The first step in the $100 billion dollar stimulus voyage begins with paperwork.
Some of the applications for loan guarantees under the American Recovery and Reinvestment Act (ARRA) can run 200 pages or more, not including exhibits and tables of contents (see Obama Signs Stimulus Package).
The clock, moreover, is running. Applications for the $400 million advanced electric program opened 40 days ago. Applicants only have 60 days left to file applications. Money under the program will start being delivered in September.
"It is not as messy as it seems," said Steve McBee of McBee Strategic Consulting. Nonetheless, "it's an unprecedented amount of money."
What that means, of course, is that greentech companies of all sizes are going to need to enlist professional help if they want to participate. As a result, McBee and national law firm Cooley Godward Kronish today announced an alliance to help clients navigate the new regulations.
The ARRA in many ways seems destined to reorder the energy business as well as the economic foundation of the United States. It is unlikely that the U.S. will become a bastion of socialism, but the government is taking on the role of the country's largest investment bank, thus placing it in a position to foster new companies and ideas while stranding others.
Overall, the stimulus will likely be a boon for green energy because it will bring stability to an industry whose fate has been tied, sometimes fatally, to the price of oil. The budding green business of the 1970s came crashing down less than a decade later after oil plummeted and there was political turnover in Washington.
This time around, the federal government, as a whole, appears to be committed to making a long-term commitment to alternative energy and green technology both as a way to stimulate job growth and improve national security.
"The energy policy of the last 20 years has been ridiculous," said McBee. "There is a sense that this has to be viewed as patient capital," he added later.
One of the first things companies need to do is understand the nuances of the program. Overall, the energy portion of the ARRA consists of $34 billion in stimulus spending, $44 billion in loan guarantees and $12 billion or so in direct government purchases of things like electric vehicles or equipment for the USDA. (Estimates on the size of the portion of the $787 billion ARRA that will help green industries vary.) The loan guarantees require 20 percent matching funds from recipients while grants require 50 percent matching funds.
Applicants in most instances also have to prove they are shovel ready, noted Jim Fulton, who manages Cooley's cleantech practice.
The ARRA will only be the first step, said McBee and Fulton. The Obama administration also wants to pass carbon legislation. Neither McBee nor Fulton believe carbon legislation will pass this year. The House might pass a version, but the complexities and competing interests of carbon will likely kill it in the senate.
McBee said that carbon legislation might get passed before the 2010 elections.