The US Treasury announced yesterday that the government will allocate $3 billion in government stimulus funds to cover upfront project costs in the clean energy sector. In an effort to kickstart an industry worn down by recession, the money will go to developers to finance up to 30% of wind farms, solar plants, biomass facilities and other renewable energy projects.

What’s especially remarkable about the initiative is that the government will be issuing direct payments – instead of tax credits – to qualified companies that build and start clean energy operations beginning on or after January 1, 2010. The funding, part of the American Recovery and Reinvestment Act, will be critical to boosting the fortunes of limping green industries like wind power, where total installations in 2009 will likely fall 40% below last year as a result of the broad economic downturn.

From 2006-2008, big investment firms like Goldman Sachs and the now-defunct Lehman Brothers paid for green energy projects in return for 30% federal tax credits. Since damaged banks won’t be paying taxes for years to come, institutional investing has essentially abandoned the renewable energy field. And for small producers, making enough revenue to even reach the taxation stage is a struggle. 

Forbes predicts that these grants “could boost the fortunes of companies like turbine manufacturers General Electric, Vestas and Siemens, while solar module makers SunPower and First Solar could also gain business.” Treasury Secretary Timothy Geithner predicts that more than 5,000 renewable businesses will partake in the incentives. The government’s commitment to clean energy development sets a powerful precedent for the public and private sector alike. The kind of forward thinking we need to ensure continued innovation in our energy infrastructure.