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Renewable Energy Stimulus

13% of the Stimulus Will Be Spent on These Projects

By Nick Hodge
Wednesday, February 18th, 2009

A few sectors have been declared early winners now that the $787 billion stimulus has been signed into law.

Flaws and all, there's no point it debating or trying to fix it now. As savvy investors, all that's left to do is single out the ways to profit and try to recoup your personal share of the tax dollars being doled out to stave off what are now being called "catastrophic consequences."

Judging by the headlines generated since the bill's signing, cleantech and infrastructure are the two sectors that should get your early attention.

Here are a few that caught my eye:

  • A Big Green Cheer for the Stimulus Bill

  • U.S. Economic Stimulus to Boost Renewable Energy

  • US Stimulus Crucial for 'Smart Grid' Industry

  • Green stimulus: Who wins

  • Today's Hot Tip? Infrastructure

But to find out exactly who will profit, you must first understand how the stimulus will benefit the renewable energy and green infrastructure sectors.

Green Stimulus Spending

The stimulus, officially called the "American Recovery and Reinvestment Act of 2009," allocates about $47 billion for renewable energy, smart grid, and energy efficiency programs.

An additional $20 billion is available for in the form of tax incentives, which includes an extension of the production tax credit (PTC) and a new investment tax credit (ITC) for manufacturers of renewable energy technology.

Improved public transit, including high-speed rail, is slated for $17 billion.

And the final green portion comes in the form of another $20 billion for improving and updating clean water infrastructure.

A few more billion are being set aside to aid homeowners in adopting geothermal heat systems and solar hot water heaters, but the amount is marginal and really has no direct investment implications.

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In a nutshell, $104 billion is slated to come green's way... a full 13% of the stimulus package.

Here is where some of that money is going:

  • $4.5 billion to boost the energy efficiency of federal buildings

  • $6.3 billion for energy efficiency and conservation grants

  • $5 billion to weatherize old buildings

  • $2.5 billion for energy efficiency and renewable-energy research

  • $6 billion for new loan guarantees for wind and solar

  • $6 billion for cleaning up toxins on former military sites

  • $1.2 billion to fund the Environmental Protection Agency's environmental cleanup programs

The cleantech industry is about to enjoy a more equal share of the subsidies that have been afforded the oil and coal industries for years.

By acting quickly and staying ahead of the curve, you can guarantee long-term profits by using recent lows to gain access to the energy and water juggernauts of tomorrow.

Leveraging the Stimulus for Profit

The two parts of this bill that will do the most to aid the cleantech industry are the extension of the production tax credit (PTC) and the newly created ability to claim an investment tax credit (ITC) or grant in lieu of the PTC.

Sounds complicated, I know. In layman's terms what that means is wind developers now have confirmed incentives and policy guidance through 2012. They can also now get their incentives sooner, because the stimulus allows developers to file for in investment tax credit. For homeowners, this means they can now get back 30% of the cost of a new solar system after it's been in operation for 60 days, instead of waiting until tax time the following year.

All this is aimed at getting private capital flowing once again to the cleantech market in effort to create jobs and clean energy.

Since the credits markets have been so constricted, developers of cleantech projects like large solar and wind farms have been hesitant to pony up the dough for new projects. These incentives should help to change all that and get the money flowing once again.

Investors and homeowners are more likely to buy wind turbines and solar panels if they know they have Federal support and can claim their incentives up-front or soon after the project is completed.

And manufacturers of wind turbines and solar products, seeing a resurgence in demand, will be more apt to continue with now-delayed expansion plans. It'll help that manufacturers are now eligible for a 30% tax credit on new projects certified by the Secretary of the Treasury through a bidding process.

The "Buy American" provision will ensure that U.S. cleantech firms receive the bulk of the benefits.

So I'd be looking at major domestic solar players like First Solar (NASDAQ: FSLR), SunPower (NASDAQ: SPWRA), and Energy Conversion Devices (NASDAQ: ENER).

There are also a host of energy efficiency investments that are sure to boost your portfolio.

The billions of Federal dollars about to be spent are going to be the biggest government infrastructure investment since the interstate highway system was launched in the 1950s.

And securing your share couldn't be easier. Guaranteed winners are being created.

To take all the guesswork out of it for you, I've prepared a report that outlines 10 specific investments that will benefit from stimulus spending.

The billions of Federal dollars are going to start being allocated on March 3rd. That's when Wall Street will really start paying attention to these plays. By beating The Street to the punch, you can secure your winnings early, and ride this stimulus for all it's worth.

Call it like you see it,

nick hodge

Nick


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