Stimulus enables green to grow
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Kai Ryssdal: One quick footnote to that booming business on K Street. Apparently green is in. There’s a report out today from the Center for Public Integrity that says the number of green lobbyists has tripled in the last five years. There are nearly 2,500 people now employed trying to get their clients views heard on climate policy. Wall Street in particular sank a lot money into green. Tax breaks meant they could write off every dollar they put into wind or solar farms. But as their profits dried up, so did their thirst for green. That is, until the stimulus package tossed it a lifeline.
From the Marketplace Sustainability Desk, Sam Eaton reports.
SAM EATON: By injecting billions of dollars into renewable energy projects, the federal stimulus package aims to do one thing — fill the financial void left in the wake of the banking crisis. New Energy Capital CEO Scott Brown says the number of big banks willing to finance wind and solar projects has dropped from nearly two dozen to a handful.
SCOTT BROWN: Lehman, Morgan Stanley, JP Morgan, Citigroup, Wachovia. All of those players essentially are now out of the market.
Taking with them the principle funding mechanism that made renewable energy the fastest growing source of power. Rhone Resch with the Solar Energy Industries Association says the federal stimulus package narrowly averts a catastrophe.
RHONE RESCH: We have literally hundreds of projects that are in the queue, we’ve got thousands of installers ready to go and warehouses filled with equipment. What we were lacking was the financing to get these projects off the shelf and moving forward. We now have that through the stimulus bill.
But how effective the stimulus bill will be depends on how fast the new federal funds are spent. The Department of Energy has about $6 billion to loan out at low interest rates. But it’s known for working at a snail’s pace. The stimulus package will also pay back 30- percent of the cost to build a wind or solar farm. The only problem is the developer still has to come up with the other 70 percent. Kevin Walsh heads GE’s renewable energy financing group.
KEVIN WALSH: It’s not a perfect fix because even the debt markets are constrained now.
Walsh says GE is actively looking for investment partners. But these days they’re hard to come by. And this is where the stimulus package may change the renewable energy landscape. New Energy Capital’s Scott Brown says the old system of tax incentives involved so many legal and financial hurdles that only the biggest projects were worth funding. Now, he says, direct federal grants could blow the market wide open.
BROWN: So using a grant structure like this should enable small developers to build small projects which otherwise wouldn’t get built, even under the old tax credit structure.
Simply because it’s easier to come up with the remaining 70 percent of the funds on smaller, less costly projects. But GE’s Kevin Walsh says the money in the stimulus bill may not be enough to reach President Obama’s goal of generating 25 percent of the nation’s energy from renewable sources by 2025.
WALSH: Run the numbers it requires billions if not trillions of dollars of investment. That’s got to come from somewhere.
Walsh says the stimulus package primes the pump, let’s just hope the economy doesn’t freeze the lines.
I’m Sam Eaton for Marketplace.
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