Federal Renewable Energy Cash Grants to Iberdrola Makes for Lousy Economic Stimulus

Date: 15 Sep 2009 | posted in: Energy | 2 Facebooktwitterredditmail

If the government hopes to stimulate the American economy with its renewable energy cash grants, it’s going about it backwards.  Cash grants to locally owned renewable energy projects would secure the greatest bang for the buck, but the lion’s share of the renewable energy stimulus dollars are headed overseas to Spanish wind developer Iberdrola, who nabbed 60% of the $500 million in cash grants the Energy Department’s program provided to renewable energy producers.  

It doesn’t take an economist to grasp that sending $300 million dollars to Spain is worse than keeping that money in the U.S.  But most of the remaining $200 million will support absentee owned projects, where the U.S. developers are not even based in the same state as their projects.  

"That $500 million stimulus could have boosted local economies by an additional $65 million by focusing on locally owned wind and solar.  Instead, it will flow out of the state or out of the country," said John Farrell, ILSR Senior Researcher.

Unfortunately, the backward stimulus program is merely a bizarre twist to existing federal renewable energy incentives.  Reliant on a Byzantine array of tax credits and depreciation allowances, the federal programs focus on paying only those renewable energy producers who have big tax liabilities – a feature lacking in most community-owned projects.  

Could it be made better?  

"A good start would be focusing stimulus dollars on American-owned projects," remarked Farrell, "but the general principle should be even simpler.  One wind turbine can power 600 homes; if it’s not possible for those same 600 households to own the wind turbine and share its power, then we’ve failed to maximize the potential economic impact of our renewable energy policy."

John Farrell
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John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.