TREASURY RELEASES USD 550M MORE IN CLEAN ENERGY PROJECT STIMULUS GRANTS

The US Treasury and Energy departments have disclosed USD 550m more in economic stimulus grants for renewables projects with developers Iberdrola, Eurus, and Eon all receiving significant funding.

Iberdrola received USD 251m to support three projects it has developed -- the 160MW Barton wind in Iowa, the 146MW Farmers’ City wind in Missouri, and the 120MW Barton Chapel wind in Texas. The funds come on top of the nearly USD 300m received by the Spanish power giant earlier from Treasury and DOE.

Other large grants went to the North American subsidiary of German power giant Eon, which received USD 122m for its 249MW Roscoe wind project and the North American subsidiary of Tokyo-based Eurus Energy Holdings, which received USD 91.4m for its 180MW Bull Creek wind project.

DOE and Treasury are awarding the grants on a rolling basis, but have disclosed them via two public announcements to date.  The first group of projects revealed by the agencies earlier this month received just over USD 500m, meaning the federal government has now disbursed well over USD 1bn in grants to renewables projects since the grant rules were finalized in July.

The latest list of grant recipients included significant geothermal, landfill gas and biomass projects. Italian power producer Enel received USD 61.5m for its 33MW Salt Wells and 40MW Stillwater geothermal projects in Nevada. Tennessee-based Ameresco received USD 11.7m for a small landfill gas-to-energy project in Missouri and two others in California. Texas-based Rio Grande Valley Sugar Growers received USD 10.2m for its 16MW biomass project, which uses sugar cane bagasse. The remaining USD 2.7m went to 14 small renewable energy projects in 10 states.
                                            
Energy Secretary Steven Chu and Treasury Secretary Timothy Geithner announced the second round of funding after an economic stimulus review meeting at the White House. 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."

Chu said the grants programme has allowed large developers like Iberdrola, Enel and Eon to reinvest in new projects sooner than they would have otherwise and called the grants, "crucial to ensuring America can compete and win in the race for the clean energy jobs of the future."

While Chu and Geithner were at the White House announcing grant winners, President Barack Obama was at the United Nations in New York touting his administration's commitment to fighting climate change. Among other things, Obama highlighted the renewable energy spending contained in the economic stimulus package, the Environmental Protection Agency’s recently proposed automobile fuel economy standards, and the energy and climate bill passed by the House of Representatives’ last spring as evidence of the US focus on climate change.

"But," Obama added, "though many of our nations have taken bold action and share in this determination, we did not come here to celebrate progress today. We came here because there’s much progress to be made." He said developed nations like the US should lead the effort to reduce emissions but that developing nations must do their part too, and grouped China in with the US as nations that should provide financial and technical assistance to smaller developing countries.

Obama did not provide any new details on his administration’s renewable energy and energy efficiency plans but said that he looks forward to working with Congress as it advances climate legislation this fall, though he acknowledged that the task will continue to be difficult. "As we head towards Copenhagen," Obama said, "there should be no illusions that the hardest part of our journey is in front of us. We seek sweeping but necessary change in the midst of a global recession, where every nation's most immediate priority is reviving their economy and putting their people back to work."

The relevant committees in the US Senate are slated to continue work on the cap-and-trade portion of the energy and climate later this month but leading Democrats in the chamber have sought to dampen expectations that a final bill will clear the full chamber by the end of 2009.

NEF "FIRST TAKE":

The grant programme appears to be hitting its stride with DOE and Treasury rapidly turning around applications and pushing money out the door. With this announcement officials appeared to take extra care to avoid taking credit for literally spurring the development of the projects that received funding. For good reason -- at least two of the receiving projects were on line before the economic stimulus bill was even signed into law. That said, there is evidence in the marketplace that the grants are being to put to good use in funding new development and new projects. With this announcement, the administration could again come under some fire from critics on the right for doling out too much to overseas-owned firms. Approximately 70% of the first USD 502m in grants went to Iberdrola and several other foreign companies. This time, Iberdrola again picked up major funding along with Eon, Eurus, and Enel. For their part, renewables advocates can justifiably point out that the jobs created by these projects are mostly local, regardless of ownership. One way or the other, the phenomenon of providing US public funding to overseas-owned projects will not end anytime soon. It will continue to raise hackles among industry critics and could eventually prove politically problematic for the clean energy sector.

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