$90bn For Clean Energy In Retrospect

The American Recovery and Reinvestment Act (ARRA) has led to an unprecedented investment in clean energy.
Published: Mon 14 Mar 2016

It is not too much of an overstatement to attribute much of the progress of the last few years in clean energy development to the American Recovery and Reinvestment Act (ARRA) of 2009, aka the Recovery Act or popularly at the time the Stimulus Plan.

We have written about the smart grid aspects of this Act, which in turn has led to the next round of grid modernization. [Engerati-The US Grid Is Getting Smarter – Impacts Are Noticeable and Modernizing The Power Grid] However, the grid modernization funding was only a little over a tenth of the total funding allocation for clean energy of US$90 billion, almost all of which had been spent by the end of 2015.

So what have these funds collectively achieved? A recent White House publication provides an assessment.

ARRA overview

By the start of 2009, the US was going through a severe economic crisis. According to the report during the previous year private employers shed 3.8 million jobs. Trillions of dollars of household wealth had been wiped out, and the economy’s total output, as measured by real gross domestic product (GDP), was in the midst of its most severe downturn of the post-war era.

The ARRA – of which the clean energy funding accounted for about one-eighth of the total – was aimed to reverse this trend and is attributed to the turn around that started in the third quarter of 2009, with GDP per capita expanding by 2-3% above where it would have been by mid-2011. It also supported over 6 million job‐years (a full‐time job for one year) from 2009 to 2012. Of these an estimated 720,000 job-years can be attributed to the clean energy‐related programmes, rising to 900,000 job‐years through 2015.

In addition, training was supported of over 30,000 students for solar and other clean energy careers.

Renewables and energy efficiency

As can be seen in the diagram above, approximately half the funds went into renewables and energy efficiency.

Some of the outcomes highlighted in the assessment are an increase in solar electricity generation over 30 times from 2008 levels, and wind generation has increased over three times.

These deployments have contributed to dramatic cost reductions for the technologies. For example, the overnight capital cost of utility‐scale photovoltaic (PV) systems fell from $4.1/W in 2008 to $2/W in 2014. Other contributory factors included economies of scale, technology learning and new business practices.

Local industry also got a boost with a dramatic increase in the share of domestically‐produced wind turbines used in the US from 25% in 2006‐2007 to 72% in 2012.

On the energy efficiency front over 800,000 homes were weatherised, leading to over one million homes being weatherized between 2009 and 2012 with federal support.

Together, the energy efficiency investments are projected to save over 400 million MMBtu of energy over the next four decades, or the equivalent of annual energy consumption for 10,000 homes.

ARRA highlights

Other ARRA clean energy achievements highlighted include:

• Helping to support the installation of 16 million smart meters by 2016.

• Helping to address market failures such as environmental externalities, innovation market failures, and capital market failures by investing in measures across the clean energy value chain.

• Support of long-run R&D aimed to bring transformative new technologies to fruition, the benefits of which are beginning to pay off, with new transformative technologies such as a 1MW silicon carbide transistor, engineered microbes that use hydrogen and carbon dioxide to make liquid transportation fuel, and major advances in lithium‐ion batteries.

• A major demonstration carbon capture and storage facility, the Air Products and Chemicals hydrogen facility in Port Arthur, Texas, was made possible and as of May 15, 2015 had successfully captured its second millionth metric ton of CO2.

• Helping to lay the groundwork for a transition to a cleaner and more energy efficient transportation system including the purchase of 12,000 buses, vans, and rail vehicles and the construction or renovation of over 850 transit facilities.

• Supporting the deployment by ChargePoint of over 4,600 electric vehicle charging stations.

Clean energy spending outcomes

A notable outcome of the clean energy‐related investments was that they leveraged on the order of $150 billion in additional private and non‐federal capital in investments toward advancing the deployment of energy efficiency, wind, solar, geothermal, biomass, low‐carbon fossil fuel and other technologies.

With the advancement and promotion of technologies, emergence of new technologies, stimulus of local industries, and job and revenue creation, clearly the benefits of clean energy investment can be widespread, for individuals, businesses and countries as a whole.

Further reading

White House: A Retrospective Assessment of Clean Energy Investments in the Recovery Act