July/August 2009 / Features
New Options For Renewable Energy Financing
The American Recovery and Reinvestment Act of 2009 has created financial opportunities in the renewable energy sector for utilities, municipalities and private equity funds. Governmental initiatives including proposed federal climate change regulation will shape future development. The author provides a list of programs and brief descriptions of what they provide and who qualifies.
The ARRA extends the applicability of production tax credits for wind, biomass, geothermal and landfill gas projects and creates grant opportunities for renewable energy projects. Subject to certain exceptions, facilities eligible for the investment tax credit can instead claim a dollar-for-dollar grant from the U.S. Treasury.
Proposed legislation calls for reducing greenhouse gas emissions by 17 percent below 2005 levels by 2020, mostly through a federal cap-and-trade initiative. The Department of Energy Loan Guarantee Program included in the Energy Policy Act of 2005 provides up to $10 billion in loan guarantees to projects offering energy efficiency, renewable energy and advanced transmission and distribution technologies. The New Markets Tax Credits Program, to revitalize low income communities, was extended through 2009 in the amount $3.5 billion.
The author anticipates consolidation in the renewable energy industry. Expecting future growth, private equity funds and other investors will take advantage of market weakness.
