$172 Million a Week

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To say Greg Burkart is a number-cruncher is to remark that it gets dark at night. A managing director at financial advisory and investment banking firm Duff & Phelps, Burkart spends his time poking though all the numbers the federal government puts out for various spending and tax incentives for renewable energy. And with the American Recovery and Reinvestment Act - the stimulus - he has "followed the money" enough to get a sense of what is clearly the winner for renewable energy projects.

I recently asked him about the highlights of the year for stimulus-related renewable energy development, and there's one obvious answer: the so-called 1603 grants, the provision in which qualified renewable energy projects receive 30 percent of the project costs in direct payments from the Treasury Department instead of the usual production tax credit that is calculated over 10 years. "If I had to give a grade, the 1603 would be an A+," Burkart says. Since the grants started to be released this fall, more than $1.5 billion has gone out the door, with no end in sight. That averages $172 million a week, for the about 150 projects. "If it does that at that run-rate, annualized, that's a total of $8.8 billion," he says. No one is sure if that level of activity can be sustained for that long, but consider that the Department of Energy estimated that the cash grant program would cost $3 billion over two years.

The headlines have been written mostly about large wind projects, with about two dozen of them having received from $20 million to $120 million each. A few projects in other resources have received as little as $5,000. Interestingly enough, the big winner, in numerical terms is solar. "There have been about 90 there as opposed to about 30 in wind," Burkart says. The vast majority of those appear to be rooftop arrays on commercial buildings, most under $100,000. Overall, with the large bump from the wind totals, projects are averaging slightly less than $49 million.

The program is clearly doing what it was supposed to, with quick approvals of well-documented projects and the Treasury Department adhering to its promise to cut checks within 60 days. But the filings have to be done along strict guidelines. "You don't get a second chance to do it right the first time," he says. But more of the same successes for 1603 are expected next year. He doesn't expect the activity to slow, especially if the economy improves, for one simple reason: construction on qualified projects has to start in about a year, completed by late 2011, and developers might not be willing to leave another $9 billion "unclaimed."

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