In the year since it was enacted by Congress, the federal stimulus bill has helped the solar and wind markets grow in the United States, but has done relatively little to boost domestic renewable energy manufacturing.
Last February’s stimulus bill, aka the American Recovery and Reinvestment Act, allocated $45.1 billion for renewable energy, energy efficiency, and other energy-related programs and incentives. As expected, due to the multiyear nature of many of the projects, most of that money hasn’t been spent yet. For example, of the $36.7 billion the U.S. Department of Energy has to spend, so far it has distributed just $2.4 billion (although it’s announced awards totaling $25.4 billion).
But the money that has been spent on renewable energy–and the anticipation by investors of more to come–has helped increase the size of the solar and wind markets in the United States. The biggest help has come from grants for building renewable energy projects, such as solar and wind farms. This money–$2.3 billion has been spent so far–helped turn around what was expected to be a dismal year for wind and solar markets in the United States, says Edward Feo, a partner in the law practice of Milbank Tweed Hadley & McCloy. Feo says that experts expected the wind market to drop sharply in 2009 because of the poor economy and tight credit markets. Most presumed there would be half as many installations as the year before. Instead, wind installations increased from about 8,000 megawatts of wind power in 2008 to almost 10,000 megawatts in 2009, he says.
Similarly, the solar industry continued to grow last year. So far the grants have allowed 182 solar energy projects, according to the Solar Energy Industry Association. Altogether, stimulus-related incentives have created 18,000 jobs in the United States, the association says.
The impact of the stimulus is expected to be even greater this year. Last year, the grants were only available for the second half of the year; they’ll be available for the whole of 2010. What’s more, none of the loan guarantees that had been authorized by the stimulus for renewable energy projects have been issued so far. Such loan guarantees, some of which are expected this year, could be key for some projects to get financed, says Feo. This is especially true for large-scale solar thermal power plants. (There have been a few loan guarantees issued from a 2005 energy bill, such as one to the solar company Solyndra, and another to Nordic Windpower.)