Oregon Public Utility Commission Gives Green Light to Third-party Ownership Model for Distributed Generation
Senate Fails to Pass Solar ITC Extension (Again)
By a vote of 51-43, largely along party lines, the Senate once again failed to extend the Investment Tax Credit (ITC) for solar projects. The cloture motion, which would have brought the legislation to the senate chamber floor for debate, thwarted efforts to extend the ITC for an eight-year period and once again put into question the willingness of solar developers to invest in solar projects in the United States.
Senate Bill 3335, which contained the eight-year ITC extension, also would have provided relief to disaster victims and extended the Production Tax Credit for wind projects for an additional year. According to Republican leaders, that party wants to focus on increasing domestic oil production (by lifting bans on offshore drilling and developing new oil wells in the western U.S.) before addressing tax credits for renewable energy. To see how your senator voted, click here.
As noted in my post of July 24, companies such as Abengoa, which has plans to site a large solar thermal project and manufacturing plant in the U.S., have threatened to walk from their projects if the ITC is not extended. According to SEIA, Abengoa's Solana project isn't the only thermal project that may be affected by a failure to extend the ITC. Stay tuned.
For more coverage on the ITC vote, read the AP story online.
EPA Stalls Regarding RFS Waiver
EPA Administrator Stephen Johnson granted himself a continuance last week to make his decision on whether to grant Texas Governor Rick Perry’s request for a waiver of the Renewable Fuel Standard (RFS). As an attorney accustomed to living with deadlines, I certainly appreciate the lure of being able to grant oneself a continuance. Like many others participating in the biofuels industry, however, it is somewhat frustrating to encounter yet another delay on the policy front.
To be fair, Administrator Johnson has his work cut out for him in resolving this issue. Advocates on both sides see potentially substantial impact from a decisive ruling on the waiver. The waiver provision has been described as a pressure relief valve for the RFS. The interesting thing about this pressure valve is that no one knows what pressure the valve will withstand before it releases. Oil industry advocates would prefer a “hair trigger” type pressure release valve whereas biofuel advocates would like to see a more robust fixture.
Governor Perry’s request has some unique attributes. He actually based his request not on the RFS causing difficulty for the petroleum industry- which would have been difficult since ethanol has typically been less costly than gasoline and in ample supply- but on food and livestock supply arguments. Governor Perry’s request also precedes the ramp up period in the RFS when the real challenges will likely begin and thus his request could be viewed as an early attempt to hobble the RFS.
Let us hope that cooler heads prevail. Given the tremendous energy security and cost issues presently caused by our fossil fuel dependence, now is not the time for the EPA to start buckling on the RFS. As noted by the NBB’s CEO, Joe Jobe, "If the RFS is waived or cut in half in 2008, then the growth of all biofuels, including 'advanced biofuels' such as biodiesel, will be severely hindered." As Jobe and others have noted, these advanced biofuels may hold the real key to relieving the pressure on both fuel and food prices in the future.
Senators Move to Extend Investment Tax Credit
Promptly following yesterday's blog posting about Congressional inertia, US Senators Bauchus and Reid introduced an ITC extension bill late yesterday (7/24). The bill, S.3125, is a broad extenders bill that includes a variety of business tax credit extensions. SEIA reports that this bill faces the same opposition that has killed extension bills introduced throughout the 110th Congress. This is the last vote on the ITC before the August recess.
Among other things, the bill contains eight-year extensions of the commercial and residential solar ITC, allows the credit to be used against the AMT, repeals the utility exemption and doubles the residential cap to $4,000 among other provisions. The bill is also a tax-relief vehicle for families and businesses affected by natural disasters this year.
Senator Reid plans to bring S. 3335 to a vote as early as Tuesday (7/29). A full copy of the bill is available here, courtesy of SEIA.
Comments on 500+ Page MMS Rule Due September 8
On July 9, 2008, the Department of the Interior's Minerals Management Service (MMS) issued proposed regulations for granting leases, easements and rights of way for alternative energy project activities and for alternative uses of existing facilities located on the Outer Continental Shelf (OCS). For those who are less than excited at the prospect of wading through the 500+ page text of the proposed rules, my partner Cherise Oram and summer associate Chad Marriott (University of Oregon) have written an executive summary of the MMS's Proposed Regulations Governing Development of Wind, Wave, Current, Solar and Other Alternative Energy Sources on the Outer Continental Shelf. Comments on the proposed rules must be submitted to MMS no later than Monday, Spetember 8, 2008.
Tax Credit Inertia May Cost U.S. Solar Projects
Utah PSC Jurisdiction Over Wind Farm--continued
It looks like Milford Wind isn't ready to throw in the towel yet on the issue of Utah PSC jurisdiction over its proposed wind farm, having filed a Petition for Rehearing or Request for Reconsideration of the Commission's Order on Petition for Rehearing. Utah PSC Docket No. 08-2490-01. Milford Wind provides arguments on why the Commission got it wrong on the reversal of its first order, and also reiterates its arguments on why the Commission doesn't even have jurisdiction over Milford Wind to begin with (arguments the Commission hasn't addressed). Stay tuned.
Ethanol - Coming Soon to a Pipeline Near You?
According to John Eustermann, a partner in our Boise office specializing in biofuels, while the measure is seen by those in the ethanol industry an encouraging step towards moving ethanol to the retail pump, it's part of a long-term effort he's seen to augment the almost exclusive transport of ethanol via rail cars. Challenges will include the potential incompatibility and understanding the short- and long-term risks of transporting fuel-grade ethanol through pipelines, whether dedicated or existing.
Green Building Standards Adopted in California
The California Building Standards Commission has adopted the nation’s first state-wide Green Building Standards Code.
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Energy efficiency
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Water efficiency and conservation
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Use of recycled and sustainable materials in construction
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Recycling of construction waste
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Indoor air quality
The Green Building Standards Code contains numerous optional green building measures, but some standards will soon be mandatory for all new buildings constructed in
The mandatory and recommended green building standards in the Green Building Code could have a significant positive impact on energy consumption, water and resource use, and waste generation, considering the amount of resources associated with buildings in the
Can a 33% RPS Requirement be Met?
The California Air Resources Board (CARB) staff has proposed that a 33% Renewable Portfolio Standard (RPS) be adopted as part of the Scoping Plan for the Global Warming Solutions Act. (see page 24 of the draft Scoping Plan. ) Is that achievable? If it is, what are its implications?
The current California RPS calls for 20% by 2010. As proposed by CARB staff, 33% would be required by 2020. CARB staff also calls for the RPS to apply to municipal utilities as well as the investor owned ones. This would be a big departure from the current RPS which only applies to investor owned utilities (IOUs). CARB itself may not have the authority to impose the 33% RPS and CARB staff openly acknowledge that they will require cooperation from other agencies such as the California Energy Commission and the California Public Utilities Commission. It's not clear that any of those agencies have jurisdiction over municipally owned utilities and so legislative action might also be required to impose a RPS on them. Most, but not all, municipally owned utilities in California have voluntarily adopted goals of achieving 20% or more of their electricity from renewable sources.
Its going to be significant challenge to achieve 33% by 2020. Just achieving 20% by 2010 is proving to be a challenge and the the municipal utilities are not even mandated as part of that mix. Getting there will require a significant amount of new renewable energy generation development from wind, solar PV, solar thermal, and Geothermal. Wave, tidal and current generation might also be required. So will lots of transmission. The struggles that California has already had trying to get to 20% show that the detailed environmental reviews and complex power procurement processes will require a lot of energy (pun intended) to overcome.
But a 33% RPS will mean a significant amount jobs in the development, construction, operation and management of renewable energy. It will also likely be a boon for renewable energy in general, with new technologies, new settings and achievement of renewable energy at an unprecedented scale.
California releases Appendices for the draft GHG Scoping Plan for emission reductions
The California Air Resources Board (CARB) released the appendices to its draft Climate Change Scoping Plan. With the release of the appendcies the full draft scoping plan is available for comment. The Scoping Plan is a required step in CARB's implementation of AB-32, the Global Warming Solutions Act of 2006. Under AB-32, CARB must reduce Green House Gas (GHG) emissions to 1990 levels by 2020. The Scoping Plan must be adopted this year and the specific measures to reduce GHG emissions must be implemented as regulations by 2012. Comments are "requested" by CARB by August 11 in order to allow CARB to fully respond to them and present a final Scoping Plan to the CARB Board at its November Meeting.
The draft scoping plan calls for 14 tons of carbon dioxide emission reductions for each man, woman and child in California. To get there, it calls for improvements in energy efficiency in buildings and appliances, expanding the Renewable Portfolio Standard to 33%, implementing a cap and trade program connect to the Western Climate Initiative and many other specific measures.
Once the Scoping Plan is adopted CARB, and other agencies such as the California Energy Commission and California Public Utilities Commission will have to adopt regulations that would go into effect by 2012. Those regulations will be the true teeth of AB-32.
Of the proposed measures, the 33% RPS strikes me as being a very lofty goal that could impose significant changes in the electrical generating industry of not only California, but all the surrounding states that send power into California. But I'll comment further on that in a separate blog entry.
Utah PSC Asserts Jurisdiction Over Wind Farm Transmission Line
Reversing its earlier decision on the matter, the Utah Public Service Commission has concluded that a wind power project ("Milford Wind") must obtain a certificate of convenience and necessity ("CPCN") for a 90-mile transmission line that it proposes to build in connection with its wind farm to be built in southwest Utah. Order on Petition for Rehearing, Docket No. 08-2490-01. The Commission stuck with its decision that the power production facilities associated with the independent power project are exempt from its jurisdiction pursuant to legislation adopted earlier this year, but concluded that the exemption does not apply to the transmission facilities. The project is under contract with the Southern California Public Power Authority ("SCPPA") for the sale of energy from the first phase of the project.
It'll be interesting to see if there's a move in next year's legislative session to extend the jurisdictional exemption to the transmission facilities of independent energy producers.
The Cutting Edge of Carbon Sequestration Law
On July 17, my partners Jerry Fish and Tom Wood made a well-received presentation on geologic carbon sequestration at the Rocky Mountain Mineral Law Institute (RMMLI). RMMLI will soon publish their very detailed law review article on the subject--the article will discuss both real property issues (who owns the rights to store or sequester carbon dioxide, anyway?), as well as the environmental, permitting and regulatory issues raised by carbon sequestration. In the meantime, for those who can't wait for RMMLI to publish its 2008 proceedings, here's Jerry and Tom's Power Point presentation about "Carbon Sequestration Property and Regulatory Issues".
Is the Glass Half Empty, or Half Full?
The Oregonian ran an interesting front page article today (July 21, 2008) about the expected explosive growth of wind energy in the Pacific Northwest. The good news (or what should have been the good news) is that wind developers are planning to quadruple the amount of wind power in the region.
The Bonneville Power Administration's recent transmission "open season" produced substantial "pay to play" commitments from major wind developers (including national players IBERDROLA, Horizon Wind Energy, and enXco, among others) and regional utilities, who are together planning to add more than 4,700 MW of installed wind capacity to our region over the next five years. (The article reports that the region's transmission system now handles about 1,490 MW of installed wind capacity, which will rise to about 2,000 MW by the end of 2008.) Once the five year build out is finished, about 8%of the region's electricity needs would be served by wind, which would be among the highest percentages in the nation--wind currently serves about 1% of all US energy needs on average, rising to highs of around 5% in windy Iowa and Minnesota.
Unfortunately, the morning print edition of The Oregonian ran a somewhat sensational headline announcing that "Wind power could blow grid," adding that "utilities and developers want to quadruple Northwest's output, but power lines can't hold that much more." It would have been more accurate to announce "Wind to Power 2,000,000 Homes," but what do I know about selling newspapers? Anyway, the whole point of the BPA's open season was to lay the groundwork for building the new transmission infrastructure that will enable us to make effective use of all that wind without "blowing the grid." In fact, most of the proposed projects won't be built if the transmission infrastructure isn't improved--the crisis that the headline predicted really can't happen. Sadly, a large number of people who don't read "below the fold" aren't going to grasp this little nuance and are going to come away with the impression that "wind is bad." Challenging, yes--bad, no.
Here's the on line version of the article, more plausibly entitled "Rush of wind to hit Pacific Northwest."
Low Temperature Geothermal Electricity Production
UTC Power equipment collects heat from a lower temperature source and uses it to vaporize a fluid with a lower vaporization temperature than water. That vapor then drives a turbine. In Alaska, at Chena Hot Springs Resort UTC Power equipment now supplies all the electricity the resort needs and its heating as well. The system there works with water at 165 degrees Fahrenheit!
By being able to produce heat and power with water below 225 degrees, UTC Power’s technology opens up a much larger area for potential geothermal energy production. The next key step will be to see a commercially developed facility demonstrate sustainable production at an acceptable cost. (Chena Hot Springs was supported by various groups and is considered a demonstration project by many and not a commercial project.
Visit UTC power and read about Chena Springs.
Stoel at the American Coalition for Ethanol Conference
The American Coalition for Ethanol's 21st Annual Ethanol Conference and Trade Show will be held August 12-14 at the Qwest Center in Omaha, Nebraska. This event will be a great opportunity for you to keep up with what is going on in the ethanol industry. You'll hear from people about what is happening legislatively, and you will also hear from people involved with many of the ethanol plant projects around the country. David Quinby (Principal at Stoel Rives) will be sitting on the morning panel:
"Ethanol Today & Tomorrow: Growing and Selling Considerations"
In these days of narrow margins and volatile markets, ethanol producers are talking about consolidation, mergers & acquisitions. Plants can grow, diversify, economize, recapitalize or sell. Learn about the questions to ask and steps to take today, to make it tomorrow.
Please visit us at Booth #718 to pick up the newest version of our "Law of Biofuels" book!
Lava Law
Lava Law is Stoel Rives’ “Law of” book for Geothermal Energy. Like all our “Law of” Books, it has chapters covering all relevant issue areas involved in the development of geothermal energy. We recently updated Lava Law as well so its current as well as relevant.
Download Lava Law - Legal Issues in Geothermal Energy Development.
Or email Angel Giovannone at amgiovannone@stoel.com to request a copy be mailed to you..
Better, visit our booth at the Geothermal Energy Association Trade Show October 5-8 in Reno Nevada. We’ll give you a copy and we can talk.
California's Solar Incentives Continue to Decline as More Capacity is Added
This summer, the rebate is expected to pass through its largest drop, going from $1.90 per watt to $1.45 per watt under the Expected Performance Based Buydown (EPBB) option. This will reflect 190 megawatts of solar power installed state-wide as a result of the CSI program. The EPBB will stay at $1.55 for the next 30 megawatts of installed solar before it will drop again to $1.10 per watt. The theory behind the dropping incentive was probably that as more solar was installed, the cost per watt would also drop resulting in less of a need for an incentive. While that has born itself out in part, the drop in cost has not been any where near the drop in the incentive.
I am installing a 5.1 kw DC/ 4.3 kw AC system this summer that is right in step with the expected cost of about $8,000 per kilowatt of installed capacity before rebates. Other incentives exist as well, such as federal tax credits and state property tax exemptions, and with my expected EPBB the system will “pay for itself” within 5-9 years depending on how much electricity rates go up over that same timeframe. The drop in the incentive would have added a year or two to that cost recovery time period.
Is Geothermal Energy Really "Renewable" Energy
This might be an esoteric discussion point, but theoretically speaking, the geothermal resource of the earth could be considered a limited and fixed resource that does not renew itself. The temperature of the earth at the center may reach 10,000 degrees Fahrenheit but it is much cooler the closer you get to the surface. We tap into geothermal heat where it is close enough to the surface and hot enough to make it economic and efficient to do so. The question is, though, when we remove heat from the earth, is it a reservoir with a finite capacity, or is it a renewing resource? In other words are we depleting it?
The answer, according to Gerald Bawden, a Ph.D. Geologist with the United States Geologic Survey and Rick Adair, an energy industry writer with Newsdata Corp with a Ph.D. in Earth Science is that the heat in the earth is mostly a function of both radioactive decay of elements in the earth and a natural process occuring wherein the solid innner portion of the core is steadily crystalizing its outer liquid portion. That’s great news in the moral debate about whether geothermal energy is renewable since it means that the earth is still adding heat. So, as we continue to find and use more geothermal energy, we can rest assured that we are not depleting a limited reservoir. Of heat anyway. Many geothermal power plants that use water/ steam deal with the fact that the water resource in the area beneath plant may be limited. Fortunately the condensed steam can be injected back down to the heat source and various sources of non-potable water can be injected as well.
From a legal perspective, there is not much debate. Most laws passed so far that attempt to define renewable energy include geothermal energy. California’s Renewable Portfolio Standard (RPS) for instance, includes Geothermal electricity production as one type of renewable energy that the investor owned utilities can contract with to help meet their minimum required amount of renewable electricity.
2008 Geothermal Energy Association Annual Trade Show
The 2008 Geothermal Resources Council meeting and Geothermal Energy Association Trade Show is set for October 5-8 in Reno, Nevada. It’s the largest Geothermal Energy meeting in the world, by far and is well attended by the industry. You can find Stoel Rives geothermal practitioners in attendance as we exhibit and sponsor at the show.
More information and registration for the 2008 Geothermal Energy Association Trade Show.
A Darker Shade of Green: Stoel Rives Announces Firmwide Sustainability Campaign
Our renewable energy team here at Stoel Rives has been a big fan of purchasing green power for years--we were one of the first US law firms to purchase green tags to offset a portion of the firm's electricity use.
In 2008, we kicked off an even more ambitious firmwide GO GREEN campaign that goes beyond buying green power. In many of our offices, we have removed garbage cans from individual offices and now walk our garbage to a central location on each floor where the waste can be recyled, composted or, as a last resort, thrown away. (Needless to say, the sudden disapperance of office garbage cans stimulated a lot of discussion, but it certainly taught us how many things could actually be composted or recycled if we tried hard enough.). We've logged enough alternative commuting miles in the past 6 weeks to drive round trip from Portland, Oregon to Miami, Florida over 15 times. We also learned that we we can save over $70,000 a year in costs by just changing the firm's printers to a default duplex mode. We're now one of only seven law firms in the United States to qualify as a leader in the EPA/ABA Climate Challenge.
To learn more about the things we're doing here at Stoel Rives to reduce our impact on the earth and support renewable energy, check out our Go Green Press release
.The Role of Biofuels Producers in Climate Change
A recent article by Stoel Rives Boise Partner John Eustermann highlighted the role that biofuels producers can play in climate change in the United States as voluntary carbon trading markets continue to mature and carbon legislation becomes more likely. The article provides an overview of the current state of the carbon credit trading market in the United States, as compared to those countries which are signatories to the Kyoto Protocol, and identifies the benefits to companies who enter the voluntary market in the United States in anticipation of establishment of a formal trading market.
The article, entitled "Committing to Carbon Credits," appears in the July 2008 issue of Biofuels International magazine. Another recent article of John's on the topic was featured in the April 2008 issue of Ethanol Producer magazine, entitled "Capturing the Value of Carbon Credits in Biofuels Projects."
Minerals Management Service Issues Proposed Rules For Alternative Energy on the OCS
On Tuesday, MMS released its proposed rule for alternative energy development on the Outer Continental Shelf, including wave, current, and wind energy technologies. You can access the rule from MMS's website.
Stoel Rives attorneys are in the process of reviewing the rule and will release a client alert soon. Please feel free to subscribe if you'd like to receive that alert.
Relocating the Wind: Creative Transmission Solutions
A recent article by my partners Marc Wood and Jennifer Martin explores the transmission challenges faced by wind and other intermittent energy resources and then explains how transmission obstacles can be reduced by the effective use of dynamic scheduling, physical storage and exchange (shaping), or some combination of the two. The article urges FERC to initiate technical workshops to explore the potential of dynamic scheduling and storage & exchange as tools for improving the capability of existing transmission systems.
The article "Relocating the wind: New strategies for moving wind generation from high-wind areas to high-load areas" appeared in the May/June 2008 issue of North American Clean Energy.
Ohio's New RPS Yields Duke Renewables RFP
Spurred by Ohio's new renewable energy portfolio standard, Duke Energy Ohio is requesting proposals for renewable energy resources that would begin delivering energy in 2009-2012. Duke is interested both in PPAs and asset acquisitions, and the resources must be able to deliver energy to the MISO grid. Bids are due by August 8, 2008.
In Ohio, "renewable energy resources" include solar PV, solar thermal, wind, hydroelectric, biomass, biogas, fuel cells, renewable power storage, and others. Because Ohio's RPS requires the state's utilities to generate or acquire 50% of their renewable energy requirements from generation facilities located in Ohio, Duke will give preference to Ohio facilities.
Although solar energy is often associated with the sunny southwestern United States, the Duke RFP shows that solar has a role to pay in the Midwest, where it can help to meet summer peak loads. Duke plans to be taking delivery of 15,000 MWh of solar by 2012.
Duke has established a web site for interested bidders
.Interesting article on OTEC and carbon sequestration
Over on Renewable Energy World is an interesting Q&A on Ocean Thermal Energy Conversion ("OTEC") written by Christopher Barry. He's focusing on OTEC and how it can relate to deep-water carbon sequestration, which was one of the first applications of OTEC that I became aware of a few years back in law school in discussions with Craig Allen, a maritime and marine law expert at the University of Washington.
Interesting from a conceptual standpoint, and it is something I believe has serious merit, using a carbon-free energy source to sequester CO2 in the deep ocean (where residence times are on the order of 2000 years or so).
For more, see Christopher Barry's write-up at Ocean Thermal Energy Conversion and CO2 Sequestration.
