Created under Section 1603 of the Recovery Act, the programme provides cash assistance to renewable energy producers in place of tax credits. This money enables companies to create new jobs and improves project feasibility by establishing a financial trust fund for renewable energy projects that are otherwise unable to take off. Consequently, this is responsible for the expansion and acceleration of country-wide renewable energy schemes.
Treasury Secretary Geithner said, “Not only are our Recovery dollars meeting an immediate funding need among innovative companies, they are also jumpstarting private sector investment in communities across the country – with benefits for the renewable energy industry and our economy alike.”
The federal government payment totals 30% of the cost of the project; for each federal dollar spent in payments, more than two dollars are spent in private sector investments.
This being the second round of awards, the first round totaling US$502m, the 1603 programme has significantly impacted the renewable energy industry by increasing the availability and liquidity of financial capital in three ways:
- Recycling grants into new projects: Project developers are able to begin construction of additional projects thanks to the extra capital from the grants they are receiving;
- Increasing the flow of capital: By reversing the drop in availability of equity investment, the 1603 programme brings significant private capital off the sidelines to finance more renewables projects;
- Attracting investment for domestic projects: Large project developers allocate capital across many countries, and the 1603 programme is attracting billions of dollars of additional capital towards projects in the US.
Project developers receiving awards through this program participated in today's meeting, including Ameresco, First Wind, Horizon Wind, and Sun Edison. Also participating were several renewables manufacturers who supply these developers, including Cardinal Fastener, GE Energy, Gamesa, Solyndra, and Vestas Americas.