GREEN
11/10/2009 05:12 am ET | Updated May 25, 2011

Energy Projects Lag In Stimulus Spending

President Obama has pledged to transform the nation's energy policy and has made renewable energy a cornerstone of the $787 billion stimulus package, but so far the money for energy-related projects has been slow to leave Washington.

In February, Obama made a point of signing the stimulus package at the Denver Museum of Nature & Science, where he inspected its rooftop solar energy system and was introduced by the president of the company that installed the panels. Seven months later, the Energy Department is among the agencies with the slowest pace of stimulus spending.

Although energy officials have approved billions of dollars worth of stimulus proposals, the department's records show that only a fraction of those funds have been disbursed -- less than two percent of the total $36.7 billion in funds authorized to the department. By contrast, the Agriculture Department has spent about 15 percent of its stimulus funds and the Commerce Department about seven percent.

Matt Rogers, the senior advisor to Energy Secretary Steven Chu for the Recovery Act, said his agency has moved as quickly as possible while making sure the money is going to high-quality projects. "We are making very good progress," he said. "Every week we continue to move more money out the door."

This week, however, the department's inspector general reported that it has continuing questions about the department's ability to manage and track the effect of its stimulus spending. "We are concerned that the Department's information systems supporting Recovery Act activities may be unable to handle significant increases in workload or provide appropriate mechanisms to ensure that funds are accurately tracked and reported," Inspector General Gregory H. Friedman wrote in the report.

The internal report parallels the concern of some economists and energy analysts about the pace at the Energy Department.

"They have announced some grandiose programs, but what have they actually done?" said Matthew Kahn, an economist at UCLA who specializes in energy and the environment.

"A lot of money has been allocated but not very much has been spent," said Joel Kurtzman, a senior fellow at the Milken Institute in Santa Monica, Calif., and an expert on renewable energy. He said science and industry have "made tremendous strides" in the technology for solar and wind energy. "Let's get those up and running," Kurtzman said.

The renewable energy industry also has suggested that the administration has not moved fast enough. In May, trade groups representing solar, wind, geothermal and other energy companies wrote to Obama complaining that crucial loan-guarantee programs were being stalled because of bureaucratic delays, at a crucial time when credit had dried up. Kenneth W. Hansen, a Washington attorney advising the trade groups, said this week that only a portion of those programs have since been set in motion.

The stimulus package includes tax and spending provisions to weatherize low-income homes, modernize the nation's electric grid, train workers for green jobs, make federal buildings more energy efficient, and help build an industry that manufactures batteries for electric cars. It also includes 17 provisions designed to help boost the solar industry.

Rogers said that the department's plan included three phases. The first was tax incentives to individuals, designed to help put a floor under the economy. The second was grants to the states. The third phase is a set of competitive awards that aim to provide long-term and enduring investments in the nation's energy future.

"We are just now getting into that third block," Rogers said. As an example, he pointed to last month's announcement of $2.4 billion in grants to speed up the manufacturing and use of electric vehicles and batteries, the largest single investment in advanced battery technology for hybrid and electric-vehicles ever made. The announcement said that the money would go to 48 separate projects.

"The intent is to build a battery and advanced technology infrastructure in the United States," Rogers said. "We are trying to build a set of industries that last for decades."

On the day he signed the stimulus bill into law, Obama, surrounded by workers from the solar and wind industries, emphasized the importance of the alternative energy provisions. "Because we know we can't power America's future on energy that's controlled by foreign dictators, we are taking a big step down the road to energy independence and laying the groundwork for a new green economy that can create countless well-paying jobs," Obama said in his remarks. "It's an investment that will double the amount of renewable energy produced over the next three years."

Obama was introduced at the ceremony by Blake Jones, president and chief executive of Namaste Solar of Boulder, Colo. In a recent interview, Jones said his company was one of the ones that saw a quick benefit from the stimulus package. The stimulus bill, he said, spurred sales of residential rooftop solar systems by allowing for an existing federal tax credit to be combined with a new Boulder County program that provides loans for residential projects that install solar systems or make energy efficiency improvements.

"We were on the verge of laying people off when the Recovery Act passed," Jones said in an interview. "It let us know things were absolutely going to get better. We've hired a few more people and best of all we've got optimism for the future. It's no longer gloom and doom. We're planning for things to get better."

Because of the recession, Jones said, all the company's commercial projects had been postponed. Last week, the company announced that one of those projects, to install a solar energy system at the Louisville, Colo., headquarters of Eldorado Artesian Springs, Inc. was back on schedule - because under the stimulus the company could receive a cash incentive rather than taking a tax credit. Though the stimulus package was signed in February, the rule permitting that change was not adopted until July.

"There's no doubt it would have been better if it was faster," Jones said, speaking about both the rule change and the release of stimulus funds in general. But he added, "You need a balance between implementing provisions in a responsible way and making sure the stimulus hits the market quickly."

Some economists and energy experts are asking not only if the pace of spending is fast enough but whether the administration is realistic in trying to use those funds for two purposes -- to get the economy moving as well as change the way Americans use energy.

"The question is whether you can kill two birds with one stone - the two birds are ending the recession and de-carbonizing the economy," Kahn said. "Economists like the two Obama goals but some are skeptical whether both can be accomplished."

Kurtzman, of the Milken Institute, added that the Obama administration has not moved quickly enough to begin the crucial task of upgrading the nation's electric grid. He said modernizing the grid could be the key to success or failure in energy policy because it is crucial to speed the use of alternative energy - to move electricity from remote locations of the country that produce wind or solar energy, for example, to more populated areas that need it.

A so-called smart grid would also allow for greater energy efficiency by allowing customers to turn appliances on and off when energy is least expensive, and it would help to cut the threat of energy blackouts.

Obama talked about the importance of modernizing the electric grid at the stimulus signing ceremony last February. "Today the electricity we use is carried along a grid of lines and wires that dates back to Thomas Edison, a grid that can't support the demands of clean energy," Obama said. "That means we're using 19th and 20th century technologies to battle 21st-century problems like climate change and energy security."

Seven months later, Kurtzman said, not enough progress has been made. "When it comes to the grid, almost nothing has been spent," Kurtzman said. "What you need is to start building new parts of the grid - you need to get the plans done quickly and break down some of the regulatory hurdles so you can upgrade the grid."

The stimulus package contains a total of $11 billion for the electric grid, including $4.5 billion in grants to modernize the grid being administered by the Energy Department. Kurtzman said that isn't nearly enough.

Rogers, the Energy Department official responsible for the stimulus, said that the department has already received more applications for work on the smart grid than it can fund.

"My boss the secretary is an impatient man. I'm an impatient man. We would always like to be able to do things slightly faster," Rogers said. "This is a lot of money. We should be able to have a meaningful impact on energy efficiency."