ARRA Amendment: Renewable Energy Gets $3 Billion

U.S. Department of Energy reportedly announced that it has entered into a partnership with the U.S. Department of the Treasury to significantly increase economic development in urban and rural areas, and together are making available $3 billion via the American Recovery and Reinvestment Act of 2009 (ARRA) the for the development of renewable energy projects around the country.

When the ARRA was originally signed into law by President Barack Obama on the 17th of February, $6 billion from within $61.3 billion for all Energy related funding was set aside for renewable energy and electric transmission technologies loan guarantees.

Officials at the Department of Energy said that the new program will now provide direct payments in lieu of tax credits in support of an estimated 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities.

"The renewable energy program provides another important avenue for the Recovery Act to contribute to economic development in communities around the country," said Tim Geithner, secretary of the Treasury. "It will provide additional stimulus to economies in urban and rural America by helping to develop domestic sources of clean energy. This partnership between Treasury and Energy will enable both large companies and small businesses to invest in our long-term energy needs, protect our environment and revitalize our nation's economy."

Officials said ARRA has sanctioned authority to the Treasury for making direct payments to companies that create and place in service renewable energy facilities beginning retrospectively from January 1, 2009. Prior to this amendment, companies could file for a tax credit to cover a portion of the renewable energy project's cost. With this new ruling, companies may agree to forgo tax credits down the line in favor of an immediate reimbursement of a portion of the property expense, and thus help in injecting immediate cash relief in localized economies all across the country.

"These payments will help spur major private sector investments in clean energy and create new jobs for America's workers,” said Steven Chu, secretary of Energy. “It is part of our broad effort to double our renewable energy capacity in the next few years and make sure that America leads the world in creating the new clean energy economy of the future."

The U.S. Department of Energy said that although the new ruling provides much needed impetus to the struggling renewable energy sector, there was not much wrong with the old tax credit system, which had been widely availed to the tune of $550 million to 450 businesses in 2006. However, the rate of renewable energy projects had fallen drastically since the economic and financial downturns began as projects had a harder time starting projects because investors became wary of any form of financing.

Both the Treasury and Energy anticipate renewed vigour in renewable energy projects and said they are making available the terms and conditions, guidance, and a sample application so that companies can prepare successful applications in advance of the launch of a new web based application that will be available shortly.

Recently Sprint Nextel claimed that as a part of its green initiatives it was awarded a $7.3 million grant from the U.S. Department of Energy to expand its use of hydrogen fuel cells as back-up power to cell sites on their network, and claimed that it currently has more than 250 hydrogen fuel cells deployed at cell sites across their network.