The Alternative Energy Investment Act, which establishes a $650 million fund to support programs designed to increase the development and use of alternative and renewable energy, improve energy efficiency, and reduce energy consumption, was signed into law on July 9, 2008, by Governor Edward G. Rendell.1 The Act, whose prime sponsor was Representative Eugene DePasquale (D-95), comes at a time when energy prices and the use of alternative and renewable energy are common topics of discussion among Pennsylvania businesses and residents.
The Act, in addition to supporting research and development of alternative energy technologies, provides assistance to consumers to cover up to 25 percent of the cost to install energy-saving equipment and boosts funding of the Low-Income Home Energy Assistance Program (LIHEAP) by $40 million. Of the $650 million fund created by the Act, $500 million will be administered by the Commonwealth Financing Authority (CFA), and $150 million will be transferred in General Fund tax revenue between FY ’08-09 through FY ’15-16 for various consumer programs.
The $650 million will be allocated as follows:
- $500 million to the Commonwealth Financing Authority
a. $165 million for alternative energy grants/loans administered by CFA, including loans to businesses or nonprofit economic development organizations and loans or grants to political subdivisions for clean energy projects, loans and grants to businesses for alternative energy production projects, and loans and grants to businesses, nonprofit economic development organizations or political subdivisions for site preparation (the loan or grant shall not exceed $30 million per project)
b. $100 million for consumer solar energy projects administered by the Department of Environmental Protection (loans will not exceed 35 percent of the purchase or installation price)
c. $80 million for loans and grants for alternative energy production projects related to solar energy (the loan or grant shall not exceed $30 million per project)
d. $40 million transferred to the Ben Franklin Technology Development Authority to support early-stage activities and research to develop and implement alternative energy and energy efficiency technologies
e. $40 million for the Low-Income Home Energy Assistance Program (LIHEAP)
f. $25 million for loans or grants for small-scale renewable energy projects, including geothermal technologies or wind energy projects, including manufacturing facilities for wind turbines
g. $25 million for loans or grants for high performance buildings to individuals or small businesses
h. $25 million for pollution control technology grants for coal-fired power plants that have an installed capacity of less than 500 megawatts to enable them to comply with new state/federal regulations.
- $92 million for consumer energy conservation projects
a. authorizes grants, loans, rebates and reimbursements of up to 25 percent of the purchase and installation price for consumer energy conservation projects, including:
- solar or solar photovoltaic panels
- energy-efficient windows and doors, including those with low-emissivity glass, coatings and glazings
- geothermal heat pumps
- insulation, air-sealing and other energy saving projects
- energy-efficient heating and cooling equipment
- energy-efficient solid-fuel residential furnaces including those that burn coal or wood pellets
- energy-efficient lighting systems for small businesses
b. individuals residing in owner-occupied dwellings and small businesses are eligible to participate.
- $50 million for alternative energy production tax credits
a. applies to facilities or projects that:
- use waste coal, biofuel, biomass, solar power, wind energy, geothermal, clean coal or waste energy technologies or other alternative energy resources recognized under the Alternative Energy Portfolio Standards Act
- manufacture or produce products that provide renewable energy
- are used for research and development of technology to provide alternative or renewable energy sources
- develop or enhance rail transportation systems that deliver alternative or renewable fuel
b. capped at 15 percent of the total amount of all development, equipment and construction costs, not to exceed $1 million per taxpayer in the applicable taxable year.
- $5 million for home energy efficiency loan program
a. authorizes loans for the purchase or installation of energy-efficient projects, including:
- air sealing, insulation and duct work
- energy-efficient windows and doors
- energy-efficient cooling systems or repairs
- roofing repair, replacement or improvements
b. loans shall be between $1,000 and $10,000, and eligible applicants’ household income shall not exceed 150 percent of the greater of current statewide or area median income as established by the U.S. Department of Housing and Urban Development for the applicant’s county of residence.
- $2.5 million for data center consolidation projects
a. funds projects that use server virtualization technology to consolidate and reduce the number of servers at a data center for energy efficiency purposes.
Sen. Mary Jo White (R-21), Chair of the Senate Special Session Committee on Energy Policies, commented on the Act: “Pennsylvania will now have a framework in place to expand and diversify our energy supply, and encourage steps that can reduce demand and increase efficiency, both in our homes and businesses. It’s an historic step that will boost the use of alternative and renewable energy throughout the Commonwealth.”2
According to a Department of Environmental Protection news release about the Act, Governor Rendell will work through the summer to reach an agreement with the legislature on measures that will improve Pennsylvania’s energy policies. “While I’m disappointed we were unable to reach an agreement on key measures related to electricity, specifically on conservation, energy efficiency and requiring service to be provided at the lowest reasonable rate,” the governor explained, “I’m encouraged by the commitment by all of the parties to get something done this fall. We’ll work throughout the summer to improve Pennsylvania’s energy policy so it works for consumers and protects them from the volatility of the open market and collusion or fraud.”3
The total amount of funding available under the Act was less than originally proposed by the governor, and it is generally viewed as just a step toward energy independence and the development of the renewable energy industry in Pennsylvania. Unfortunately, many of the Act’s administrative details have been left for further development by the Department of Environmental Protection and other agencies. Therefore, it is still uncertain how, and when, Pennsylvania businesses will be able to take advantage of the incentives the Act creates. Pepper Hamilton will continue to monitor the development of regulations implementing the Alternative Energy Investment Act, and we will continue to develop strategies to maximize the viability of development projects. The Act represents yet another tool to support such viability.
For more information on Pennsylvania’s Energy Independence Strategy, go to: http://www.depweb.state.pa.us/energindependent/site/default.asp.
For additional information on the Alternative Energy Investment Act, please contact Sean P. Delaney.
Endnotes
1 The text of House Bill No. 1 is available at: http://www.legis.state.pa.us/cfdocs/billinfo/billinfo.cfm?syear=2007&sind=1&body=H&type=B&BN=0001.
2 See General Assembly Passes $650 Million Alternative Energy Investment Act, available at: http://www.senatormjwhite.com/press-2008/070408.htm.
3 Gov. Rendell Signs Bill Establishing $650 million Energy Fund to Support Conservation, Spur Renewable Energy Development, July 9, 2008 Newsrelease, Commonwealth of Pennsylvania, Department of Environmental Protection, available at: http://www.ahs.dep.state.pa.us/newsreleases/default.asp?ID=5150&varQueryType=Detail.
Michelle M. Skjoldal and Sean P. Delaney
