Despite the speed with which the government wants to act - the American Recovery and Reinvestment Act -- includes a goal of spending 50% of the $787 billion allocated by the legislation within 120 days from when it is signed into law -- many hurdles and unanswered questions remain, even though more than three-quarters of the 120 days have already passed since the bill was signed on February 17, 2009.

It has been widely reported that the Recovery Act contains $67 billion in energy sector allocations ...So, despite all the excitement, few if any power projects have benefited from Recovery Act funding.

Even looking beyond the hurdles and delays, it is difficult to assess the impact that the act will have on the power sector, and particularly on capital projects, because few power sector allocations come from the direct spending provisions of the act.

They flow from tax incentives and from the Department of Energy's loan guarantee program, so their use is subject to several variables, and their ultimate impact in terms of possible projects financed is harder to gauge.

It has been widely reported that the Recovery Act contains $67 billion in energy sector allocations -- some observers put the number as high as $97 billion - but in terms of capital projects that number is far smaller, about $18 billion.

However, there is a great deal more, as much as $110 billion in loan authority and as much as $15 billion in tax incentives, that is available for the power sector.

So when they think of capital projects, that is where power company executives are putting their focus.

Power companies have, in fact, already begun to line up to take advantage of the tax breaks and loan guarantees.

In the last couple of weeks executives at FPL Group, Invenergy, BrightSource Energy and Ormat have all spoken publicly about their plans to use Recovery Act funding.

During a recent earnings call, Armando Pimentel, FPL Group vice president and CFO, said that NextEra Energy Resources, FPL's unregulated unit, plans to bring more than 1,000 MW of wind capacity online in 2009 and to use convertible investment tax credits on 600 MW to 700 MW of that total.

The Recovery Act allows developers to elect to use the Investment Tax Credit instead of the Production Tax Credit as a means of addressing the steep decline in wind farm installations since the recession hit.

The recession dried up earnings, and without earnings tax credits have no use.

To address that situation, the Recovery Act also allows developers to take a cash grant in lieu of the ITC.

The cash grant is for 30% of a project's cost and is payable by the Treasury Department within 60 days of the application date or the in-service date of the project.

Which trigger date will be used has not yet been determined.

Pimentel also said NextEra would likely use the cash grant for about two-thirds of the 1,000 to 2,000 MW of new wind capacity it expects to bring online in 2010 and on up to two-thirds of the wind capacity the company plans to add in 2011, though he did not specify how much capacity the company anticipates bringing online in 2011.

For a typical 100-MW, $200 million wind project the cash grants would total $60 million, he said.

The grant "gives you a whole heck of a lot of certainty when it comes to cash ... It's a big, big amount for us," Pimentel said, noting that 30% of the $1.4 billion cost of 700 MW of wind capacity amounts to several hundred million dollars that "would be coming back to us within the next 12 months or so."

Invenergy CEO Michael Polsky has said he expects his company's planned 110-Grand Ridge in LaSalle County, Illinois, to be one of the first wind projects to benefit from the cash grant.

BrightSource recently said it has applied to the DOE for loan guarantees to support its solar thermal projects.

And Ormat Technologies has said that it plans to seek stimulus funding to proceed with its build-out of geothermal power projects.

Keith Martin, a partner with the law firm of Chadbourne & Parke says he expects the cash grant provisions will attract between three and five thousand applications.

But he wonders whether or not the Treasury Department will be able to handle those applications without a staff dedicated to the task.

In addition, Treasury has yet to write the rules to implement the cash grant program; they are not expected until July.

And while one provision of the Recovery Act gives cash grants, another takes away tax benefits.

The act stipulates that recipients of cash grants can only use 85% of the accelerated depreciation associated with a project.

So developers and their bankers are trying to devise ways to monetize the remaining 15% that would otherwise be left on the table.