How Will the Stimulus Affect Energy?

By Richard Martin, 1-21-09

The U.S. House has released the draft outline of the $825 billion economic stimulus package, which includes $76 billion for energy projects over the next few years. Of that, $18.5 billion is proposed for renewable energy, a sector hard hit by falling oil prices and the drying up of state revenues targeted at funding green-energy projects.

In Colorado, the budget for the Governor’s Energy Office, which receives funding from state gaming revenues, was slashed from a predicted $8 million to just under $4 million for last year. Initially projected at around $5 million for 2009, funding for the agency is forecast at zero. Zilch. Nada.

The result has been a painful process of readjusting priorities just to keep the overall effort from withering.

“We’ve been trying to pull back some of our programs to provide continuity,” says Tom Plant, head of the energy office. “Then the stimulus came along.”

Energy-related projects juiced by the stimulus plan will likely include new public transit lines, renewable R&D, and rebates and credits for homeowners and businesses going green. A large chunk will certainly go to community-based initiatives, like retrofitting older building for more efficient energy use. And much of that money will be matched with Energy Conservation Block Grants – representing “a substantial injection into industries associated with renewable energy and energy conservation, particularly at the community level,” says Plant.

The emphasis on local projects (as opposed to massive regional transit facilities or solar-production plants, for instance) and on conservation and efficiency springs from two convictions: a) that conservation and efficiency can be achieved quickly, this year, using existing technologies and relatively cheap investments; and b) that local projects will have the biggest and most rapid effect in terms of job creation.

The result could help jumpstart, or at least tide over, the moribund construction and remodeling industries, says Plant: “We’ll see some incredible economic activity in the expansion of energy-efficiency-related business,” including the weatherizing of structures and the installation of more efficient heating and cooling systems.

It’s not clear at this point how much money the state of Colorado will receive for renewable under the federal stimulus plan. And, unfortunately much of the federal dollars will likely come too late to have an effect in the current economic downturn: an analysis by the Congressional Budget Office found that, of the $18.5 billion slated for renewable energy, less than $3 billion would be spent by 2011.

A spokesman for House Speaker Nancy Pelosi told The Washington Post that, while a large chunk of the stimulus will be available immediately, other sections “represent down payments on crucial priorities for our economic future—investments in clean energy, health care, education and repairing our nation’s infrastructure.”

For his part, Plant is optimistic: “Hopefully, we’ll be able to have actual programs funded and up and running by the end of March,” he told the Daily Camera.

Spurred by Gov. Bill Ritter’s ambitious alternative-energy plans, Colorado has already become a leader in R&D for solar, wind, and other forms of renewable energy. Plant doesn’t expect that to dry up in the current recession. Plus, he points out that across the West, major utilities have instituted plans for large concentrated-solar plants: Xcel Energy, Colorado’s largest utility, has put out RFPs for up to 600 MW of solar production, for instance.

“There are hundreds of megawatts of concentrated solar being proposed around the country,” notes Plant. “That’s a transformational change in the industry.”