A Jolt in the Arm

Washington state is on the cusp of another breakthrough. Only this time the change isn’t in aerospace, software or the internet. It’s in energy.

But there’s a major caveat for those seeking to benefit from this new gold rush: It has never been done before. And new federal spending is going to change the landscape in ways we can’t predict.

Thanks to the American Recovery and Reinvestment Act, the massive three-quarter-trillion-dollar federal stimulus package, a lot of money is going to be flooding the energy sector. Specifically, $41 billion, and that doesn’t take into account what might accrue as a result of a more favorable tax climate for alternative energy programs.

Tony Usibelli thinks that might be another $20 billion in tax benefits. As director of the Energy Policy Division of the state Department of Community, Trade and Economic Development, he’s watching the coming flood with anticipation. His agency will administer about $176 million in new funding as a result of the bill.

Of the $176 million, larger cities, towns and tribal governments will receive about $46 million of their own to work with, but the rest will be distributed through the state’s low-income weatherization program (about $59 million), the State Energy Program ($60 million) and the Energy Efficiency and Conservation Block Grant program ($11 million).

The Block Grant Program was established by Congress in 2007, but has never been funded. The State Energy Program is usually funded to the tune of about $1 million, while the best-capitalized program, weatherization, usually clocks in at about $4 million to $5 million per year. So these programs are getting 10-, 30- or 60-fold increases in funding. “This is unique,” Usibelli says.

But how to tap into that cash flow is another question entirely. As is how to make sure that money isn’t wasted (it is government spending, after all), and how it might be used to maximize its impact. And then there’s the accelerated timeline. The funds in the State Energy Program, for example, must be committed by September 2010.

“It makes it somewhat more difficult if someone is a startup company, as opposed to those in the early commercialization stage,” Usibelli says.

Startups might be better off targeting a much larger pot, the $30 billion or so that the federal Department of Energy will distribute to various programs nationwide. These funds are more tailored to research-and-development-oriented businesses, but they come with a lot of strings attached.

“Almost all those programs need matching dollars,” says Rick LeFaivre. “It really almost only makes sense for a startup if you’re going to go that way

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