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What The Hold-up At Treasury Means For Energy

Last week, I wondered if the Department of Energy was up to the task of doling out all those funds for clean-energy projects that are authorized in the big stimulus bill quickly enough. After all, the department still has a backlog of grants and contracts left over from older legislation. So that's definitely a story to follow, but as a small tangent, it seems there could be a related concern with the Treasury Department, too.

Some background: A few provisions in the stimulus bill would allow wind (and, to a lesser extent, solar) companies to receive either cash grants or refundable tax credits instead of the old production credits. Firms find the former more valuable, especially solar and wind developers who aren't yet profitable and don't have a big enough tax liability to benefit from non-refundable credits. (In the old days, these smaller companies could just sell their credits off to investment banks in exchange for financing, but given the credit crunch, that option is getting scarce, so there was a need for refundable credits.)

Anyway, those are all fine ideas. But there's a snag. As The Washington Post reported the other day, Tim Geithner and the Treasury Department have been, understandably, wrapped up in the banking and housing crises, and the administration hasn't exactly had a ton of free time to fill many lower-level Treasury positions. Ed Fenster, CEO of SunRun, a residential solar provider, observes via e-mail that "many key positions in the Treasury Department—let alone those that must be created to administer this program—remain unfilled. Although [the solar and wind] program is likely to be a priority, it may take awhile for Treasury to begin paying grants."

By the way, Fenster predicts that wind power is likely to benefit more from the new tax changes than solar will: "Wind power is the biggest winner…. Although the stimulus package increases the subsidy for most wind projects, it only increases the availability of financing for and demand for solar projects. As such, we expect it will result in an increase in the price of solar over the next few years." Worth noting.

--Bradford Plumer