 1970, prices rocketed six fold, about half our nuclear facilities were permitted in one year, and wars to protect "American interests" became a way of life. Imagine what a world production peaking of that same resource will bring.

Political institutions are unable to solve the problems we face with energy. Entrenched fossil fuel interests can offer economic steroids to bureaucrats desperate for growth. They will persuade those in government to avoid making large investments needed to develop sustainable alternatives; activities that compromise their market value. By the time declining resources and climate change make it obvious that these investments should be made; it will be far more difficult and expensive to make them. When peak oil really starts to bite, governments around the world will be less able than now to solve the obvious problem.
http://transitionwise.org/1A_problemofpeakoil.html

Mike Holly
April 12, 2012

@ pineywoodsdavid Biomass plants dont need subsidies if they involve industrial cogeneration fueled by biomass wastes (eg paper, sugar cane). The problem is the utility monopolies refused to give plants fair avoided costs and even lowered their rates so they wouldnt cogenerate. Now, no one will develop similar low-cost applications.

david turbeville
April 12, 2012

We have a biomass plant here, and they have it idled right now. They say that electricity rates are too low for them to be profitable. After reading the article, I wonder if it is also due in part to losing the subsidy,

ANONYMOUS
April 12, 2012

This was actually a good article supported by a particularly good comment by Mark-Randall. I live on a little island and on most days there is a layer of pollution several thousand feet thick that sits above the sea all around. The air quality in cities throughout the world - particularly major ones - is non-existent. Kids have alergies they never used to have, and adults and children alike are suffering from respiratory deseases that are reminiscent of the coal mining towns of early last century. Why so many commentators fail to understand or see the bigger picture is a mystery. How they fail to grasp the simplist fact that their governments go to war to secure oil reserves is incredible. Worse yet is if they do understand that thousands of innocent people get killed for the oil in their land, and yet still they rally and blog against renewable energy, even though it is their tax $ that are paying for the wars. They would rather turn a blind eye to that than support young industries and new technologies that first need help getting critical mass and then need nurturing to become mainstream. There is clearly a delicate balance to be found when supporting these young industries but no matter how you look at it, the coal, oil, gas and nuclear power industries should have had their hand taken out of the cookie jar decades ago.

ANONYMOUS
April 11, 2012

We need more coal, nuclear and foreign oil. Tax breaks for new technologies like oil, coal and nukes are our only salvation. Our bought and paid for legislators are the problem and that is unlikely to change soon, or perhaps at any time. Competition is not looked upon fondly by the incumbent energy source businesses. They will buy, steal and kill to keep renewable technologies at bay in the US. Real energy reform will come in other countries, like Japan, first.

Lynn Wasnak
April 11, 2012

I agree with Mark Randall - Congress supports a # of outdated or untenable projects due to unwillingness to change and/or self-interest of particular politicians. Renewable Energy financing that can create jobs here in our country (rather than importing equipment from overseas) is a good idea, not a bad one. Our system of 'government' is a hodgepodge of partisan strategies. Putting the people of the US to work on sustainable forms of energy seems like a great idea to me.

Mark Randall
April 11, 2012

I don't know which planet the two previous commenters are living on, but the illusion of some pure libertarian capitalist utopia is clearly not relevant to our system of government. How is it that you can characterize an industry as a failure of government policy that has grown consistently every year for the past thirty years and inspired hundreds of billions of dollars in private investment? It is the role of government, from small towns to superpowers, to create a positive atmosphere for private investment, period. The struggle over who gets tax breaks and incentives is a purely political decision and has almost nothing to do with the merits of one industry or another. The fossil and nuclear industries are certainly collecting the lions share of federal largess and only now are we hearing the slightest bit of resentment from the public that $4 gasoline and record profits and record executive pay seen to be inconsistent with tax loopholes and incentives that should have been closed generations ago. If you want to talk about crony capitalism, the greatest examples seem to have eluded your keen scrutiny. The people have spoken... we want energy sources that are sustainable and clean and that break our dependence on foreign imports. Support for renewables is appropriate and working. The failure of the congress to routinely support renewables simply a reflection of our broken system of government, not an indication that renewable energy technologies are immature.

ANONYMOUS
April 11, 2012

I am an advocate for advancing renewable energy technology, but I also think that technology should not be deployed until it becomes cost competitive. As a matter of federal government fiscal policy, I have no problem with income tax deductions for R&D costs. But I don't agree with direct subsidies or cash payments. More importantly, the US Treasury has no constitutional authority to make such cash payments with taxpayer money, as the article notes.

The US federal government has a very poor historic track record at using taxpayer funds to "create" jobs. Every dollar they hand out to create a job is a dollar not available to the private sector for creating jobs. Rather than handing out cash grants and subsidies, the most effective thing the federal government can do is create an equitable tax and regulatory environment for private businesses that encourages renewable energy technology development. The incentives should be designed to encourage companies to risk their own funds to develop technologies and products that will result in profits. The incentive should be focused on generating a financial return for the company's own R&D investments, rather than encouraging crony capitalism focused on leveraging political contributions.

Mike Holly
April 10, 2012

The author is very unclear, perhaps even hiding the facts. He says "The grant program was created in February of 2009 as part of the stimulus package. It allowed developers to take a cash grant through the Treasury in lieu of a tax credit."

What tax credit ? Doesn't he mean the PTC ? If the PTC expires, what is the logic in extending the grant ? How does the expiration of both result in more job losses if they are lieu of each other ?

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Stephen Lacey

I am a reporter with ClimateProgress.org, a blog published by the Center for American Progress. I am former editor and producer for RenewableEnergyWorld.com, where I contributed stories and hosted the Inside Renewable Energy Podcast. Keep...