A Superconductor Pipeline for Renewable Energy
Among all the interesting presentations at this month's AWEA transmission and wind workshop, American Superconductor's presentation about developments with superconducting transmission lines was particularly noteworthy. Superconducting direct current lines offer greater efficiency, as well as siting and aesthetics benefits, but have historically fallen victim to much higher costs when compared to traditional overhead transmission lines. However, with talks of extra-high voltage "green superhighways" transmitting renewable energy from the nation's interior to load zones, it appears from American Superconductor that the costs of a 5 GW, 200 kV superconductor line are nearly equivalent to 765 kV overhead lines when built on a 1,000 mile scale. Perhaps we will see a superconducting pipeline instead of an extra-high voltage overlay.
For more information about the viability of superconducting transmission lines, look for American Superconductor's White Paper in the near future.
Stoel Teams with EUCI to Present Law of Renewable Energy Webinars
Stoel Rives LLP is teaming up with EUCI to present a series of webinar’s based on our series of “Law of” books about renewable energy. The Law of Renewable Energy web conferences will address the major legal issues associated with the development of renewable energy projects. The web conferences will include the following topics:
Tax and Project Finance Structuring Issues for Renewable Energy Projects
April 27, 2009
Real Estate and Site Rights for Renewable Energy Projects
May 11, 2009
PPAs for Renewable Energy Projects
May 18, 2009
Siting and Permitting for Renewable Energy Projects
June 1, 2009
EPC, Major Component, Construction and Balance of Plant Contracts for Renewable Energy Projects
June 8, 2009
Regulatory and Transmission Issues for Renewable Energy Projects
June 15, 2009
Please sign up here if you’d like to get your own copy of any book in our “Law of” series. We update the “Law of” books regularly, and we'll have copies of the Law of Wind (5th edition) at Booth No. 3148 at the AWEA conference in Chicago on May 4-7, 2009. In addition, please sign up here if you’d like to receive our Stoel Rives Energy Law Alerts and other periodic updates.
New tax credit for "qualifying advanced energy project"
Although this blog is focused on renewable energy, manufacturers in the renewable space should be aware of a new tax credit included in the stimulus bill. The provisions is complicated and unlike most tax credits. Nevertheless, its benefits, especially for manufacturers on the cutting edge, may be too great to ignore.
Taxpayers who qualify are entitled to a 30 percent tax credit for investment in a “qualifying advanced energy project." A "QAEP" is defined as one that reequips, expands or establishes a manufacturing facility that produces:
1. property designed to produce energy from the sun, wind, geothermal, and other renewable resources,
2. fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric motor vehicles
3. electric grids to support the transmission of intermittent sources of renewable energy, including storage of such energy,
4. property designed to capture and sequester carbon dioxide emissions,
5. property designed to refine or blend renewable fuels or to produce energy conservation technologies, and
6. new qualified plug-in electric drive motor vehicles (and components),
The program is to be established by IRS, in consultation with Energy Department, on or before August 26, 2009.
Once the program is established, the Secretary of Treasury is to award certifications for tax credit. Applications must be submitted within 2 years, and applicants will have one year from the date their application is accepted to provide evidence that requirements for certification have been met. After certification awarded, an applicant has 3 years to place project in service.
The following are the criteria for certification:
-- Reasonable expectation of commercial viability
-- Greatest domestic job creation (both direct and indirect)
-- Greatest net impact in reducing air pollutants, greenhouse gases, etc.
-- Greatest potential for technical innovation and commercial deployment
-- Lowest levelized cost of energy generated or stored or of measured reduction in energy consumption or greenhouse gas emissions
-- Shortest project time from certification to completion.
The credit generally applies only to construction, etc. after February 17, 2009.
The credit is new and unlike anything IRS has ever administered before. Therefore, it is reasonable to expect that IRS will take some time to get the program fully functional. Nevertheless, it makes considerable sense to begin assembling materials that explain the company’s project and address the criteria for selection. In addition, it would be advisable to submit any applications as soon as possible after the program is established.
Stoel Rives would be pleased to assist in planning for and submitting applications for the credit.
Interior and FERC reach agreement on Outer Continental Shelf hydrokinetic projects; Secretary Salazar announces regional meeting details
From our colleague Cherise Oram:
Secretary of Interior (DOI) Ken Salazar and Acting Chairman of the Federal Energy Regulatory Commission (FERC) Jon Wellinghoff have announced an agreement describing how the two agencies will work together to facilitate permitting renewable energy – particularly ocean wave and current projects – on the outer continental shelf (OCS). The announcement indicates that DOI’s Minerals Management Service (MMS) will retain leasing authority for ocean wave and current projects on the OCS, but that FERC will have the “primary responsibility to manage the licensing of such projects” pursuant to the Federal Power Act (FPA) hydropower licensing provisions. FERC has long asserted that the FPA gives it concurrent jurisdiction with MMS’s leasing authority. The announcement indicates that the agencies will sign a more detailed Memorandum of Understanding describing how the agencies will coordinating their licensing and leasing processes for offshore projects.
This announcement comes just as Secretary Salazar, FERC Commissioner Philip Moeller and others were to testify before the Senate Committee on Energy and Natural Resources on offshore renewable energy, including the jurisdictional debate between MMS and FERC.
Finally, Secretary Salazar has announced more detailed information on the four regional offshore renewable energy meetings he plans to hold April 6-16 in Atlantic City, New Orleans, Anchorage and San Francisco. For detailed information, see Secretary Salazar’s Invitation to Regional Meetings on Offshore Energy Development.
Stimulus Bill Funding for Data Center and Telecom Technology Energy Efficiency, Smart Grid, Enhanced Geothermal Systems, and More
The American Recovery and Reinvestment Act of 2009, also known as the “Stimulus Bill,” allocated billions of dollars in funding for renewable energy, energy efficiency, energy storage, and other projects under the energy and climate change umbrella. Of the vast sums of money available for such projects, $16.8 billion goes to the U.S. Department of Energy’s (“DOE”) Office of Energy Efficiency and Renewable Energy (“EERE”). Another $4.5 billion in direct spending on smart grid demonstration projects will be overseen by DOE’s Office of Electricity Delivery and Energy Reliability.
On March 5th, DOE’s EERE Industrial Technologies Program (“ITP”) released a Notice of Intent to issue funding for technologies that increase the energy efficiency of server-based information and communication technology (“ICT”) systems housed in data centers and telecommunications central offices. The solicitation seeks proposals for projects that would increase the efficiency of IT equipment, software, power systems, and cooling systems. The solicitation also extends to the demonstration and field-testing of pre-commercial technologies in these areas, as well as in distributed generation or alternative power technologies used to power ICT systems. ITP intends to release the solicitation sometime this month.
DOE also recently announced its intention to issue a Funding Opportunity Announcement (“FOA”) for smart grid demonstrations. In addition, DOE issued two FOAs for enhanced geothermal systems (“EGS”). The EGS FOAs offer up to $84 million over six years, including $20 million for the 2009 fiscal year. Check out our recent Energy Law Alert for more information on DOE funding for smart grid demonstrations and enhanced geothermal systems.
Because of the relatively short window for responding to FOAs, DOE recommends that prospective applicants complete several one-time pre-application steps. Information on submitting applications is available at www.grants.gov.
Bonus depreciation available for cellulosic ethanol
The Internal Revenue Service has issued a new private letter ruling in which it concluded that a cellulosic ethanol plant is eligible for special bonus depreciation. The IRS concluded in PLR 200910007 that a taxpayer's demonstration plant would qualify even though the plant will produce ethanol through fermentation subsequent to hydrolysis rather than as a direct output of the hydrolysis process.
As a reminder, a special bonus depreciation allowance was provided for cellulosic ethanol facilities IRC sec. 168(l)). Bonus depreciation allows taxpayers to claim a depreciation deduction for 50% of a plant's cost in the year the plant is placed in service. However, the way in which the provision was drafted apparently created concern that the provision would only apply in certain narrow ways. The ruling alleviates that concern, with the IRS concluding that the provision is to be interpreted broadly "in light of the purpose it was intended to serve."
