U.S. stimulus bill likely to revive green power

By Matt Daily - Analysis

NEW YORK (Reuters) - The U.S. renewable energy sector, which has been hit hard by the banking crisis, will get a new lifeline from the economic stimulus package that is expected to pass the U.S. Congress on Friday.

The flow of new wind and solar projects has slowed to a dribble in the past few months, forcing some solar companies to lay off workers and others to temporarily idle production lines as banks shut off capital flows to the industry.

"I think this is very, very helpful and productive," Rick Gittleman, head of law firm Akin Gump Strauss Hauer & Feld's renewable energy practice, said of the measures in the stimulus package.

The U.S. House of Representatives on Friday approved the $787 billion stimulus package containing a measure that would allow renewable energy developers to seek grants directly from the U.S. government. Much of their financing now is linked to tax credits that are nearly impossible to sell because of the banking crisis.

The U.S. Senate is expected to vote on the bill later on Friday and send it on to President Barack Obama.

Wind power has grown rapidly in recent years in the United States, with more than 24,000 megawatts of capacity in operation, or about 1 percent of the total power supply. Solar power is far less than that, but has been growing at 40 to 50 percent per year.

"We're feeling very optimistic, and it feels like the message got to Congress," said Arno Harris, chief executive officer of Recurrent Energy, a California-based solar power developer. "If the bill passes, I think we're going to be off to the races."

Green power project developers often finance new wind and solar installations by selling the tax breaks they receive under government programs to banks. Those banks use the green tax breaks to reduce their own tax burdens, and provide much needed money to the renewable energy industry to keep growing.