Green Era

Green Era

February 24, 2010

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

Is the $787 billion stimulus plan living up to its promise? The measure, which passed largely along party lines more than a year ago, has sought to stem job losses and to create a new economic foundation.

Utilities are, in effect, at the epicenter of this transformation. To some, the industry is working hard to build such a future but to others, it is playing it too safe.

"Utilities have not participated to the level they should have in these dialogues," says Ryan Cook, vice president of the employment services division of Energy Central, the publisher of EnergyBiz Insider and the producer of the EnergyBiz Leadership Forum. The goal, he adds, is to attract fresh thinkers into the New Energy Economy -- jobs that are long-lasting. "The jobs that I see being created now are green collar jobs for those workers who have been displaced. We now need to ask if these jobs are sustainable or whether they are short-term, stop-gap measures."

According to the White House, the stimulus funding measure has directly saved or created about 52,000 clean energy jobs as of the fourth quarter of 2009. But many more such occupations are on the way. About two-thirds of the original $787 billion that is to be distributed over 10 years has already been allocated. Billions will go into modernizing the nation's energy infrastructure.

Since the recession's onset in December 2007, about 8.4 million jobs have been lost. But Obama's team says that the stimulus has saved or created a total of 2 million jobs and that it will create another 1.5 million this year. The economy grew at 5.7 percent in the last quarter with many economists predicting a growth rate this year of 2.5 percent. Unemployment, however, still stands at nearly 10 percent.

While defending his record on the anniversary of the law, President Obama introduced some green businesses that he says would be backtracking if not for the stimulus package. Instead, those companies are now preparing for the future by building solar panels and retrofitting homes and businesses. He is urging the American people to be patient so that the full effect of his policies can take root, acknowledging that it "does not yet feel like a recovery."

At present, IHS Global Insight says that 750,000 green jobs exist in such fields as renewable power generation, research, consulting, engineering and construction. Over the next 30 years, it is predicting the creation of an additional 4.2 million clean energy jobs.

President Obama's message is that only the federal government has the resources necessary to stimulate demand during deep recessions and that it must use that financial muscle to try and help restore confidence. Ultimately, however, the public sector must step aside after it has catalyzed the economy and let the private sector take over.

Consider that the administration has already awarded 100 grants totaling $3.4 billion to those businesses that are helping to build out the intelligent utility. Those companies, which themselves are contributing at least $4 billion, will do everything from installing smart meters that can facilitate two-way communications between utilities and their customers to mounting devices along their networks that can notify grid operators of congestion. They can then redirect power flows and avoid brownouts, saving businesses and the economy untold sums in lost opportunities.

Stronger Stance

To be sure, the president's policies don't sit well with the opposition party, which says that the excessive spending will burden the economy with an irreconcilable debt load. Republican leaders had preferred tax cuts, maintaining that businesses would stimulate jobs with that money.

"The American people took on record amounts of debt to fund Washington Democrats' trillion-dollar 'stimulus' and a year later the nation's unemployment rate is near 10 percent," says House Minority Leader John Boehner of Ohio. "Taxpayers aren't getting their money's worth from the trillion-dollar 'stimulus' and struggling families and small businesses are rightly asking 'where are the jobs?'"

It's an argument that holds sway in places where unemployment remains high. But the Obama administration responds by saying that a third of the total stimulus package has gone out in the form of tax cuts to working families -- delivered in small increments through their pay checks that they would spend. If the bulk of the overall measure had been tied to tax cuts, the White House adds that the money would have been saved. Unemployment rates would have therefore risen even higher.

Utilities generally are reluctant to embrace change but have a chance to capitalize on the shifts in public attitudes. Billions are on the line to promote the development of green energy production and the ensuing technologies that will bring them to market. Some power companies are making related investments because of mandates. Others are doing so because they fear falling behind.

Regardless of their reasons, now is the time to build for the future, says Energy Central's Cook. It's about getting a competitive edge and creating long-term value: "Utilities should take a stronger stance. They need to get some of this stimulus funding to train workers for careers in the green economy. The graying workforce remains a persistent issue."

Obama's stimulus package is intended to lay the groundwork for future economic development and to use energy-related businesses as a springboard to do so. While denounced in some circles as government largess at its worst, clean energy funds are getting allocated to dutiful enterprises. Therein lay the opportunity for utilities -- to attract the best and the brightest that help them acclimate to the green era.