Top Ten Cleantech Incentives in the United States

To increase the research, development, and utilization of clean technologies, the United States have created a number of program incentives, including grants, loans, rebates, and other funding opportunities. It is the belief of the United States that if more businesses and private individuals had the funding to make the switch to renewable energy or create new sources of cost-effective renewable energy technologies, than more would utilize them in order to reduce reliance on fossil fuels and decrease the nation’s carbon footprint.

1) United States Department of Energy Loan Guarantee Program for Renewable Energy. Set up by the Loan Programs Office by the U.S. Department of Energy, the Loan Guarantee Program provides a contractual obligation between the borrower, private creditors, and government that states the government will cover debt obligation if the borrower defaults. The mission of the program “is to accelerate the domestic commercial deployment of innovative and advanced clean energy technologies…to contribute meaningfully to the achievement of our natural clean energy objectives.” The endeavors of the project include the support of energy technology development, funding, and new job creation.

2) 2009 American Recovery and Reinvestment Act. The 2009 American Recovery and Reinvestment Act provides money for the stimulation of the American economy. Numerous provisions were included in the bill for projects concerning energy efficiency and renewable energy. Money was provided to energy efficiency and conservation block grants, to the purchase of energy efficient applications, local and state government investment into energy efficient programs, the creation of a “smart grid,” and weatherization of low-income housing, as well as other funding projects.

3) United State’s Department of Agriculture’s Rural Energy for America Program. The Rural Energy for America Program, set up by the U.S. Department of Agriculture provides grants to eligible entities, such as state, local, and tribal governments, higher education institutions, rural electric cooperatives, and public power entities. The design of the program is to provide grant assistance to ranchers, farmers, and rural-based small businesses. The grants allow these bodies to utilize renewable energy sources and become more energy efficient.

4) State Clean Energy Funds. One of the major forces of renewable energy projects throughout the nation are state clean energy funds. The funding programs have provided for a large number of renewable energy programs, including biomass, wind, solar, and hydro. Since its creation, over 50,000 projects have been supported and greatly accelerated clean energy initiatives to advance the cleantech sector. Though California boasts the largest fund for renewable energy projects, other states have made large contributions. For example, the Kansas Energy Efficiency Program offers a maximum of 50 percent of loan amounts of a number of home energy conservation and efficiency programs.

5) Utility Rebate Programs. Because installation of renewable energy systems may cause construction delays of new generating capacity, decrease peak loads, as well as distribute power generation, numerous state utilities offer rebates to customers using these systems. The Modesto Irrigation District, a publicly-owned utility providing water and electricity throughout the Central Valley in California offers a Photovoltaic Rebate Program. In it, every customer, including government (local and state), nonprofit organizations, commercial businesses, and residential, receives a rebate for the installation of solar photovoltaic systems. As per the rebate, customers get $2.80 for every installed watt.

6) Federal Incentives for Public Sector Organizations. The major federal incentive is the Renewable Energy Production Incentive set up by the U.S. Department of Energy. In this incentive, state and local governments, municipal utilities, rural elective cooperative, and tribal governments are paid 1.5 cents per kilowatt hour for the generation of electricity by solar thermal, solar electric, landfill gas, biomass, wind, livestock methane, geothermal, wave-energy, tidal energy, ocean thermal, as well as fuel cells. As part of the incentive, the organization needs to sell a small part of the electricity they generated from the renewable source to another party, such as another utility.

7) Federal Investment Tax Credits. The federal investment tax credits decreases federal income taxes for all eligible tax-paying owners, businesses and residences, on capital investments made on renewable energy projects. This one time only payment is based on the full investment made the day the renewable electric generating facility starts its service. For example, businesses and homeowners generating power from solar, wind, geothermal, hydropower, biomass, or landfill gas, are qualified to receive a 30 percent federal tax credit.

8 ) State Public Benefit Funds. State public benefit funds are provided with financing through small surcharges on utility bills of customers. There are more than twenty states that use state public benefit funds to offer financial support for projects concerning renewable energy. Vermont’s Clean Energy Development Fund, as an example, has more than $6 million set aside to supply renewable energy and energy efficiency projects with financial support until March 2012. Qualified projects include solar hot water, photovoltaic, geothermal heat pumps, wind, and farm and landfill gas recovery.

9) Cooperative Research and Development Agreements. Arranged by the U.S. Department of Energy, the Cooperative Research and Development Agreements is a different form of financial assistance. Instead of offering money straight out, the agreements create a partnership between a national laboratory and private sector partner to increase research and development into renewable energy and energy efficiency projects. Not only is funding provided, but labor and facilities as well. When the project is finished, both parties retain title to the intellectual property.

10) Energy Star Special Offers and Rebates. To promote the purchase of energy efficient products by businesses and homeowners, Energy Star sponsors a number of rebate programs and sales tax exemptions on various eligible products. Each location is different and rebates are offered on all products marked with the Energy Star “seal of approval” for energy efficiency.

Article by Shawn Lesser & Ben Taube.

Shawn is Co-founder & Managing Partner of Atlanta-based Watershed Capital Group – an investment bank assisting sustainable fund and companies raise capital, perform acquisitions, and in other strategic financial decisions. He is also a Co-founder of the GCCA Global Cleantech Cluster Association. He writes for various cleantech publications and is known as the David Letterman of Cleantech for his “Top 10″ series. He can be reached at shawn@watershedcapital.com