Dec 16 2009

Cash for Clean Power

Posted by: Jonathan Marshall

First there was Cash for Clunkers, followed by President Obama's proposed $23 billion Cash for Caulkers program.

Less well publicized, and less alliterative, is another government green subsidy program that some analysts are calling a great success. Its less-than-jazzy name is section 1603 of the American Recovery and Reinvestment Act of 2009.

Section 1603 is pumping life-saving dollars into the veins of finance-starved renewable energy companies, creating jobs as well as a cleaner environment. It provides direct cash reimbursement of up to 30 percent of a developer's total costs. In contrast, longstanding federal investment and production tax credits don't do the trick in today's economy, since many developers don't have any tax liability to offset.

So far, more than 150 projects across the country have received more than $1.7 billion in payments, ranging from $3,000 for a small solar installation in Pennsvylania to $122 million for a big Texas wind farm.

"If I had to give a grade, the 1603 would be an A+," said Greg Burkart, a managing director at financial advisory and investment banking firm Duff & Phelps.

California is still behind the curve on winning Section 1603 payments. The biggest win so far is $6.6 million for a project at a landfill in Half Moon Bay that captures methane gas (a potent greenhouse pollutant) and uses it to generate enough electricity to serve almost 12,000 homes. 

The project developer, Ameresco, called it "one of the largest landfill gas-to-energy projects that's been developed in the past five years -- certainly it's the biggest project in California in the last five years."

To qualify for funds, construction on new projects must begin by 2010 and put in service sometime between January 1, 2013 and January 1, 2017, depending on the type of project.

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