How the Infrastructure Bill Will Affect Renewable, Water, and Oil & Gas Companies
The president has signed a $1.2 trillion bipartisan infrastructure bill, a massive effort to boost Wind, Solar, Water, and Oil & Gas industries, rejuvenate American infrastructure, and safeguard our country against extreme weather events. The infrastructure bill offers more than $550 billion in new spending across areas intended to invigorate the economy, encourage competition and increase job opportunities.
Wind, Solar, Water, and Oil & Gas operators across the United States are eager to learn more about what it means for them and how they can obtain their share.
Who is Funding the 2021 Infrastructure Bill?
Funding the new infrastructure package is proposed to come from the $2 trillion raised in revenue over a decade, without adding to the federal deficit long term, according to the Department of Treasury.
While some may have called the calculations, "rosy," the nonpartisan Joint Committee on Taxation has judged that the “Build Back Better Act” would raise $1.48 trillion in revenue over a decade and be unlikely to add to the deficit long term.
A Penn Wharton Budget Model report released Thursday has estimated the plan would cost $1.87 trillion over a decade and raise $1.56 trillion — leaving a shortfall of more than $300 billion.
How Do Operations Get Their Share?
Start calling your local government officials and educating them about your projects now!
Big infrastructure projects are broken into numerous smaller project funds - each specifically allocated for a specific purpose. Typically, with one large fund being made up of many smaller funds with specific intent. For example, a transit fund consistent of X dollars would then be allocated locally by the number of transit riders in a city.
Fund allocation priorities are set on the national level, and formulas approved by Congress dictate how much money is sent to various states. Once the money reaches the local level, local leaders have control over what projects receive funding.
States also have the power to decide to allocate funding to county or city governments within their state. If this happens, officials on that local level will make the decisions about which projects get funding.
Knowing that the money is going to be hitting your state at some point in 2022-2023, the ideal situation would be to prep your local government on what projects your Wind, Solar, Water, or Oil and Gas operation are undertaking, and how they will benefit your community, now.
Where Does the Money Go?
$55 Billion for Water Infrastructure
After underinvesting and frankly neglecting American water infrastructure for generations, $55 billion dollars is being distributed for lead pipe replacement, chemical cleanup, and clean drinking water.
As far as allocation, $8 billion has been set aside for Western water projects - alone. This includes billions for water recycling systems, groundwater storage, and upgrading aging dams and canals.
Money spent on water infrastructure will help operations tackle the specific problems facing this sector: a declining workforce and lack of technological advancement that has put them behind their energy peers. By utilizing this funding in smart ways, this will enable water utilities to become more proactive and digital, that can future-proof their daily operations via technology. As America finally funds these long-standing essential issues, it will be interesting to see how the funds are specifically handled state-to-state and how the outcome varies among different water operations.
$65 Billion for Clean Energy, Wind, and Solar
2020 saw the most new wind and solar capacity installed in the U.S. ever — 32GW, in a single year, according to the Energy Information Administration. In a similar style, the infrastructure bill marks the largest investment in clean energy transmission and the electric grid in American history. The trend is clear: renewable energy is growing exponentially, and the government is ready to finance it.
The $65 billion will be used to create a new Grid Deployment Authority, to invest in research and development for electricity distribution technologies, and to promote smart grid technologies.
This exciting development supports a future clean energy economy, and specifically includes money to build out brand-new offshore wind infrastructure and a national network of electric vehicle charging stations. Rural communities, which often lack new project funding, will also get grants and loans to transition to renewable energy.
What should be most exciting is for wind and solar operations is the $20 billion allocated to incentivize governments to purchase next-generation technologies.
For renewable operations, this means a massive opportunity to gain a competitive edge, by using technology to improve the bottom-line.
$21 Billion for Oil and Gas
While the trillion-dollar infrastructure bill is intended to expedite the transition to a lower-carbon energy sector, provisions in the bill leave the oil and gas sector-major space. In fact, the bill is already increasing the demand for oil across the United States.
The infrastructure package also has positive oil and gas provisions embedded within it, like funding for roads, which requires oil-based asphalt.
Included in the bill is $21 million dollars for the cleaning of orphaned oil and gas wells that have become the property of state or federal agencies. The bill will authorize $4.7 billion dollars specifically for the plugging and reclaiming orphaned wells and will bolster jobs for oil workers.
How Can Operations Use This Information to Gain a Competitive Advantage?
New government funding has the opportunity to be a real game-changer for your operation. But, much like the covid relief funds, the allocation will be competitive and a bit mystified.
The best way to secure funds for your operation is to do the following:
- Meet with local leaders, educate, and advocate about your business and its greater community influence - how will you use the funds and how will it help your community?
- Implement technology to ready your operation for the fast-approaching future.
The best way forward to leverage some of these projects is to integrate technology to ready your organization by replacing manual, tedious tasks and giving your engineers and operators time back.
Technology exists that offsets the unique needs of your operation, including:
- The ability to automate work that is currently being done manually.
- Prevention of future asset/equipment downtime.
- Automated operational analysis that addresses problems before they occur.
- Predictive diagnostics: knowing when the asset will fail based on events.
- Dedicated support system, so that your organization can become technologically advanced without any headaches.
By integrating these technologies now, it will not only be easier to get funding, but it will be easier to use that funding to make a massive impact on your bottom line.