Solar panels are installed on the roof of a house in Jamestown by Alteris Renewables. The company, the largest installer of solar energy systems in the Northeast, also will install a wind turbine at the New England Institute of Technology, in Warwick.

Photo courtesy of Alteris Renewables

WARWICK — By next month, the New England Institute of Technology expects to break ground on a 156-foot-tall wind turbine at its campus next to Route 95.

The machine will be small compared with other utility-scale turbines that can easily top 300 feet, but its value won’t be measured by its size alone. As its three blades spin in the wind over the busy highway, the turbine will demonstrate to the thousands of motorists who drive by every day that despite taking a hit from the nationwide banking crisis late last year, the renewable energy industry in the United States still has a bright future.

The sector experienced a marked slowdown after credit dried up in the fall, but alternative-energy companies in Rhode Island are optimistic that the $787-billion federal stimulus plan recently signed into law will boost an industry that the current administration in Washington has repeatedly trumpeted.

On Feb. 17, when he signed the American Recovery and Reinvestment Act of 2009 at a ceremony in Denver, President Obama put a spotlight on the bill’s clean-energy components, saying that the plan would lay “the groundwork for a new, green-energy economy that can create countless well-paying jobs.

“It’s an investment that will double the amount of renewable energy produced over the next three years,” the president said.

That type of rhetoric encourages local companies.

“We anticipate both the stimulus package and the lip service being paid to renewables will create a rising tide for the industry,” said Richard Corcoran, general manager of U.S. operations for Viessmann Manufacturing Co. Inc., an international maker of renewable energy systems that has an office in Warwick.

The package couldn’t have come at a better time for the industry. Of the 18 banks that lent money to wind and solar companies at the height of the market, only four or five still do, according to Keith Martin, a project finance lawyer with the international law firm Chadbourne & Parke. The trade publication Platts Global Power Report predicted that this year the wind power industry could see its first drop in additions to capacity since 2005.

“Because of the current situation it is difficult to get financing,” said Christine Real de Azua, spokeswoman for the American Wind Energy Association, an industry group based in Washington, D.C. “Projects aren’t canceling, but they are slowing down.”

The problem for the alternative-energy sector is the complicated tax equity structure typically used for financing. Tax credits awarded to wind, solar and other such projects aren’t necessarily useful to the companies developing them because many of those companies don’t have burdensome tax liabilities.

They were useful to financial institutions, such as JP Morgan or the now-defunct Lehman Brothers, that were once turning healthy profits, but that’s no longer the case. By the end of last year, there was a $2-billion to $3-billion glut in unused credits, according to Martin.

The stimulus plan aims to make renewable power projects more attractive to investors in a number of ways.

What could be the most important part of the package to the green power market is the creation of what amounts to a grant program that will offer $9.5 billion to companies over the next two years. For the first time, developers will be able to apply for federal financing, equivalent to 30 percent of a project’s cost.

“The best news is that they’ve essentially gone from a tax-based incentive to a cash-based incentive,” said Bill Fischer, spokesman for Allco Renewable Energy Group Ltd. LLC, a New York developer that is in talks with several Rhode Island communities to build green projects. “Projects will be less reliant on the banks.”

It’s too early to say if Allco will be able to use the grants for the company’s proposed solar-energy development in Coventry or if it secures agreements to build and operate wind turbines for Tiverton or other towns it has approached, said Fischer.

Overall, if the grants are leveraged, they have the potential to raise two to three times their value in financing, said George Sterzinger, executive director of the Renewable Energy Policy Project, a research group in Washington, D.C. That amount of money — more than $20 billion — could, in theory, double renewable energy capacity and fulfill the president’s vision, he said.

The stimulus package also makes the grants available as tax credits to all types of renewable-energy projects. The 30-percent investment tax credit, which was previously open only to solar-energy projects, would be paid up front. It could be an option for Deepwater Wind LLC, the New Jersey company that in January signed an agreement with the State of Rhode Island for an offshore wind farm.

The company’s $1.5-billion proposal would transform energy production in Rhode Island, which ranks 35th among states that harness the wind for energy. The state has only one operating utility-size wind turbine, which by definition is a machine that has a generator of 100 kilowatts or larger. That turbine is located at the Portsmouth Abbey school. Another, larger turbine is being installed nearby by the Town of Portsmouth and will be followed by New England Tech’s project.

Deepwater’s 100-turbine plan would generate 385 megawatts of electricity or 15 percent of the state’s needs. If it were on line already, it would push Rhode Island up to 12th place on the state-by-state list of wind energy production compiled by the American Wind Energy Association.

Chris Wissemann, chief operating officer for Deepwater, said the company may use investment tax credits for the initial phase of its project — the $85-million installation of eight turbines in state waters off Block Island by 2012. He said he doesn’t believe Deepwater will need to use the credits for the much larger second phase because the economy is expected to recover before that part of the project moves forward.

In any case, said Wissemann, Deepwater has secured its financing, primarily through D.E. Shaw & Co. LP, of New York, a global investment and technology development firm. But the new tax credits could be a boon to other companies, he said.

“It’s a major beneficial structural change,” Wissemann said. “This could be a salvation for the industry.”

Additionally, the federal plan extends a production tax credit until 2012 for wind-energy projects and until 2013 for geothermal, biomass and marine-energy initiatives. The credit, which was set to end this year, fueled the breakneck pace of alternative-energy development over the past several years and its expiration could have had disastrous effects on the long-term health of the market.

The production tax credit was first enacted in 1992 but has expired on three separate occasions and then been renewed. In each instance, the year before the credit ended, the number of projects boomed, and the following year, they dried up. Industry experts say the extension could help stabilize the market.

“This mitigates the ‘boom and bust’ cycles the industry has experienced,” said Benjamin Swanson, Rhode Island sales manager for Alteris Renewables Inc., the company that will install New England Tech’s wind turbine.

Still, the credit, which provides 2.1 cents for every kilowatt-hour of energy generated, has drawbacks, primarily because it is only awarded incrementally. An investor receives the benefit annually for the first 10 years that a project is in operation. The credit is not as enticing in these days of recession, but observers say it will become more useful when the economy starts to recover.

The package also provides $6 billion to guarantee loans “in an effort,” said Martin, of Chadbourne & Parke, “to jump start the stalled debt market.” It also authorizes $1.6 billion in Clean Renewable Energy Bonds for nonprofits and municipalities.

Overall, those in the alternative-energy industry have responded positively to the changes. The Solar Energy Industries Association predicts the package will create 67,000 jobs this year across the country and another 52,000 next year to install solar panels, manufacture components and build solar-power plants.

Greg Wetstone, senior director of governmental and public affairs at the American Wind Energy Association, said the renewable-energy industry shouldn’t be seen just as a beneficiary of the stimulus package. Wind-power projects and other developments that tap into clean energy can help drive an economic recovery, he said.

Indeed, 2008 was a record-breaking year for wind power despite the slowdown in the fourth quarter. Of all the new generating capacity for electricity installed in the United States last year, 42 percent came from wind turbines. Natural gas was the only energy source ahead of wind.

New England Tech says it believes in the long-term health of the industry.

That’s why it’s investing not only in the 100kw wind turbine but also in a solar energy system, said school vice president and general counsel Phil Parsons, who is coordinating both installations.

The turbine will stand in a parking lot a stone’s throw from Route 95 and is expected to provide up to a fifth of the power used by the nearby Automotive Technology building.

The savings on electricity costs will eventually pay back the cost of the approximately $500,000 machine, but there’s another reason for the investment. Teachers will use it to give students hands-on learning in renewable-energy technology.

“The bigger picture is that students will learn about this,” Parsons said.

He and others at the school say so-called “green-collar” jobs are the future.

“And,” said Michael Eggeman, assistant professor in the school’s electrical technology department, “we thought that even before the stimulus package.” What’s in the package:

The $787 billion American Recovery and Reinvestment Act of 2009 has a host of provisions aimed at the renewable energy industry, which includes solar, wind, biomass, geothermal and other such projects. The stimulus package:

•Expands to all green energy projects a 30 percent investment tax credit that was previously only available to solar power projects.

•Creates a Treasury Department program that allows a developer to take the investment tax credit as a grant equal to 30 percent of a project’s cost.

•Extends a production tax credit for wind energy projects until 2012 and for biomass, geothermal, wave power and certain hydropower projects until 2013.

•Sets aside $6 billion to support loan guarantees for renewable energy projects.

•Creates a 30 percent investment tax credit for companies that build or expand facilities that manufacture renewable energy equipment.Renewable energy in Rhode Island

•Deepwater Wind, of Hoboken, N.J., signed an agreement with the state in January for a $1.5-billion wind farm off the coast of Rhode Island that could eventually provide 15 percent of the state’s power.

•Allco Renewable Energy Group, of New York, N.Y., is proposing a 100-acre solar energy project in Coventry and has approached Tiverton and several other unnamed Rhode Island communities with plans to install and operate wind turbines for them.

•Alteris Renewables, of Wilton, Conn., is the largest installer of solar energy systems in the Northeast. The company, which has a sales office in Bristol, also installs wind turbines and has been hired to put up a utility-scale turbine at the New England Institute of Technology’s campus in Warwick.

•Viessmann, a manufacturer of solar water heaters and other renewable energy systems with an international headquarters in Allendorf, Germany, bases its U.S. operations in Warwick.

•TPI Composites, of Warren, opened a facility in Newton, Iowa, last year that manufactures wind-turbine blades.

akuffner@projo.com