Renewable Energy Stimulus Plan Update

The U.S. Senate is expected to vote on Friday on its version of the American Recovery and Reinvestment Act of 2009, the stimulus package that the House of Representatives passed last week by a vote of 244-188.

Differences between the House-passed bill and the Senate version in debate involve different funding levels for various technologies and programs. Since the bills are still in discussion, there are no concrete predictions about how the final dollars will play out, but here’s where it stands right now.

Energy, Efficiency and Transmission ($53.8 billion Senate, $48.9 billion House)

Senate version (House version in parentheses)

  • $14.4 billion for energy efficiency and renewable energy programs ($18.5 billion in House version, which includes $6.2 billion to expand existing weatherization activities and $7.9 billion for energy-related grants to states)

  • $10 billion to cover the subsidy costs of federal loan guarantees for renewable energy systems and electric transmission projects ($8 billion in House version)

  • $6.5 billion for federal power marketing administrations to build new transmission systems (same in House version)

  • $4.6 billion for R&D on carbon capture and sequestration ($2.4 billion in House version)

  • $4.5 billion to modernize the nation’s electricity grid with smart grid technology (same in House version)

  • $7.8 billion for environmental remediation and various other activities ($6.4 in House version)

Renewable Energy Tax Credit Extensions ($13 billion Senate and House)

The bill in both the House and Senate would provide a three-year extension of the investment tax credit for renewable energy production from various qualifying facilities, including wind, biomass, geothermal and hydropower facilities.

Tax Breaks for Large-scale Renewable Projects ($11 billion Senate and House)

Companies will be able to take what is known as a “carry-back” under the Senate version of the bill. This is a tax credit against prior profits. This could be a large help to investors in projects such as banks and other investment firms that are not currently in the black.

In the House’s bill, the “carry back” provision also exists and is further extended to give companies the option to receive a grant from the U.S. Department of Energy (DOE) instead of claiming the ITC and the PTC. This change would only effect projects placed in service in 2009 and 2010 that qualify for the ITC.

These House-proposed federal grants are akin to a refundable tax credit. The dollar amount given under the grant program would be equal to the ITC amount that the owner of the project could have otherwise claimed. In most cases this would be 30% of the qualified cost of the project. The Senate version of the bill left out this proposal.

Renewable Energy Manufacturing ($1.4 billion Senate)

Under the Senate version of the bill companies that manufacture renewable energy related equipment (i.e., wind turbines and solar panels) could receive a tax credit equal to 30% of the new investments in plants or machinery. This is one of the provisions that the Senate believes will help create jobs by luring more manufacturers to set up shops in the U.S as opposed to overseas. This House version currently doesn’t have this provision.

Energy Efficiency Improvements ($10.7 billion Senate, $8.7 billion House)

This money would be used to make energy efficiency improvements to federal buildings and vehicle fleets.

Defense Energy and Efficiency Programs ($3.4 billion Senate, $4.5 billion House)

These funds would go to the Department of Defense for the repair, maintenance and renovation of its facilities; for energy-efficiency projects at those facilities; and for the leasing of renewable-energy vehicles. It would also fund energy-related R&D as well as the procurement of components to be used in vehicles that utilize renewable-energy technologies.

Advanced vehicle grants ($2 billion Senate)

Advanced battery system manufacturers would benefit from the Senate’s bill, which provides loan guarantees for technology that advocates of the provision say will help the U.S. consume less oil.

Greg Jenner, a Partner at Stoel Rives said that the bill may not pass the Senate.

“As to the current state of the bill, action on the Senate floor so far indicates that there might not be enough votes in the Senate to pass the bill. As a result, negotiations are likely occurring behind the scenes to determine how the bill can be modified to gain the necessary votes. Meanwhile, angry voters are calling their representatives to complain, which will increase the political pressure for significant changes. While everyone acknowledges that a bill will pass in some form, it is not likely to be the version we see now,” he said.

Stay tuned to RenewableEnergyWorld.com for more updates on the stimulus plan.

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