March 4, 2009 7:24 pm

Fiscal sun shines on renewables groups

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Six months ago Blake Jones stopped hiring at his solar energy company in Boulder, Colorado, and was considering dismissing workers.

Growth had been thrown into reverse as the financial crisis choked off financing for renewable energy pro­jects. “Things were looking bleak,” says Mr Jones, chief executive of Namaste Solar.

Today the company’s prospects are suddenly brighter, after the US fiscal stimulus created billions of dollars of subsidies and incentives for “green” energy.

“It’s going to have a huge impact,” says Mr Jones, who gave Barack Obama a tour of a rooftop solar facility in Denver last month before a ceremony to sign the stimulus into law. The president chose to launch the stimulus in Colorado because of the city’s leading role in the US renewable energy sector, which emerged as a big winner in the $787bn (€627bn, £558bn) bill.

With immediate effect, businesses and homeowners will be eligible for a grant of 30 per cent of any investment in renewable energy. A further $7.6bn will come as loan guarantees and bonds.

Jo Elyn Newcomb, general manager of Independent Power Systems, another Colorado-based solar group, says customers are lining up to take advantage and forecasts a 50 per cent rise in business this year.

About $80bn, or 10 per cent, of the US stimulus is dedicated to green measures, including nearly $10bn to make government buildings and low-income homes more energy efficient, $6bn for clean energy research and development, $2bn to manufacture car batteries, and tax credits for people who buy hybrid vehicles and energy-saving home appliances.

Environmental groups are broadly pleased with Mr Obama’s early moves – particularly his promise to press for legislation creating a cap-and-trade system to regulate carbon emissions. But many activists have mixed feelings. Critics say the initiatives will be undermined by other investments that reinforce dependence on fossil fuels, including $27bn for road and bridge building.

Dissent was muted by the inclusion of $9bn for an expansion in environmentally friendly high-speed rail lines and $8bn for other mass transit schemes. But some critics say that, in its haste to create jobs through “shovel ready” projects, the administration missed an opportunity for a more far-reaching overhaul of the US’s carbon-based economy.

Charles Ebinger, an energy expert at the Brookings Institution in Washington, says the most serious flaw was lack of investment in infrastructure needed to support growth in renewable energy. Wind and solar power is most plentiful in the sparsely populated mountain west and Great Plains regions – requiring construction of transmission lines to carry the electricity to faraway cities.

The stimulus included $11bn for power grid investments but Mr Ebinger says several times that amount would be needed to harness the full potential of renewable energy.

On the other hand, critics on the right complain the stimulus went too far.

Jerry Taylor, energy expert at the Cato Institute, a free market think-tank, says if the aim was to create jobs and promote growth, much of the money will be wasted. He argues that, while road building can often be started quickly, many “green” projects need years of development.

Green energy advocates point to a recent study by the American Wind Energy Association that showed the number of people working in the wind power sector increased by 70 per cent to 85,000 in the past year, exceeding the 81,000 people employed in US coal mines.

Mr Taylor says such figures merely serve to underscore the inefficiency of renewable power, given that wind accounts for only 2 per cent of US electricity production. Coal produces half.

Back at Namaste Solar,
Mr Jones is preparing to do his bit for job creation, with plans to increase the company’s 55-strong workforce by 11 over the next year.

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