Companies across Silicon Valley have been taking advantage of an Energy Department grant program that refunds up to 30 percent of the cost of transitioning to greater energy efficiency. The funding has helped companies acquire pricey solar panels, wind turbines, and Bloom boxes to generate energy. The grant is set to expire this year.

The problem, they say, is that while energy efficiency is cost-effective in the long run, the initial installation, particularly at this early stage, is very costly, with a single Bloom box running as much as $800,000. This is offset by the grant, made as a cash payment to each company. Depending on the size of the installation, the grant can be worth hundreds of thousands, or even millions, of dollars. On the other hand, the decision to install alternative sources of energy requires significant planning and lead time. To be eligible for the grant, the project has to be underway by the year’s end.

Other concerns is that the elimination of the grant will reduce business for startup companies that are only now beginning to produce alternative energy sources. While Bloom has sold its entire inventory for 2010, the end of the grant will make it more difficult for the company to sell its line in 2011. Companies will be more hesitant to make the transition as long as the status of the grant remains in limbo.

Similarly, Solar City recently announced that it would be adding solar panels to the roofs of thirty Walmarts across California and Arizona. While these installations are covered by the grant, if it expires it will be harder to coax additional stores to adopt solar energy.
Jim Conlow of San Jose’s Sprig Energy Systems says that, “Ending it at the end of the year would be too soon. There are a lot of projects that aren’t approved yet, and people are still interested. There has been a rush of people trying to get things done.”
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