U.S. Clean Energy Needs Private Funding as Stimulus Wanes

U.S. renewable energy developers will need to find new sources of funding after incentives backed by federal stimulus programs wind down, according to a report from Bloomberg New Energy Finance.

Renewable energy companies have received more than $65 billion in tax credits, grants and loans offered through the American Recovery and Reinvestment Act, the research company said today in a statement.

“Nearly all of those stimulus funds have now been deployed,” BNEF said. “Unless the private sector steps into the breach with substantial new investment, project development will slow.”

One important incentive that’s set to end Dec. 31 is the U.S. Treasury Department’s 1603 cash grant program, which repays developers for 30 percent of projects’ costs.

“Financing for the U.S. renewable sector will look quite different in 2012, compared to the past three years, once the cash grant is gone, but different does not mean dead,” Michel Di Capua, BNEF’s head of North America analysis in New York, said in the statement.

Renewable energy projects will still be eligible for tax credits and large public companies seeking to reduce their tax burdens may become a new source of investments, the report said. The 500 largest U.S. public companies paid $137 billion in taxes in the last year, according to BNEF.

Google Inc. (GOOG) and PG&E Corp. (PCG) already make tax-equity investments, taking equity stakes in projects to qualify for a portion of their tax credits, and other companies “could follow follow their lead,” the BNEF report said.

The report was commissioned by the Bethesda, Maryland-based accounting and tax advisory firm Reznick Group PC.

The WinderHill Global Innovation Index, which includes 95 renewable energy companies from around the world, has fallen 36 percent this year, through Nov. 18.

To contact the reporter on this story: Ehren Goossens in New York at egoossens1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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