Stimulus Package Will Provide Cash to Renewables-Owning Utilities

In lieu of tax credits taken over ten years, the Obama stimulus package allows developers of renewable energy projects to apply for Treasury grants equivalent to 30 percent of a project’s cost in cash.

According to Dow-Jones, the new option could be a boon for cash-strapped utilities, which are facing both tight credit markets and diminished demand.

Some of the grants will be substantial. The Treasury Department anticipates receiving between 3,000 and 5,000 applications once the application process is finalized, with large utilities like FPL Group Inc. and Duke Energy potentially qualified for grants in the $400 to $500 million range.

In anticipation of this windfall, FPL Group has already increased its earnings per share estimates for 2009 and 2010 by 15 cents. The company’s non-utility arm, NextEra Energy Resources, plans to install between 2,000 and 3,000 MW of new wind power capacity by 2010—though these figures have not changed since the Treasury grant option was made available.

Portland General Electric has estimated it could qualify for up to $200 million in grants over the 2009-2010 period.  The utility indicated to Dow Jones it would likely put some of the cash toward purchasing more wind projects to help it meet Oregon’s RPS.

Duke’s CEO suggested the company was in shape to bring 250 MW of new wind energy online each year.

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