The Solyndra debacle is no surprise to this cleantech venture capitalist. The inherent conflict between trying to get money out of the U.S. Treasury as quickly as possible to stimulate the economy and, at the same time, have government agencies that are ill-suited at making business decisions do just that was nothing other than a recipe for disaster.

Anytime a government program is giving money to the private sector with the intent of getting the money back, the program is doomed to failure. Bureaucracies, politics and the lack of a profit motive simply don’t allow government to succeed in business. Anyone who was surprised that politics played a role in the loan decision for Solyndra (and almost certainly other awardees) is very naïve.

Even if, by some miracle, the government could make good business decisions void of political influence, such programs are still doomed to failure because the public and media won’t allow for even one loan or investment to fail. In venture capital we make investments that don’t succeed and we fail often. Yet, we are still successful on the whole.Our successes more than compensate for our failures.The government has no ability to operate this way. Even if a program like the DOE loan guarantee could operate with an overall effective return (which I find unlikely anyway), its first failure would sink it. The government can give away money, but it cannot effectively invest money in individual companies.

Solyndra won’t be the last default from the DOE loan guarantee program. The huge amounts of money that will ultimately have been wasted in the cleantech stimulus – both in terms of loans that won’t be repaid and the stimulus’ failure to create any meaningful job growth when growth was most needed – is bad for tax payers. The negative PR and the future demise of cleantech policies that otherwise may have had broader bipartisan support is bad for cleantech.

In 2009, amid the euphoria of the Obama Administration’s cleantech programs, I wrote that the Administration’s cleantech stimulus was bad policy but good politics. I was wrong… not only was the cleantech stimulus bad policy, it was bad politics too. While the politics by which the Administration pushed through these ill-thought programs may have been deft, the ultimate political impact is clearly bad for both the Administration and cleantech itself.

Ultimately, we may look back at Solyndra as the dagger that burst the cleantech bubble. The hype and euphoria are officially gone. The long, hard work that will be required to diversify our energy base and increase energy efficiency wasn’t reduced when the government sent floods of money out the door to cleantech companies, and it won’t change now that the hype of those programs is gone. The good news is that, like the Web and every other technology bubble, the real value creation comes after the bubble has burst.

So, let’s get back to work.

David Gold heads up cleantech investments for Access Venture Partners. He is also the author of the GreenGoldBlog.

Photo: ergsol.com

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• Cleantech Stimulus Still Not Stimulating

With the recent “shellacking” (as President Obama referred to the election results) of the Democratically controlled Congress, much of the buzz in the cleantech space has been doom and gloom. Is cleantech doomed to a new dark age? I do not believe so.

Energy policy is one area where there is an overlap of goals between the parties. Members of both parties largely agree that energy is critical to our economic and national security. And most Republicans do not dismiss out of hand the risks of global warming.

I suspect that energy policy will be a topic where this Congress will get something done especially with the President’s increased desire to work across party lines. It won’t be exactly what the president wants and it won’t be exactly what the Republicans want. It will be an old-fashion compromise that may actually result in some policies and that will have greater long-term impact on cleantech than most of the short-term handout programs that were put in place under the largely ineffective cleantech stimulus bill.

So, where can the Democrats and Republicans potentially agree when it comes to cleantech?

1) Energy efficiency. Republicans and Democrats have demonstrated their ability to find common ground here. George Bush signed the law from a Democratic Congress that will end the life of the incandescent bulb and that increases the fuel efficiency standards for vehicles by 40% by 2020. Democrats like tax credits for installing energy efficiency improvements, and Republicans like reducing taxes. Reads like a match made in heaven.

2) Renewable energy standards. Many states have put in place such standards with support of both parties. Some Republicans in Congress have previously voiced their support. If the definition of “renewable” were expanded to include nuclear as an acceptable alternative, I suspect there would be broad support in Congress. A renewable energy standard is exactly the kind of long-term macro-economic policy needed to drive change and create more sustainable demand for renewable energy and energy efficiency. Utilities putting big dollars into development of renewable energy power sources and energy efficiency will drive much more industry growth and relieve issues around debt financing to a much greater degree than the government’s ineffectual efforts to play banker. And if the definition of “renewable” were expanded to include nuclear, then I suspect the base of support would broaden even more. Given that most renewable energy sources can’t serve as base load, it would be the right environmental and national security move to include nuclear in the energy mix.

3) R&D. Republicans have long been supporters of government R&D. Although there will be an issue around funding offsets for the R&D, I believe there will be broad consensus on the need to invest in our energy future. What will happen, I suspect, is that the focus of this R&D will shift more to early stage disruptive technologies rather than the late-stage grants and government loans which are already proving to be failures. Even the Administration has internally begun to question the effectiveness of these programs. If the scope of cleantech R&D is expanded to include clean coal technologies and next-generation nuclear, I believe the support base will broaden even more. The most effective way to ramp up disruptive R&D funding is likely through the new ARPA-E and possibly to the few federal labs that do not have their roots in our nuclear weapons programs (e.g. the National Renewable Energy Laboratory). By funding ARPA-E, most of the research would take place in our universities and private companies where the potential for real product development and technology transfer is much greater than in our defense oriented federal labs. The biggest challenge will be finding the funds given the need to reduce the deficit. One possible solution would be to take the funds already appropriated to later stage projects/loans that have yet to be awarded and redirect them to disruptive R&D. Another would be a…

4) Gas Tax. Cap and trade is likely dead. And given that such a program would have been a largely ineffectual mess (see my previous post, Cap and Trade: Right Debate, Wrong Solution) that is not necessarily bad. As I pointed out, the area where there is the greatest overlap between environmental, national security and economic objectives is with gas/diesel, which most cap and trade proposals largely wouldn’t have touched. The co-chairs of President Obama’s bi-partisan tax commission recently included a gas tax as a piece of its budget solution and two key Senators (one Republican, one Democrat) recently recently wrote the commission encouraging them to consider even bigger increases. A heftier tax phased in over time may be possible by using the concept of a “tax and dividend”, whereby a tax is levied to increase its price and much or all of the revenue is distributed back to consumers. If the money raised from this tax is largely given right back to the consumers in the form a rebate, then it’s not a tax increase but rather a tax incentive to reduce consumption of gasoline/diesel. Increasing the cost of gasoline/diesel to drive market demand for alternative fuels and energy efficient vehicles can help Republicans and Democrats achieve their desire of enhancing our national and economic security while reducing carbon emissions.

5) Government Procurement. The government is a large consumer of many items. One of the best ways to accelerate market adoption is by creating a market for the product/service. For example, the Federal government’s decision to require all new buildings to be LEED certified is accelerating a shift in the building industry to green buildings. The government purchases a large amount of energy for buildings, vehicles, airplanes and ships. Policies that drive increased purchases of domestic energy sources based on non-fossil fuels can provide a significant lift to multiple cleantech industries. The Department of Defense understands the critical nature of this issue, especially around liquid fuels. The Pentagon’s concern provides the nexus of an opportunity for collaboration between Democrats and Republicans on government procurement policies.

Even if you believe we will see a stalemate in Washington on cleantech, the global macro-economic trends will not change. Consumption of fossil fuels is accelerating as the world, especially heavily populated China and India, dramatically increase the number of automobiles, power plants and factories. It is a certainty that the price of these commodities will, on average, increase over time. The next spike in oil prices, I suspect, won’t be too many years away and, worst case, whatever lull in cleantech enthusiasm that may occur will be quickly washed away.

The essence of any government policy with the goal of accelerating cleantech is simply an effort to narrow the time between today and the inevitable day when fossil fuels become expensive enough that various renewable energy and energy efficiency solutions become compelling without any government involvement. If you’ve read my previous posts, you know that I do not believe that we will achieve our cleantech goals through massive grant or loan programs to the private sector. Policies that target the underlying macroeconomic environment will ultimately have a much greater impact than handout programs. Many of the policies that lie in the zone of potential cooperation between Democrats and Republicans such as gas tax, national renewable energy standards, and federal procurement policies can help drive steady long-term demand for renewable energy and energy efficiency. I am optimistic that these are areas where real progress can be made.

David Gold heads up cleantech investments for Access Venture Partners. He is also the author of the GreenGoldBlog.

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As the Obama Administration pushes for high-speed rail networks across the country, Germany’s Siemens has secured a place for its Valero ICE trains in the Sunshine State.

Earlier this month, Siemens presented its vision of U.S. high-speed rail to the people of Florida with the “Future of Florida High-Speed Rail Tour,” a traveling exhibit featuring a full-sized model of the Velaro high-speed train.

Apparently, the strategy worked, as Florida recently announced that it would make transportation history as the first state to build a high-speed rail corridor, with trains connecting Tampa to Orlando and then to Miami in a second phase.

We want to give Floridians a taste of what a true high-speed rail train looks and feels like,” added Oliver Hauck, president of Siemens Mobility in the U.S. “Siemens Velaro trains are successfully running on some of the fastest and most important routes in the world today.”

In April, President Barack Obama surprised many mass transit supporters when he endorsed a $10 billion investment in high-speed rail in the stimulus package, outlining 13 possible high-speed rail corridors throughout the United States, from Florida to California.

Later in the summer, the U.S. Department of Transportation delivered $80 million in grants for high-speed rail projects to several U.S. states, including California, Wisconsin, New York and New Mexico. Florida scooped up the bulk of that money however, pocketing a cool $66,600,000.

The Velaro can travel up to 250 miles per hour (403 kilometers/hour) and currently operates at high-speeds in Germany, Spain, China, Russia, France, Belgium, Switzerland and Austria. In 2006, a Velaro E trainset operated by Spain’s national rail authority, RENFE, set a world record for fastest unmodified commercial rail travel.

Article by Beth Buczynski, appearing courtesy Crisp Green.

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The stimulus bill along with the $31B cleantech element focused on grants and loan guarantees through the Department of Energy was passed into law over 18 months ago. About a year ago I wrote about how the cleantech stimulus was not very stimulating to our economy. I suggested at that time that the goals of stimulus and of long-term investment are largely incompatible, and the evidence is bearing that out. At the time, I felt like a bit of an outcast for having such a critical view and yet being an ardent supporter of clean technologies and the need to wean our nation off fossil fuels. On the anniversary of my first post on this topic it seems appropriate to take a fresh look at where things stand.

While stimulus supporters and the press love to focus on the selection of award winners for grants and loans, funds appropriated but sitting in the U.S. Treasury have zero potential to stimulate the economy irrespective of whether a winner has been selected. As of September 10, 2010 and about 19 months after the stimulus became law, according to the Obama Administration’s Recovery Act web site, recovery.gov, the Department of Energy had paid out just over 23% of the $31B of funds appropriated to the department for various cleantech activities under the stimulus bill. At that rate it will take roughly six years for all funds to be dispersed. According to DOE’s more detailed numbers, in the past 12 months, the department has awarded (i.e. selected winners) for about $14B in grants. Less than 10% of that amount has actually been disbursed to date. In addition, there are over 730 awards representing $1.2B that were made in 2009 for which no funds have been paid out at all. Many of these likely still are trying to get their contracts in place, an often-arduous process that can take many months.

In the Smart Grid segment of stimulus, where stimulus actually slowed spending because utilities stopped work to wait and see whether they would win a grant, less than 8% of the over $4B appropriated has been paid out. People in the utility industry who have received grants have told me about calls from DOE staff “virtually begging them” (in the words of one source) to spend money against the grants that have been awarded more quickly. In other words, the government seems more concerned about optics of getting the money spent than having it spent wisely.

As stated on recovery.gov, the goal of the Recovery Act was to “… jumpstart our economy, save and create millions of jobs, and put a down payment on addressing long-neglected challenges so that our country can thrive in the 21st century.” It’s amusing that the recently released Administration Report on the Recovery Act emphasized that its focus would be only on “the ‘Reinvestment’ part of the Recovery Act” and completely avoids any comment on the stimulus’ impact on the economy or jobs. Seems like quite a testament to failure of the recovery spending to provide stimulus in any meaningful way.

If the focus of the cleantech “stimulus” was really on reinvestment, then the government would be careful and diligent about naming grant/loan winners rather than rushing to make awards as fast as possible (which is motivated by stimulus). Yet, while money has been slow to flow from DOE, award winners have been selected for virtually all of the $31B from the recovery program. As I said earlier this year in a Cleantech Forum debate with DOE Renewable Energy Grants Advisor Sanjay Wagle, the government is simply incapable of both getting grant/loan money out the door quickly and spending it wisely. I still maintain that programs like Cash for Clunkers and energy efficiency tax credits (whether you agree with the specific policy or not) have a rapid positive impact on the economy. The evidence on the government’s own recovery site seems to bear that out: by comparison, 77% of all tax-related stimulus benefits (only some of this cleantech-related) have been paid out to recipients in the form of reduced tax obligations. While one can debate the degree of impact those funds may have, funds awarded but not transferred from the federal treasury have no chance of stimulating the economy.

Much of the press focus on the cleantech stimulus has been on the Advanced Research Projects Agency – Energy (ARPA-E) funding into early stage cleantech technologies with “game changing” potential. The government has long played a role in funding early stage research and such a program has worthy goals. Yet, ARPA-E represents only about 1.3% of DOE’s stimulus funding with most other funding going to much less disruptive grant/loan programs in which the government is trying to play business person and has a notoriously bad track record of doing so. And ARPA-E’s appropriation for 2011 is likely to be less than 2010 with the House number passed at a 50% reduction.

The unfortunate reality is that by using the stimulus bill as a vehicle for pushing funds through the slow and ineffectual government bureaucracy rather than focusing on stimulative policies that would have had greater impact on the economy, the Administration may very well have lost the opportunity to enact macro-economic policies affecting the cost structure for energy that could have had much more far-reaching and long-term positive impacts on the goal of reducing our consumption of fossil fuels. I believe time will bear out that many of the grant/loan awards made in such a hurry will turn out to be a waste of money.

Conversely, the macroeconomics of energy are certain to change as finite fossil fuels continue to be consumed… it is only a question of over what time period. It is that reality which is driving the private sector investments that must be the backbone of any sustainable change in our energy economy. Careful federal policy around carbon-based fuels could have provided greater visibility into the time frame and degree of increase in the market cost of fossil fuels even if there was a very slow phase in of such a policy to avoid collapsing the economy. The result would have been greater clarity of when (and shorter time horizons for when) clean technologies could become cost competitive. This would have resulted in a corresponding increase in investment by the private sector in building those businesses to profit from the impending change. And that would have been extremely stimulative to our economy without needing to borrow a penny to fund it.

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• High-Speed Rail: So Much Track, So Little Money

If you’ve ridden a train any time recently in the United States, you’ve probably noticed that the nation’s passenger trains are, by and large, slow, loud and late. Sure, there are regional pockets of decency in the nation’s rail infrastructure, but the country’s only high-speed rail link, the Acela Express between Boston an Washington, D.C., is still not cheap — and when compared to the fast trains in Europe and Asia, not all that fast either. Essentially, the nation’s rail infrastructure is stuck in the 1970s.

Speaking in Milwaukee on Labor Day, President Obama outlined a $50 billion transportation infrastructure plan that would not only invest in roads and runways, it would work to integrate high-speed rail on an equal footing into the surface transportation program.

To ensure a sustained and effective commitment to a national high speed rail system over the next generation, the Administration’s plan would construct and maintain 4,000 miles of rail – enough to go coast-to-coast.

“We’re talking roads. We’re talking bridges. We’re talking dams, levees,” said President Obama. “But we’re also talking a smart electric grid that can bring clean energy to new areas. We’re talking about broadband Internet so that everybody is plugged in. We’re talking about high-speed rail lines required to compete in a 21st century economy.”

The President’s plan would also invest in a long-overdue overhaul of Amtrak’s fleet.

“I want to get down from Milwaukee down to Chicago quick,” Mr. Obama told attendees of the Milwaukee Laborfest last week.

Competitive funding via the ‘New Starts’ program

The White House describes President Obama’s infrastructure investment plan as a two-part proposal that would include both an initial $50 billion investment in projects and the renewal of the six-year surface transportation infrastructure bill that has been overdue for reauthorization for a year.

Projects eligible for New Starts funding include but are not limited to rapid rail, light rail, commuter rail, automated guideway transit, people movers, and exclusive facilities for buses (such as bus rapid transit) and other high occupancy vehicles.

Many parts of transit systems have been allowed to fall into a state of ill-repair. The President’s plan would help address this by making a major new investment in the nation’s bus and rail transit system.

According to the president’s plan, high-speed-rail funding would be integrated into the surface transportation bill for the first time.

The Administration says it is committed to expanding public transit systems and would dedicate significant new funding to the “New Starts” program, a “Race to the Top”-style program that would inject competition into the process of allocating funding for “locally planned, implemented, and operated major transit projects.”

The (unchanging) politics of passenger rail

But the proposed $50 billion transportation investment, to go along with the $10 billion in stimulus already earmarked for high-speed rail corridors, many Republicans are opposed to the plan, which is nothing new.

“If we’ve learned anything from the past 18 months, it’s that we can’t spend our way to prosperity,” House Minority Leader John Boehner (D-Ohio) said in a statement.

“We don’t need more government ’stimulus’ spending — we need to end Washington Democrats’ out-of-control spending spree, stop their tax hikes and create jobs by eliminating the job-killing uncertainty that is hampering our small businesses,” said Boehner.

The question many Americans have when they travel overseas and ride on high-speed rail networks is, ‘why can’t we have trains like this?’ The answer is a pretty complex one, but to put it simply, it is because of our fascination with privatization and an irrational fear of government — a fear that thanks to right-wing radio and telepundits seems to be gathering momentum.

The good thing about politics is that public opinion is often fleeting and things are not always as they seem.

Article by Timothy Hurst, appearing courtesy Celsias.

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In the wake of the dissolution of the Renewable Electricity Standard (RES) from the energy bill currently wheezing through the Congress, came a report that wind power installations in the U.S to date this year have dropped by 71% from last year’s level.

According to the latest quarterly report issued by the American Wind Energy Association (AWEA), 700 MW of wind turbines were added in the second quarter of 2010, down 57% from comparable 2008 levels and down 71% from 2009. Manufacturing investment also continued to lag below 2008 and 2009 levels. As the largest producer of renewable energy, the wind power industry, and those who support it, must find these figures troubling indeed.

After a promising start by the Obama administration to address climate change, the foul winds of American politics have once again managed to cloud the skies over Washington. How did this happen? With a new and dynamic president in the White House the political will to take on climate change as a policy priority seemed finally in place. After years of bickering with the Bush administration over extending the production tax credit (PTC) for renewable energy, windpower merchants – and their counterparts in solar, geothermal, and biomass production – finally achieved meaningful government support when Mr. Obama agreed to include the PTC and investment tax credits (ITC) as part of last year’s stimulus package.

These tax incentive measures have proven themselves to be critical for initial and ongoing investment in renewable energy technologies. The PTC for wind energy had been allowed to expire three times under the Bush administration. In each case, new investment in wind dropped by more than 70 percent.

The RES would commit utilities to obtain a percentage of their power from renewable sources by a designated date. The loss of the RES language from the proposed Senate energy bill came a few weeks after Majority Leader Harry Reid announced that he was giving up on trying to get a provision into the legislation that would cap carbon emissions. With the abandonment of the RES came a clear message that Democratic leadership had all but abandoned comprehensive climate legislation.

Why was the RES so important to the sustenance of the wind energy industry? Tom Udall of New Mexico spelled it out in a letter that he drafted to leader Reid: “A strong RES will give certainty to clean energy companies that are looking to invest billions of dollars in the U.S. to manufacture wind turbines, solar panels and other renewable energy components.”

If the Democrats were looking for certainty all they had to do, as usual, was look across the aisle where they could be certain of no support. “We don’t have a single Republican to work with us,” was the way Senator Reid put it at a news conference. “We don’t have the votes.”

Indeed, by the end of the discussion in the Democratic caucus, Senate Dems announced they had given up on passing a comprehensive energy bill this summer and would instead pursue more limited legislation focused on the gulf oil spill and on energy efficiency standards. Americans who seemed to have reason to hope that the United States would finally demonstrate global leadership in addressing climate change, woke up to find their hopes being whittled away just as they did one year ago when substantive healthcare reform dissolved in the bitterness of Washington political gridlock.

Across the pond, however, things were looking quite different. Energy data released by the Digest of UK Energy Statistics (DUKES) indicated that wind power generation increased 31 percent in 2009 and now represents 2.5 percent of all UK electricity production. Wind is now generating power to more than two million homes in the United Kingdom.

British advocacy groups hailed the news, and called for even faster growth in renewables. Unlike the United States, European countries have RES structures in place. The United Kingdom’s RES mandates electricity generation from renewable sources at 15 percent by 2020. The European Union as a whole has set a combined RES target of obtaining 20 percent of its electricity from renewables by 2020. The UK holds wind generation from offshore installations in particularly high esteem. It plans to power the majority of the country with offshore turbines and expects to become a wind energy exporter by 2050.

Earlier this year, a report issued by the European Wind Energy Association indicated that most of Europe is on track to meet or exceed its RES targets.

As summer begins to wind down, Americans who thought the nation’s climate policy was heading in the right direction should not underestimate the gravity of these developments. With the likelihood of Democratic losses in mid-term Congressional elections on the horizon, the vision of bold U.S. leadership on climate change is quickly vanishing like a mirage on the beach.

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The folks who install insulated windows, efficient factory motors and energy saving lights apparently missed the memo about the economic meltdown.

As US gross domestic product slipped to under 1% in 2008, the $4.1 billion energy service industry grew 7%. Jealous? Just wait. That was nothing compared to the expansion predicted over the next couple of years, according to a new report by the Lawrence Berkeley National Laboratory.

Energy service companies, or ESCOs, will see 26% annual growth from 2009-2011 with revenue reaching $7.1 to $7.3 billion, the report estimates. ESCOs are private companies that typically offer energy savings improvements under long-term performance contracts.

How are they getting so much business in this depressed real estate market? A lot of it – nearly 70% — comes from what the industry fondly calls its MUSH market — municipal and state governments, universities, schools and hospitals. These institutions do not experience the boom and bust of private business, so were less hard hit by the economic downturn. Equally important, they have federal stimulus dollars to spend on energy efficiency.

Efficiency also has begun to catch the attention of the hard-to-persuade homeowner. The residential market in 2008 accounted for 6% of ESCO business, still small, but double what it was two years earlier. It helped that electric utilities increased their efficiency spending and subcontracted some of this work out to the private ESCOs.

State clean energy policies also aid the boom in ESCO activity. Massachusetts, Connecticut and Rhode Island, for example, have made energy efficiency a ‘first fuel,’ meaning utilities must secure all cost-effective energy savings before buying or building electric power. In addition, 18 states have created energy efficiency portfolio standards. They require that utilities achieve annual energy savings targets.

Not all of the news is good. Interest in energy efficiency ebbed among big businesses, not surprising given the economy. They accounted for 15% of market share in 2006, but only 7% in 2008. Uncertainty about the future makes them hesitant to commit to long-term performance contracts, according to the report.

“The traditional ESCO business model based on long-term performance contracts has always been a tough sell to private sector customers and the economic downturn further crimped its attractiveness,” the report said.

Where is the ESCO business heading? It appears the MUSH market will remain strong for quite some time. The report identified about $35 billion in potential business remaining from MUSH. The federal building market, which accounted for 15% of ESCO business in 2008, also continues to offer promise. The US Department of Energy invested $440 million in federal efficiency projects in 2009 and $498 million in 2010.

LNBL prepared the study with the help of the National Association of Energy Services Companies. The US Environmental Protection Agency provides an explanation of energy performance contracting here.

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

photo: Meanest Indian

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MP2 Capital is a San Francisco firm that develops, finances and invests in distributed generation and small-scale utility solar projects throughout North America, selling the electricity produced by its projects to commercial, government and utility customers under power purchase agreements and feed-in tariffs.

Its latest project is a 445-kilowatt solar photovoltaic array in Winsted, Connecticut. MP2 Capital has entered into a power purchase agreement to sell all of the electricity generated to the Regional School District No. 7 for 20 years under a grant from the Connecticut Clean Energy Fund.

The system, which sits atop multiple rooftops of the school district, was built by groSolar and is composed of 1,937 photovoltaic panels from Canadian Solar. It is expected to produce approximately 492,000 kilowatt hours of clean solar electricity and save the school district $26,000 in energy costs during the first year of operation. Over the term of the agreement, the system is expected to produce approximately 9,380,000 kilowatt-hours to offset the school’s energy use.

Brad Bauer, co-founder and managing director of MP2  Capital, talked with CleanTechies about the project.CleanTechies:  Is a backup system still required?

Brad Bauer: The school remains connected to Connecticut Light & Power (the local utility) service. Should the solar array not produce energy for whatever reason (e.g., weather, system malfunction, nightfall, etc.) the school simply purchases kilowatt hours from the local utility.

CleanTechies: Is there any out-of-pocket cost to the school system?

Bauer:  No, the school district incurs no up-front or ongoing expenses related to construction or operation of the solar array.  MP2 bears the cost of construction and operation in exchange for the district’s agreement to purchase the output of the system under the terms of a long-term power purchase agreement.

In this instance, because of a generous grant from the Connecticut Clean Energy Fund and MP2 Capital’s ability to fully monetize the available federal tax incentives, the District was able to achieve significant cost savings in the first year, an estimated $26,000 in savings, which it expects to multiply over time.

CleanTechies:  What are the opportunities and limitations for these types of solar power projects?

Bauer:   Power purchase agreements (PPAs) are efficient and economical ways for commercial and government entities to produce and consume renewable energy without incurring the up-front and ongoing expenses otherwise associated with a distributed generation renewable energy project.

When structured correctly – which requires full monetization of the available federal tax benefits, state and local incentives – a power purchase agreement will oftentimes allow a host customer to purchase electricity at a lower effective rate per kWh than if they had purchased the same kilowatt hours from the local utility or purchased the generating asset themselves.

Principal limitations on distributed generation solar power purchase agreement projects run from:

• economic (constantly evolving state/local incentive landscape, undercapitalization of the downstream market and scarcity of legitimate PPA providers with access to capital);
• to regulatory (need fair, low cost interconnection rules and net metering rules that allow some scale and do not discriminate against on-site power);
• to utility pricing practices (need to decouple utility profits from kWh sales in order to address the business disincentive that many utilities face when customers install distributed generation systems and need to have utility pricing reflect the on peak value of solar power).

CleanTechies:  Where are the other projects going on similar to this?

Bauer:  We sell electricity to customers a wide variety of customers from coast-to-coast – including WGBH Educational Foundation Trust in Boston, Massachusetts; Newington Public Schools in Newington, Connecticut; Denver International Airport (Denver, CO) and Santa Cruz City Schools (Santa Cruz, CA).  We recently started construction of solar arrays on 18 schools in the Denver Public School District (Denver, CO) with Namaste and Oak Leaf Energy Partners; are nearing completion on a project at a wastewater treatment plant in northern California; and are slated to begin construction on a small scale utility solar project where we will sell electricity and solar renewable energy credits to Progress Energy Carolinas (Charlotte, North Carolina) under a long-term power purchase agreement.

While a different sort of market, we are also quite active in the Ontario, Canada Feed-in-Tariff market where we are acquiring rooftops, building solar arrays and selling electricity to the Ontario Power Authority under long term power purchase contracts.

CleanTechies:  What qualifies a school or business for this type of agreement?

Bauer:  At some level, anyone with a utility meter qualifies for a distributed generation power purchase agreement.  That said, there are practical limitations in that the customer location needs to have attractive incentives:

• the customer’s kWh needs need to be sufficient to absorb embedded transaction costs;
• the customer needs to have adequate space to site the generating asset; the customer needs to be willing to make a long-term commitment to purchase power generated on-site; and maybe most importantly in today’s market,
• the customer’s credit needs to be strong enough to support an investor making a capital commitment based in no small part on their agreement to buy power from the generating asset over a long period of time.

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Slow down, high-speed rail seekers. In the race for stimulus money, the Obama administration has received applications from 24 states requesting $50 billion for high-speed rail projects, reports The New York Times.

That’s more than six times the amount of money designated. Joseph Szabo, head of the Federal Railroad Administration, told the Times that the selections will be merit based, and will be made this winter.

The Salt Lake Tribune reports that Utah Sen. Bob Bennett is involved in a fickle love affair with stimulus money. Two days before the Republican senator voted against the nearly $800 billion package – which he said would only stimulate the national debt – Bennett wrote to Energy Secretary Steven Chu asking him to pay special attention to a few projects in Utah. He wasn’t alone, reports the Tribune. All four of Utah’s Republicans in Congress voted against the bill, before using congressional stationery to try to nab a portion of the stimulus package for their state.Tax credits for companies that create jobs? Increasingly, economists and Washington officials are saying “Yes, please,” reports The New York Times. The federal government hasn’t tried it since the 1970s, but in the face of the highest unemployment rates in a generation, supporters are saying it may offer just enough incentive to get companies to hire new workers.

And finally, The Wall Street Journal reports that more than $270 million of stimulus money awarded by the Federal Aviation Administration has gone to low-priority projects. In fact, they are of such low priority, they fall below the threshold of projects that the FAA would typically weed out. We’ve reported on the FAA’s decision to fund low-priority projects with stimulus money, and on the inspector general’s blasting of the FAA for its stimulus-spending decisions.

Article by Sabrina Shankman appearing courtesy of ProPublica.

[photo credit: BakaOnigiri/WikiCommons]

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By all accounts the cash for clunkers incentive program has exceeded all expectations in both volume of sales, as well as answering skeptics by getting fuel inefficient vehicles off the road.

The new vehicles being purchased average nearly 10 mpg higher, saving nearly 4 million barrels of oil per year and eliminating the production of tons of greenhouse gases.

More importantly, the program and its surrounding attention seems to have driven consumers towards hybrids and fuel efficient vehicles even more than a 50 cent spike in the price of gasoline. According to Brian Benstock, the VP and GM of Paragon Honda and Acura, the program is also introducing new customers to imports. Benstock said the program has reversed the ratio of domestic/import trade-ins at his dealership. Previously about 70 percent of his customers were trading one import (mostly Hondas) for another. Now it’s the opposite: 70 percent of people walking in the door are swapping American made autos for Hondas.

The simple reason for this switch — no Hondas qualify as clunkers under the program, so customers now Benstock’s talking to customers who previously bought American SUVs and pickups. He said the Honda Civic (37 percent of sales) is the hottest seller, followed by the Accord, and then the Insight hybrid. Paragon ran out of Civic Hybrids a few weeks ago, so for now his sales people are putting people in standard Civics by touting its fuel efficiency and adding incentives. He expects to have more Civic Hybrids by the end of the month.

Sales overall are nearly back to “pre-recession” levels Benstock says, with just as many additional customers who aren’t getting the cash-back as who are. He admits that this stimulus has “done exactly what it was supposed to do — stimulate sales,” but that at some point auto makers have to take over in generating sales on their own.

Ford and GM have also seen a strong increase in sales, while the impact at Chrysler has been more modes.

The Senate will likely push through another $2 billion to extend funding for the program. Benstock says the “right” vehicles are being driven off the road through the program. Most of the vehicles are older SUVs, minivans and trucks. “They’re junk.”

American consumers have proven that with the right incentives — monetary in nature — they’re willing to buy more fuel efficient vehicles. The lesson for automakers (especially Detroit) is that with Congress and gas prices leading the way, the shift to fuel efficiency will continue.

This article originally appeared on Matter Network.

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