President-elect Barack Obama recently called for stimulating the economy in part by direct government investment in clean energy, specifically in projects "building wind farms and solar panels." Through various "green" policies and investments, he hopes to create five million new jobs.

A new report from Deutsche Bank supports this approach. It argues that it's possible to address challenges related to climate change, energy security, and the financial crisis at the same time by investing in four specific areas: energy-efficient buildings, electric power grids, renewable power, and public transportation. The report cites figures that suggest investing in these areas creates more jobs than investing in conventional energy sources because much of the old energy infrastructure is already in place. It says that "a $100 billion investment in energy and efficiency would result in 2 million new jobs, whereas a similar investment in old energy [such as coal or natural gas] would only create around 540,000 jobs."

What's more, the report continues, when the government invests in a project, other investors line up to invest as well. It "unlocks" private-sector funding and partnerships.

Detractors say that clean energy can have a negative effect on jobs, since it tends to cost more. If energy costs are high enough, it could force companies to cut jobs.

The financial bailout package signed into law today has some bonus provisions for renewable energy and plug-in vehicles.

Last year, last-minute wrangling led Congress to drop from its major energy bill significant tax credits for wind and solar energy, as well as for plug-in hybrid vehicles. The solar and wind credits were set to expire next year, which would have put some renewable-energy companies in a bind. What's more, without a tax credit for plug-in hybrids, vehicles that use little to no gasoline for short trips, few people would have been able to afford them.

This year, these credits seemed on track to be approved, until the financial crisis and Treasury secretary Henry Paulson's bailout package distracted Congress, leading some experts to worry that the renewable-energy companies and automakers would be left in the lurch.

But the credits were added to the bailout bill, which passed the House today and was quickly signed into law.

Last week's news in the New York Times about massive new solar installations in California is both good and bad news. The good: Solar power plants are at last beginning to rival conventional plants in terms of peak power production. Two new installations will combine to produce 800 megawatts of power when the sun is overhead, the amount a small to midsize nuclear power plant produces at its peak. About two years ago, Technology Review reported on plans for solar farms of unprecedented size, but those would produce only 100 megawatts or less. The new installations increase this output by almost an order of magnitude. Clearly, solar power is on its way to becoming a significant source of electricity.

The bad news: It's still not that much electricity. The very fact that 800 megawatts of solar power is big news indicates just how far we've still got to go. For one thing, 800 megawatts of solar is not equal to 800 megawatts of nuclear or coal. That's because solar works only during the day--and even then it doesn't generate peak levels in the morning and evening. Nuclear can keep cranking at near peak output day and night. The new solar installations will produce far less electricity than a comparably sized nuclear plant.

What's more, we're still talking about megawatts of electricity. To supply anticipated energy needs, we need to be thinking not just in thousands of megawatts--that is, gigawatts--but in thousands of gigawatts, or terawatts, of power. According to one report, all of the solar panels produced so far can only generate about 12 gigawatts.

This is all just to say we've got a problem of enormous scale on our hands. There are also concerns about cost--solar is still more expensive than electricity generated from fossil fuels.

But enough of the negative. The new installations are yet another sign of a rapidly expanding solar industry. This expansion will fuel itself by bringing down the cost of making solar panels. Meanwhile, technology continues to improve. That includes the development of cheaper ways to store solar power, so it can be used at night.