American Recovery and Reinvestment Act will stimulate renewable energy and energy efficiency

(17/03/2009)

IDC's Industry Insights has examined the implications of the U.S. economic stimulus plan, the American Recovery and Reinvestment Act (ARRA), and quantified the technology spending that may be stimulated from initiatives to be deployed in the three vertical markets of energy, government and healthcare. The company estimates that approximately $101.2 billion in technology spend will be generated over the next five years.

The estimate includes both information technology (IT) spend – traditionally the focus of IDC’s market research – as well as non-IT technology in these sectors, such as smart meters, in-home display devices, energy management systems, and renewable energy technologies surrounding wind and solar power.

The ARRA will fund some of this spend directly, but additional technology spending will be stimulated as the legislation provides incentives and tax rebates for the projects it promotes.

“While the ARRA does not provide detailed information about the exact amount of technology spending that will be allocated, the Industry Insights companies performed an extensive review of the legislation and held discussions with industry technology buyers, to estimate the amount of technology spending that is likely to be generated as a result of the ARRA's key initiatives in energy, healthcare and government,” said Meredith Whalen, group vice president and general manager, Vertical Market Business Units at IDC.

IDC’s Industry Insights anticipates that the more than $40 billion investment the ARRA targets for the energy industry will stimulate approximately $77.6 billion in technology spending. The energy initiatives that will experience the most growth will be related to intelligent grid, renewable energy, and energy efficiency.

The healthcare industry is expected to see $21.1 billion in technology spending, with the largest portion concentrated on promoting deployment and usage of electronic medical and electronic health records, including incentive payments to physicians who implement and use these tools. Additional funds will be steered to technology solutions that measure the comparative effectiveness of programs and clinical intelligence solutions.

Within the government sector, the ARRA will provide approximately $2.5 billion in technology funding to Federal agencies for new and existing programs, including allocations for the Social Security Administration, the Department of State, and the Department of Homeland Security. Industry Insights’ research identifies 12 different government technology opportunities that are anticipated to be supported by the new legislation.

In addition to spending for improving the infrastructures necessary to support the management of the ARRA funds, the Government also plays a second role in the ARRA scenario – that of the gatekeeper of funds. Industry Insights provides guidance on how technology suppliers can best engage with the Government and plan the best business strategies to pursue new revenues from this significant opportunity. One key strategy will be the ability to demonstrate results that are achieved in line with the ARRA’s promise of economic recovery.

The IDC Industry Insights companies that focus on the vertical markets highlighted by this research have conducted in-depth analysis on many of the technology initiatives that are expected to see the greatest opportunities from the ARRA. Energy Insights provides coverage of the intelligent grid, distributed and renewable energy, and energy efficiency. Health Industry Insights provides perspectives on the healthcare provider, healthcare payer, and drug discovery markets. Government Insights research will cover both the IT spending that government will make for its own internal operations and well as the best approaches for navigating through the buying cycle.

Related categories:  Environmental legislation   Solar power and photovoltaics   Wind power