Arizona Recieves $200 Million to Stimulate Green Future

Alt Dot Energy
March 28, 2009

Nearly $200 million in federal stimulus money is coming to help Arizona move
into a green future.

State, local governments and individual homeowners will be provided with money
to find new ways to conserve energy, generate electricity and promote alternate
fuels. It is part of a $3.2 billion package to pay for energy efficiency and
conservation projects with money from the American Recovery and Reinvestment Act
(ARRA), the $787 billion stimulus package approved by Congress and President
Obama in February.

On March 26, the U.S. Department of Energy announced that Arizona would receive
$63.8 million for the Energy Efficiency and Conservation Block Grant program,
which provides grant money to the state, local governments and tribal
communities. DOE said the money would build on $57 million for the
Weatherization Assistance Program and another $55.4 million for the State Energy
Program that had been announced several weeks earlier. Those programs provide
money and rebates to assist homeowners who want to make their houses more energy efficient.

According to DOE, most of the specifics on how the money will be put to use will
be left up to the states, with the federal government providing broader
guidelines. In Arizona, the money will be administered through the state
Department of Commerce, and Gov. Jan Brewer will set specific guidelines and
priorities for its use.

Significant portions of the money could be used to provide financial assistance
for solar energy projects across Arizona. That has some advocates here hopeful
that the stimulus money, as well as tax credits from the 2008 bank bailout, will
help jump-start the solar energy industry in a state that many people hope will
become the solar capital of the world.

The block grant program provides grants for energy efficiency programs, and the
reduction of total energy use and fossil fuel emissions. According to DOE, a
wide variety of projects are eligible for grant money, including retrofits of
residential and commercial buildings, renewable energy installations on
government buildings and energy efficient transportation. Even efforts to
capture greenhouse-gas emissions from landfills and install energy efficient
traffic signals are among a plethora of projects and programs for which the
stimulus money can be used.

The grant money will be divided among dozens of jurisdictions. Phoenix alone
will receive $15.2 million, with $9.5 million going to the state, $5.1 million
to Tucson, $4.2 million to Mesa, $3.9 million to Pima County and $3.5 million to
Maricopa County. Those government entities, which must apply to DOE to receive
the money, will make many of the decisions on how to use it.

Under the Weatherization Assistance Program, Arizona families who earn up to 200
percent of the federal poverty level, about $44,000 a year for a family of four,
will be eligible for up to $6,500 per home for energy-efficiency upgrades.
According to DOE, the program can help homeowners reduce heating bills by an
average of 32 percent.

The State Energy Program also will provide rebates to homeowners for audits that
will help them determine how to make their homes more energy efficient, and
install the improvements to put those efficiencies into practice. Upgrades for
government buildings and the development of alternate fuels and renewable energy
programs will be funded by the ARRA programs as well.

Solar energy advocates are optimistic about the money that will go toward solar
projects, but it’s not clear how much it will be and how it will be spent.
“It’s actually virtually impossible, because what’s going to end up happening is
each of these programs will determine how to allocate the funds,” said Monique
Hanis, a spokeswoman for the Solar Energy Industries Association in Washington, D.C.

The bank bailout bill approved by Congress in 2008 included tax credits for
homeowners who wanted to install solar panels on their homes for electricity
generation. Those photovoltaic systems can cost upward of $40,000, but previous
tax credits capped the available federal tax credits at $2,000. The ARRA removes
a similar $2,000 cap on tax credits for the less-expensive water-heating solar
systems, and replaces it with a 30-percent credit.

Michael Neary, of the Arizona Solar Energy Association, said lifting the $2,000
cap on tax credits for water-heating solar systems will not have much of an
impact on homeowners, who can install such systems for about $6,000. What he
does expect to have an impact, however, are federal tax credits for solar
technology manufacturing. According to the SEIA, the stimulus package includes a
30 percent tax credit for manufacturing assets.

Hopefully, Neary said, the tax credits will help drive the market until the cost
of photovoltaic technology comes down to the point where the industry is more self-sustainable.

“One of the things that we’ve been trying to do here in Arizona is to build the
market, a sustainable market, something that’s going to ultimately drive itself,
rather than being driven with just tax credits,” he said. “Yeah, the tax credits
are something that are kind of going to jump-start it, and by the time the
federal tax credit expires in eight years, theoretically the costs of the
products will come down.”

Hanis said the industry will benefit from a loan-guarantee program that receives
funding from the ARRA. The program actually began in 2005, she said, but only
recently guaranteed its first loan, $535 million to California-based Solyndra
Inc., which will use the money to help build a solar panel manufacturing plant.

Solar supporters such as Neary and Hanis are hoping the ARRA will spur further
expansion of the industry, which they say has seen substantial growth in the
past year. Hanis said the solar industry in the U.S. grew by 17 percent in 2008.
In Arizona, Neary said the ASEA grew from 40 members at the beginning of the
year to about 60 by the start of 2009. About half of those new members, he said,
joined after the bank bailout, with its photovoltaic tax credits, was approved in September.


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