Biden Spins the Stimulus Package, but There's Lots Left to Spend on Energy

(MoneyWatch)  Vice President Joe Biden released a report Tuesday that celebrated the success of the $787 billion stimulus package -- specifically the $100 billion aimed at innovation for medical research, renewable energy, advanced vehicle technology and the smart grid. To say this announcement is premature, is an understatement. For one, all of the funds haven't been distributed yet -- a fact that has produced plenty of criticism. And secondly, that money could be lost if the Energy Department doesn't get cracking and hand out the funds by the Sept. 30, 2010 deadline.

That's not to say the funds aren't a good thing or that a periodic update of the stimulus package isn't warranted. There's a decent amount of evidence, including a recent Congressional Budget Office report that says we're better off because of the stimulus package.

But the timing of Biden's report smacks of spin control. The Office of Inspector General found in an audit, released two weeks ago, the DOE still had a lot of stimulus money to give out by the Sept. 30 deadline. The audit seemed particularly worried that the DOE hadn't reached its goal in spite of adding staff to handle the extra workload. The audit found that as of July 9:

• The DOE had obligated $29.3 billion, or 90 percent of the $32.7 billion required to be obligated the Sept. 30 deadline -- meaning $3.4 billion remains;
• 10 of the DOE's recovery act projects were responsible for almost 80 percent, or $2.7 billion, of the remaining $3.4 billion.
• The report is especially concerned about delays in the award process for the carbon capture and storage and industrial carbon capture and storage applications projects.

So what are the stimulus funds -- for energy -- supposed to do, anyway?

• Reduce the cost of renewable energy. For example, cutting the cost of batteries for electric vehicles by 70 percent between 2009 and 2015 and slashing the cost of solar power in half by 2015.
• Double renewable energy generation capacity in the U.S. -- that means power generated from wind, solar and geothermal -- to 57.6 GW by 2012. That would be enough to power 16.7 million homes.
• Double the U.S. manufacturing capacity for renewable energy equipment to 12 GW by 2012.

The idea is to provide enough manufacturing tax credits, payment-in-lieu-of-tax-credits and loan guarantees to encourage private investment and ultimately hit these three goals. The very important side effect in all of this are the thousands of jobs that are supposed to be created as a result.

Is it working?
Like I mentioned earlier, it's still too early to chime in on the effectiveness of the stimulus funds. But there's some indication the money that has been awarded has helped. Two analyses from the Lawrence Berkeley National Laboratory and Bloomberg New Energy Finance, which were cited in Biden's report, found that without the incentives wind installations could have been up to 2.4 GW lower. In all, 10 GW of new generating capacity was added in 2010.

I did my own informal study and spoke with a few solar and wind energy industry folk. Their reviews are mixed. Little to no money has been handed out, although some commitments have been made. On the other hand, the stimulus money has encouraged utilities, for example, to move forward with renewable energy projects, they said.

The real test will be this year and into 2011. Wind turbine giant Vestas Wind Systems noted in its earning report recently that the financial crisis had a delayed effect on the company. Other companies that have projects with long lead times have had a similar experience.

The stimulus dollars should help these companies not only get over the hump, but to drive investment over the long term. Which means the success or failure of the stimulus package won't be known for years.

Photo from Flickr user Johnny alive, CC 2.0
Related:

• Stimulus Energy Fund Tracker: Nearly a Year and Only 5.7% Spent
• Stimulus Energy Fund Tracker: 1.2% Spent, $36.2B To Go