Federal renewable energy incentives have come under their fair share of scrutiny following the demise of solar company Solyndra, which received a $535 million U.S. Department of Energy (DOE) loan guarantee in 2009.
Less talk, however, has been made of a separate incentive program that has achieved a considerable degree of success in spurring not only renewable energy development, but also jobs and the national economy.
Unlike the DOE's now-infamous loan-guarantee program, the Treasury's Section 1603 program – created under the American Recovery and Reinvestment Act of 2009 – allowed renewable energy project developers to claim a one-time cash grant of 30% of a project's total costs in lieu of the production tax credit or investment tax credit. The aim was to reduce the need for developers to secure tax-equity partners – a difficult feat in a rough economic climate.
A new analysis from the DOE's National Renewable Energy Laboratory (NREL) shows the Treasury's cash-grant program's impact on installed renewable energy capacity, jobs and overall economic investment.
According to the report, the Section 1603 program supported an average of 52,000 to 75,000 temporary jobs and 5,100 to 5,500 permanent jobs per year in the large-scale wind and solar PV sectors. The overwhelming majority of these positions – 44,000 to 66,000 temporary jobs and 4,500 to 4,900 permanent jobs – were in the wind industry.
The report included both direct jobs – those supporting the design, development, construction and installation of wind energy facilities (e.g., construction crews, foundation workers, heavy equipment operators, electricians, crane operators, engineers and other construction-related workers) – and indirect jobs – those in the supply chain and associated manufacturing sectors (i.e., those involved in production the turbines, towers, blades and other components, as well as in the industries that supply goods and services to wind turbine manufacturers).
Most of the jobs supported by the Section 1603 program were indirect, accounting for 38,000 to 60,000 wind industry jobs per year, compared to 5,500 direct wind industry jobs per year.
The earnings and wages paid to the workers on projects that were awarded Section 1603 funds accounted for a total of $7.7 billion to $12 billion, and resulted in a total economic output of $23 billion to $39 billion – a clear return on investment from the $7.68 billion awarded to wind projects under the program's three-year lifetime.
According to the NREL report, which covers data through Nov. 10, 2011, 197 large-scale wind projects (i.e., those over 1 MW) received a cash grant from the Section 1603 program, representing a total nameplate capacity of 12.81 GW – a large portion of the U.S.' 43.461 GW in cumulative installed wind power capacity as of the third quarter of 2011, according to statistics from the American Wind Energy Association.
NREL is quick to point out, however, that the results presented in its report cannot be attributed solely to the Section 1603 program. Some projects may have progressed regardless of whether they received the grant, NREL notes, while other projects were 100% dependent on the incentive. Therefore, the jobs and economic impact estimates can only be attributed to the total investment in the projects.
Despite the program's success, it was not extended beyond 2011. To qualify for Section 1603, a renewable energy project must have started construction before Dec. 31, 2011, and be completed before Dec. 31, 2012. Companies are still applying for the grants, so it is possible that the program's impact could be even more profound than was reflected in the NREL report.