Renewable Energy Stimulus Takes Shape

Trend: U. S. green companies will likely benefit greatly from the renewal energy tax credits in the renewable energy stimulus.

Nick Hodge at Wealth Daily says a few sectors have been declared early winners now that the $787 billion stimulus has been signed into law. Excerpts below.

Link: Renewable Energy Stimulus.

$104 billion is slated to come green's way... a full 13% of the stimulus package.

Here is where some of that money is going:

• $4.5 billion to boost the energy efficiency of federal buildings

• $6.3 billion for energy efficiency and conservation grants

• $5 billion to weatherize old buildings

• $2.5 billion for energy efficiency and renewable-energy research

• $6 billion for new loan guarantees for wind and solar

• $6 billion for cleaning up toxins on former military sites

• $1.2 billion to fund the Environmental Protection Agency's environmental cleanup programs

The cleantech industry is about to enjoy a more equal share of the subsidies that have been afforded the oil and coal industries for years.

Leveraging the Stimulus for Profit

The two parts of this bill that will do the most to aid the cleantech industry are the extension of the production tax credit (PTC) and the newly created ability to claim an investment tax credit (ITC) or grant in lieu of the PTC.

Sounds complicated, I know. In layman's terms what that means is wind developers now have confirmed incentives and policy guidance through 2012. They can also now get their incentives sooner, because the stimulus allows developers to file for in investment tax credit. For homeowners, this means they can now get back 30% of the cost of a new solar system after it's been in operation for 60 days, instead of waiting until tax time the following year.

All this is aimed at getting private capital flowing once again to the cleantech market in effort to create jobs and clean energy.

Since the credits markets have been so constricted, developers of cleantech projects like large solar and wind farms have been hesitant to pony up the dough for new projects. These incentives should help to change all that and get the money flowing once again.

Investors and homeowners are more likely to buy wind turbines and solar panels if they know they have Federal support and can claim their incentives up-front or soon after the project is completed.

And manufacturers of wind turbines and solar products, seeing a resurgence in demand, will be more apt to continue with now-delayed expansion plans. It'll help that manufacturers are now eligible for a 30% tax credit on new projects certified by the Secretary of the Treasury through a bidding process.

The "Buy American" provision will ensure that U.S. cleantech firms receive the bulk of the benefits.

So I'd be looking at major domestic solar players like First Solar (NASDAQ: FSLR), SunPower (NASDAQ: SPWRA), and Energy Conversion Devices (NASDAQ: ENER).

There are also a host of energy efficiency investments that are sure to boost your portfolio.

The billions of Federal dollars about to be spent are going to be the biggest government infrastructure investment since the interstate highway system was launched in the 1950s.

Comments

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[Joseph]

I think it is fantastic how the stimulus funds are making a difference. They are being taken advantage of all the time with the installation of geothermal heat pumps to replace high energy heating and cooling systems.