Lexington, KY - A partnership between the U.S. Department of the Treasury and the Department of Energy under the American Recovery and Reinvestment Act will provide $3 billion to businesses for the construction of an estimated 5,000 renewable energy facilities.
"The thinking is that this direct payment will help stimulate local economies and help to provide seed money to get these projects up and running," said Katerina Milenkovski, an attorney and specialist in environmental law with the firm of Steptoe & Johnson. "Right now there are tax credits available for companies that pursue these renewable energy projects," she said. "This program, in lieu of the tax credit, gives them a flat-out rebate on the front end, as much as 30 percent of the cost of the eligible project."
Projects eligible for the program listed on the U.S. Treasury Web site read as a definitive list of matured renewable energy technologies. Those qualifying for the 30 percent rebate include: large wind; closed loop biomass facility; open loop biomass facility; geothermal (under IRC sec. 45); landfill gas facility; trash facility; qualified hydropower facility; marine and hydrokinetic; solar; fuel cells; and small wind. Those qualifying for a 10 percent rebate include geothermal (under IRC sec. 48); microturbines; combined heat and power; and geothermal heat pumps. Qualifying projects can already have been under construction, but must be put into service sometime between January 1, 2009 ,and December 31, 2010. The completion of projects can be extended beyond the December 31, 2010 deadline for as long as the applicable tax credit is in effect. Application must be made by October 1, 2011. Guidance documents and the application are available online at www.treasury.gov/recovery/1603.shtml.
Another recent announcement further highlights the current drive to build energy independence within the United States. On July 29, the Department of Energy (DOE) announced $30 billion in loan guarantees for renewable energy projects. This is coupled with an additional several billion dollars more in loan guarantees for work to increase efficiency and security of the nation's electrical power transmission system.
Funding comes from the Recovery Act and through 2009 appropriations.
"These investments will be used to create jobs, spur the development of innovative clean energy technologies, and help ensure a smart, strong and secure grid that will deliver renewable power more effectively and reliably," said U.S. Energy Secretary Steven Chu. "This administration has set a goal of doubling renewable electricity generation over the next three years."
The program is backed with $8.5 billion in lending authority from the 2009 annual appropriations for renewable energy; up to $2 billion under the Recovery Act to support loans for renewable energy and electric power transmission projects; $500 million from the Recovery Act toward "cutting edge" biofuel projects; and $750 million from the Recovery Act to large transmission infrastructure projects. Past projects evaluated under earlier rounds of the program include: biomass; hydrogen; solar; wind and hydropower; advanced fossil energy coal; carbon sequestration; electricity delivery and energy reliability; alternative fuel vehicles; industry energy efficiency projects; and pollution control equipment.
The loan guarantee program will involve large multimillion-dollar projects, said Nancy Norris, a spokesperson in Louisville for Chase Banks. The DOE, she said, will make substantial loans to qualifying projects, making it less risky and more attractive for banks to participate in the loans. "We're familiar with the program and we expect to participate," said Norris, "but it's too soon. The DOE has just started the application process." The application deadline is September 13. Guidance and applications are available at www.lgprogram.energy.gov/keydocs.html.
These programs reflect the movement of stimulus money under the Recovery Act into the public sector with the same aim of boosting renewable energy supply and increasing energy efficiency while lessening dependence on foreign oil and reducing greenhouse gas emissions. States have been gearing up for this program. According to the Department of Energy Web site, 27 states plus the District of Columbia have Renewable Portfolio Standards (RPS). A RPS is a mandate created by a state that sets a level of renewable energy use in the state to be attained by a certain year. That level can be stated as a percentage of the state's overall electricity sales or as a quantity of megawatts. Most states use the percentage approach. The levels of renewable energy set by different states range from eight percent to 25 percent. Target years range from 2013 to 2025. Some states that have not adopted a RPS have set nonbinding policy goals.
In November of 2008, Governor Beshear introduced Kentucky's Seven-Point Strategy for Energy Independence. That strategy included the goal: "By 2025, Kentucky's renewable energy generation will triple to provide the equivalent of 1,000 megawatts of clean energy Ö" The governor also introduced with House Bill 2 the requirement that buildings with 50 percent or more of state funding be built according to codes set by the Green Building Certification Institute. He established the Energy and Environment Cabinet and appointed Dr. Len Peters to head it, overseeing the coordination of the Department of Environmental Protection, the Department for Natural Resources and the Department for Energy Development and Independence.
This coordination on the state level will facilitate the spending in Kentucky of $52.5 million from the State Energy Program (SEP), a facet of the Recovery Act. An initial 10 percent of the money was made available for Kentucky to create its strategy. On July 6, Kentucky was awarded $21 million to implement planning. The DOE will provide over $26 million in additional funding when it sees Kentucky "demonstrating successful implementation of its plan." The goal is to stimulate the economy while advancing energy efficiency and renewable energy initiatives. Assistance to state and local agencies, schools, nonprofits and the commercial, industrial and agricultural sectors aims to bring about reduced energy consumption through energy efficiency programs and education. Energy audits and building retrofits to bring energy efficiency to schools and public buildings across the state will create lasting savings for taxpayer dollars. SEP funding will also go to school education programs to foster greater knowledge and awareness of energy efficiency. A generation of youth can bring new habits and a spirit of innovation to meeting the growing challenges of energy management in a rapidly changing world.