The $800 billion US stimulus package launched by President Barack Obama will affect both domestic and foreign industries. The package includes funding for renewable energy projects, which will also affect Israeli venture capital and technology companies in this field. This is a dramatic change, because the US renewable energy market hitherto was quite difficult to penetrate for foreign entrepreneurs, compared with, for example, the Spanish market.
The US stimulus package includes federal government loans for renewable energy projects. Until now, such guarantees were only available for innovative technologies, but they are now available for commercial technologies as well, which creates opportunities for Israeli companies like Ormat Industries Ltd. (TASE: ORMT) and Solel Solar Systems Ltd. This budget item currently amounts to $6 billion, but Adv. Noemi Schmayer, a partner at M. Firon & Co. says that, with leveraging, the amount available is actually much greater.
Schmayer says, "The fact that this intervention is backed by the government makes it easier for financial and strategic investors to provide additional loans, which will greatly boost the $6 billion item to the point that the White House estimates at $60 billion."
Schmayer adds, "Grants will be provided for solar energy and other renewable energy projects."
Schmayer says, "The money targets everybody in the renewable energy industry, not just US companies, hence its importance for Israeli companies. For technology-based renewable energy industries to compete against conventional energy, as in the case with wind energy, government help is necessary. Without this assistance, in the present climate in which people are in no hurry to make investments, especially not in start-ups or in difficult and hard to apply technologies such as renewable energy, and when the price of oil has plummeted to $40 per barrel, the difficult question arises, 'How do you encourage investment in renewable energy?' The answer is government support."
Published by Globes [online], Israel business news - www.globes-online.com - on March 8, 2009
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