The Three Prongs of the “Green” Energy Stimulus Package

The much-touted economic stimulus package is expected to be in the range of $675 billion to $775 billion. It includes $300 billion in temporary tax cuts for individuals and businesses and a big expansion of safety-net programs like unemployment insurance. It includes more money for highways, schools and other public infrastructure; more money for “green” energy projects; and more money to help state governments pay for health care and education. Estimates are that the “green” portion of the stimulus package could reach $100 billion over two years.

What “green” energy projects are we talking about here? What technologies are likely to be funded?

It appears that the new administration and Congress are set to launch a three-pronged green energy attack. These three prongs would include: alternative energy production, upgrading the electricity distribution system and public works energy efficiency.

Alternative Energy Production

Obama has stated that he intends to double the production of alternative energy in the next three years.

Renewable energy from wind, solar, and geothermal is currently about 24,000 megawatts, which represents about 1 percent of all power generation in the country.

An Obama transition aide has said that doubling renewable-energy production in the United States is possible through a combination of loan guarantees and, ultimately, a national renewable portfolio standard (RPS). During the campaign, Obama had advocated a national RPS at 10 percent by 2012 and 25 percent renewable energy by 2025. The American Council on Renewable Energy has issued a call to action to its 600 members to develop plans on how to meet Obama’s ambitious energy production goals.

The estimate is that new wind energy production will account for about 20,000+ megawatts, while solar and geothermal will account for the other 4,000 megawatts.

Electricity Grid Upgrade

Upgrading the electricity distribution system is the second prong of the attack. By equipping the grid with communications network–the essence of smart grid technology–utilities can run the power grid more efficiently and consumers can get information to help lower energy usage.

Obama recently stated that part of the stimulus package will be spent on “updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation. It means expanding broadband lines across America, so that a small business in a rural town can connect and compete with their counterparts anywhere in the world.”

Smart energy grids would allow real-time monitoring of a customer’s energy use through Internet technology. Proponents of a national smart grid say it would likely result in decreased electricity use, allow energy companies to more efficiently distribute electricity, and encourage homeowners to install alternative energy generators such as solar panels and sell their excess energy back to the grid.

Public Works Energy Efficiency

The major push in the energy efficiency arena appears to be a public works project aimed at retrofitting federal government buildings. In a recent radio address, Obama stated: “First, we will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs.”

Modernizing federal buildings appears to be a cost effective use of stimulus package funds, which should serve to provide a number of low-tech jobs as well.

While the debate will undoubtedly continue on how best to spend economic stimulus funds, these three areas appear to be the primary focus of the “green” portion of any such package.