California Legislature Fails to Pass 33% Renewable Portfolio Standard
An alert written by Stoel Rives partner Seth Hilton:
Last night, the California legislature failed to pass Senate Bill 722—the 33% Renewable Portfolio Standard (RPS) legislation—by the close of the legislative session. The bill would have increased California’s RPS to 33% for both investor-owned and publicly owned utilities. It would also have placed limits on the use of renewable resources located out-of-state to meet California’s RPS—utilities would have been required to meet a certain percentage of their RPS obligations through resources whose first point of interconnection was a California balancing authority, or whose power is transmitted to California through a dynamic transfer arrangement or scheduled hourly or inter-hourly into California. The proposed legislation also would have authorized the use of renewable energy credits (RECs)—the environmental attributes of renewable power separated from the power itself—for RPS compliance, but would have imposed limits on the amount of RECs that could be used to meet the utilities’ RPS obligation.
Continue Reading...Understanding "Beginning Construction" Under Section 1603
The Treasury Department recently issued a series of FAQs in an effort to clarify when projects will be treated as having "begun construction" for purposes of the section 1603 grant. As you may be aware, a project that otherwise qualifies for the grant but is not placed in service before the end of 2010 may still be eligible for the grant if construction on the project is begun in 2009 or 2010 and the project is eventually placed in service before the applicable "credit termination date." The new FAQs address a number of the unanswered questions. However, the framework adopted by the Treasury Guidance and the new FAQs is complex, and there appears to be a considerable amount of confusion among developers about how the "beginning construction" requirement can be met. Therefore, we thought it important to issue this alert.
Continue Reading...RNP and AWEA respond to WSJ editorial about wind energy
Tuesday's Wall Street Journal included an editorial by Robert Bryce titled "Wind Power Won't Cool Down the Planet," claiming that wind power does not reduce carbon pollution, based on fossil fuel industry studies. In response to Bryce's editorial, Renewable Northwest Project has released a statement from Ken Dragoon, RNP research director, countering Bryce's claims with facts from independent sources. (http://www.rnp.org/index.php?q=node/1001)
American Wind Energy Association (AWEA) has also issued a similar statement. http://awea.org/newsroom/pdf/08-27-10-Wind_and_emissions_response.pdf.
Energy Law Alert: CPUC Proposes to End Moratorium on TREC Transactions; Increase Cap to 40%
On August 25, the California Public Utilities Commission (“CPUC”) issued a proposed decision (“PD”) that would end the CPUC’s moratorium on approval of tradable renewable energy credit (“TREC”) transactions and increase the cap on such transactions for large investor-owned utilities to 40%.
Previously at its March 11, 2010 meeting, the CPUC authorized the use of TRECs for compliance with California’s Renewable Portfolio Standard (RPS), subject to certain limitations. CPUC Dec. 10-03-021 (Mar. 15, 2010)(“March Decision”). Among the limitations that the March Decision imposed was a cap limiting the use of TRECs for RPS compliance for the largest investor-owned utilities (Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric) to 25% of their annual RPS compliance obligations. That cap was to remain in place until December 31, 2011, when the CPUC would consider modifying or removing that limitation. The March Decision also imposed a price cap of $50 per TREC. The price cap also expires on December 31, 2011.
Continue Reading...Minnesota PUC Settles Longstanding Dispute over REC Ownership
Last week, the Minnesota Public Utilities Commission resolved a longstanding dispute over who owns Renewable Energy Credits (RECs) when the Power Purchase Agreement (PPA) is silent. Following the establishment of an REC tracking system for Minnesota, Xcel Energy asked the Commission to clarify ownership of RECs associated with 46 wind, biomass, hydro, and landfill gas facilities totaling 467.5 MW. These PPAs were written before the concept of RECs existed.
On August 17, 2010, the Commission resolved the dispute partially in favor of Xcel and partially in favor of the generators. The Commission divided the disputed PPAs into two categories: 1) PPAs signed under 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) PPAs signed under Minnesota’s 1994 wind and biomass mandates (Minn. Stat. §§216B.2423 and 216B.2424).
For the PURPA contracts, the Commission decided that the generators are the rightful owners of RECs because they had only been paid avoided cost with no premium for the electricity being from renewable sources.
For the wind and biomass mandate PPAs, the Commission favored Xcel and decided that the utility had acquired ownership of the RECs, unless the generator can make a showing that the PPA is not silent on REC ownership. For this category, the Commission reasoned that Xcel had contracted to buy electricity that would meet specific renewable mandates. Without the RECs, the electricity would not satisfy the renewable mandates.
The Commission exempted two PPAs close to being privately settled from its decision as well as 13 PPAs that were already privately settled.
Filings related to the "silent PPAs" dispute can be found by searching for Docket No. E-002/08-440 in Minnesota’s eDocket system.
Mitsubishi Wind Turbine Antitrust Claims Put on Ice
A federal judge has stayed Mitsubishi’s antitrust monopolization claims against General Electric in an Order issued this week. Opening a new front in the battle with General Electric over wind turbine technology, Mitsubishi tried to raise the stakes last May, claiming that General Electric’s patent infringement actions (proceeding in three other venues) were baseless, calculated to help General Electric maintain a monopoly in the market for variable speed wind turbines. Mitsubishi also filed its own patent claims against General Electric, in yet another court. As we reported when the claims were filed last spring, Mitsubishi’s antitrust claims were premised on the theory that General Electric’s patent infringement claims were a “sham.”
Not surprisingly, General Electric asked the court in the Western District of Arkansas to either dismiss Mitsubishi’s claims or stay the claims, pending the outcome of General Electric’s patent infringement lawsuits. On the motion to dismiss, the court found that “[n]either of [General Electric’s] arguments has merit” – holding that there is insufficient evidence in the record to definitively establish that General Electric’s patent infringement claims were not objectively baseless. The court held that pending the outcome of the ongoing patent infringement claims in other courts, Mitsubishi may be able to prove that General Electric engaged in sham litigation with the intent of excluding Mitsubishi from the variable speed wind turbine market. For this reason, it would be inappropriate to dismiss Mitsubishi’s antitrust claims, the court held.
However, the court also noted that Supreme Court precedent establishes that Mitsubishi’s sham litigation claim cannot proceed if General Electric ultimately prevails on one or more of its patent claims against Mitsubishi. Even if a favorable verdict of patent infringement is ultimately overturned, under controlling precedent, a favorable trial verdict is sufficient to establish a patent holder’s probable cause to file its underlying claim – and thus eliminates any sham litigation claim. Because there are pending patent claims before other courts where General Electric may ultimately prevail, the Arkansas court decided to stay Mitsubishi’s antitrust claims while General Electric’s patent claims proceed.
The gambit to raise an antitrust action against General Electric has suffered an initial setback. Much as Mitsubishi may have relished a concurrent antitrust counterattack against General Electric, the Arkansas court, sitting where Mitsubishi (not coincidentally) plans to build a major wind turbine manufacturing plant, has refused to put the cart before the horse. The good news for Mitsubishi of course is that its sham litigation claims survived the motion to dismiss. If Mitsubishi can ultimately prove that General Electric knowingly sued on fraudulently obtained patents, look for more action back in the Western District of Arkansas, but not any time soon.
THIS WEEK IN BIOFUELS, A PATENT PERSPECTIVE
By our colleague Edna Vassilovski:
The US and PCT patent organizations published the following patents and applications during the week of August 15, 2010:
- WO2010093835 (Xyleco) relates to a utilizing existing manufacturing facilities, such as those used for the production of starch-, sucrose-, or lactose-based ethanol, to produce non-starch, non-sucrose, and non-lactose based products. The disclosure contemplates using the facility as-is, adding or removing equipment from the facility, as well as adapting the facility to include additional functionalities such as including a recalcitrance reducing system, and/or an enzymatic hydrolysis system.
- WO2010093832 (Xyleco) relates to methods for converting cellulosic and lignocellulosic feedstocks to a concentrated form which can be easily transported and utilized. The disclosed method involves mixing a cellulosic or lignocellulosic feedstock with a solvent such as water and a saccharifying enzyme and transporting the resulting mixture.
- WO2010093829 (Xyleco) relates to methods for processing biomass, for example in the context of producing biofuels. The method involves measuring the lignin content of the biomass and adjusting process parameters based in empirically determined relationships between lignin content and recalcitrance. According to the specification, the disclosed process enables manufacturing plants to utilize different types of feedstock and compensate for variations within the feedstocks.
- WO2010093765 (Arch Chemicals) relates to an antimicrobial composition for use during the fermentation step in the conversion of sugarcane to ethanol. The composition comprises an antimicrobial agent of the guanidine family, e.g. poly(hexamethyl biguandine) (PHMB), an antibiotic agent, and a surfactant in amounts sufficient to control wild yeast, Lactobacilli and bacteria microbiota contamination.
- WO2010093399/U.S. Patent Pub. No. 20100209548 (ENE003) relates to a portable apparatus for ethanol production and extraction from organic feedstock such as corn mash. According to the specification, the apparatus is designed to be mechanically simple and affordable so that it is suitable for use by farmers in small farms, yet can be upscaled for larger facilities.
- WO2010093365 (Helio Biotechnology Corporation) relates to cyanobacteria nucleic acid sequences, vectors and host cells useful in the production of ethanol, and methods of producing ethanol from solar energy and CO2 using cyanobacteria. For example, the specification discloses a genetically engineered cyanobacteria comprising a polynucleotide construct having a polynucleotide sequence encoding pyruvate decarboxylase enzyme (which can be obtained from Acetobacter pasteurianus plasmid pGADL201) and a copper ion inducible promoter (such as the pPetE promoter). According to the specification, in contrast to biomass ethanol production, the disclosed help reduce greenhouse gas by utilizing large quantities of CO2 as a carbon source for fuel production.
- WO2010093310 (Boson Energy) relates to a process for pelletization of biomass to increase its bulk density and reduce its storage and transportation costs. The process, which can be continuous, involves distinct heating, defibration and pelletization steps, which are all carried out in an substantially oxygen-free atmosphere. The heating and pelletization steps are carried out at a temperature within the glass transition or softening temperature interval of the lignin contained in the raw material.
- WO2010092924 (University of Miyazaki), which is published in Japanese, appears to relate to pentose-assimilating recombinant E. coli, useful in the production of ethanol. According to the abstract, the specification discloses E. coli obtained by destroying or eliminating the ptsG gene of the K011 strain of E. coli and that consequently improve or resolve the diauxy problems of the K011 strain of recombinant ethanol-producing E. coli.
- WO2010091507 (Natural Energy Systems) relates to a process for converting organic material to a methane-rich fuel gas. The process involves forming a first mixture by vaporizing the organic material in a substantially oxygen-free, enclosed chamber, and then mixing the vaporized organic material with an excess amount of hydrogen gas, and optionally superheated steam, at temperature ranging from 450 C to 650 C; forming a gaseous mixture containing methane, hydrogen and acid by heating the first mixture to a temperature ranging from 600 C to 900 C in the presence of an excess amount of hydrogen gas and superheated steam; and, neutralizing the gaseous mixture with a base.
- US Patent Pub. No. 20100210741 (Range Fuels) relates to catalyst compositions for converting syngas to alcohols such as ethanol. The catalyst compositions comprise cobalt-molybdenum-sulfide powders in which sulfur is present in a total amount of at least 40% by weight of the catalyst composition, for example in a total amount of 42% to 44% by weight. The amount of elemental sulfur present in the composition is preferably low, for example between 100 ppm – 5000 ppm calculated on a total catalyst weight basis. According to the specification, the molar ratio of sulfur to cobalt, given and initial assignment of sulfur to molybdenum to yield MoS.sub.2 is an important parameter, and is preferably between 0.1 to 4.
- US Patent Pub. No. 20100205857 relates to a eukaryotic cell capable of producing butanol and ethanol at a ratio of butanol:ethanol of between 1:2 to 1:100. The eukaryotic cell is preferably a Saccharomyces cerevisiae, which comprises at least one inactivated nucleotide sequence encoding an enzyme required for the production of ethanol, for example an alcohol dehydrogenase. The eukaryotic cell can comprise a nucleotide sequence encoding a butyryl-CoA dehydrogenase and at least one nucleotide sequence encoding a heterologus electron transfer flavoprotein. The eukaryotic cell can further comprise a nucleotide sequence encoding a heterologous enzyme having enzymatic activity for converting pyruvate, acetaldehyde or acetate into acetyl-CoA in the cytosol. According to the specification, it was surprisingly found that such a eukaryotic cell can be used in a large-scale ethanol fermentation process with minor to no adaptations in fermentation and distillation equipment.
- US Patent Pub. No. 20100205854 (Chevron U.S.A.) relates to low melting point triglycerides made esterification of Fischer-Tropsch acid by-products and the glycerol by-product from biodiesel generation. According to the specification, the low melting point triglycerides are useful as a fuel or fuel blending additive component for cold climates.
DOE:$15 million for Innovative Geothermal Recovery Methods
On Friday, the US Department of Energy ("DOE") announved a $15 million funding opportunity for geothermal energy research and development projects that:
- Address the environmental risk factors associated with heat recovery from the earth's subsurface (earthquakes, water consumption and pollution);
- Add innovative methods for extracting heat from geotlogic formations, particularly permeable sedimentary formations; and
- Reduce financial risks.
Successful applications will address all three of the listed issues. Applicants should note that if the application does not address the first two elements listed above, it will be tossed out. Applicants must submit a pre-application concept paper by October 1, 2010, and will be informed by DOE if they are eligible to submit a full application (whihc will be due November 30, 2010).
The funds will divided between feasibility studies (Phase 1) and validation and proof (Phase 2) with the bulk of the funds being awarded for Phase 2 activities. The funds will be paid out over 3 years and there is a 20% cost share.
Eligible applicants include most domestic entities who are encouraged to form consortia to apply. Foreign entities or persons may participate as a subrecipient of the funds.
Sen. Kerry's Energy Tax Bill Would Help Energy Storage Technologies
On August 5, 2010, Sen. John Kerry (D-Mass.) introduced S.3738—the Clean Energy Technology Leadership Act of 2010—which would have some impact on the growth of energy storage technologies in the United States.
Among other things, the bill would provide for an extension and modification of the Advanced Energy Manufacturing Tax Credit (the “MTC”), a credit authorized under the American Reinvestment and Recovery Act aimed at stimulating and expanding the domestic manufacturing industry for clean energy technologies. The MTC is also referred to as Section 48C of the Internal Revenue Code (the “IRC”). The proposed modifications would extend the MTC to “statutory advanced energy property,” the definition of which includes property used exclusively to manufacture or fabricate fuel cell power plants and systems for the electrochemical storage of electricity (other than lead-acid batteries) for use in connection with electric grids.
Also noteworthy is that S.3738 is similar to the STORAGE 2010 Act, introduced by Sens. Bingaman (D-NM), Wyden (D-OR), and Shaheen (D-NH) in July. Click here for more on that bill. Both bills amend Section 54C of the IRC to allow grid-connected energy storage systems to qualify for Clean Renewable Energy Bonds (“CREBs”). In addition to including energy storage technology in the CREBs program, S.3738 would expand the program by increasing the national new clean renewable bond limitation by $3.5 billion in 2010; sixty percent (60%) of that amount must be allocated by the Department of the Treasury to public power providers, and forty percent (40%) must be allocated to electric cooperatives.
A major distinction between Sen. Kerry’s bill and the STORAGE 2010 Act is that Sen. Kerry’s bill does not add energy storage devices to the list of technologies eligible for the federal investment tax credit. The full text of the bill can be found here.
Clean Energy Jobs Focus of New Manufacturing Solicitation Issued by the DOE
On August 12, 2010, Energy Secretary Steven Chu announced a new loan guarantee solicitation for renewable energy manufacturing projects. The Commercial Technology Renewable Energy Manufacturing Projects solicitation (the "Solicitation") is supported by the American Recovery and Reinvestment Act (the "Recovery Act") through Section 1705 of the Loan Guarantee Program and is focused primarily on providing new green energy jobs and the deployment of renewable energy technologies that reduce greenhouse gas emissions.
The solicitation specifically identified "Eligible Projects" to include renewable energy manufacturing projects or facilities located in the United States that:
- Manufactures Commercial Technology products that support the generation of electricity or thermal energy from renewable resources;
- Has Project Costs greater than seventy-five million dollars ($75,000,000);
- Is able to obtain a credit rating equivalent of "BB" or better from Standard & Poor's or Fitch, or "Ba2" or better from Moody's, as evaluated without the benefit of any DOE guarantee or any other credit support;
- Will create or retain jobs in the United States; and
- Otherwise meets all applicable requirements of Title XVII, including Section 1705, the Solicitation, including all attachments and all applicable requirements of the Recovery Act.
The Solicitation also provided, for illustrative purposes, examples of the types of Eligible Projects that may qualify, which include the following:
- wind energy component or systems manufacturing facilities;
- solar photovoltaic (PV) component or system manufacturing facilities;
- concentrated solar power component or system manufacturing facilities;
- hydropower component or system manufacturing facilities;
- geothermal component or system manufacturing facilities;
- other geothermal power cycle component or system manufacturing facilities; or
- ocean wave, tidal, and river current (e.g. hydrokinetic) component or system manufacturing facilities
