Australia passes 20% renewable energy target by 2020
From my colleague Adam Walters:
On August 20 the Australian government announced the passage of a bill quadrupling its Renewable Energy Target (RET) to ensure that 20% (approximately 45,000 GWh) of Australia’s electricity is generated from renewable energy sources by 2020.
How does Australia’s RET Scheme Work?
The RET scheme is an expansion of Australia’s Mandatory RET scheme introduced in 2001, the first of its kind in the world. It works through the creation and sale of Renewable Energy Certificates (RECs) by renewable power generators to “liable parties” (mainly large-scale electricity utilities and consumers), who must provide a designated quantity of REC’s to Australia’s renewable energy regulator to demonstrate compliance and avoid having to pay charges for any shortfall. One of the changes brought about the new legislation is to increase from $40/MWh to $65/MWh.
Renewable energy sources eligible for accreditation under the RET scheme include: solar, wind, hydro, tidal, wave, biomass and geothermal, as well as solar water heaters and other smaller generation units. Hydro has historically dominated Australia’s renewable energy landscape, but recent project announcements and funding opportunities for wind and solar projects signal greater diversification of the industry, particularly for proven technologies.
Continue Reading...No Preliminary Approval for ITC Grants
In recent days, there have been rumors circulating that Treasury would issue "pre-approvals" for ITC grants in cases where construction begins in 2009 or 2010 but the project is not placed in service before 2011. You will recall that projects may still qualify for the ITC grant in those cases if they meet the placed in service deadline (12/31/12 for wind, 12/31/16 for solar and 12/31/13 for all others).
This rumor has some people excited because it is different than what Treasury had been saying and what attorneys had been advising. Previously, it was believed that Treasury would merely "accept" applications and wait until the project was placed in service to determine if it qualified for the ITC grant.
We have been told definitively by Treasury that the rumor is false. Treasury will not "pre-approve" projects for the ITC grant subject only to meeting the placed in service deadline. According to Treasury:
"We will not be issuing 'advance rulings' on projects for which construction begins but are not placed in service. What we outlined on page 3 of the 1603 Guidance document, ' II. Application Procedures' has not changed. We will not issue preliminary approvals because too many things can change by the time a specified property is placed in service. We believe the applicants and lenders should have a good idea if the proposed property meets the requirements of the 1603 program upon reading the application, guidance, terms and conditions, etc.
Stoel Rives has developed an extremely good relationship with individuals at Treasury administering the ITC grant program. We appreciate their candor and willingness to clarify how they intend to run the program.
If you have any questions about this issue, please do not hesitate to contact your favorite Stoel Rives attorney.
Friday Webinar on Commercialization of Advanced Biofuels (Algae)
On Friday August 28, Eric Lindeman of The Energy Daily will be moderating a webinar about "Advanced Biofuels: What Are the Commercial Possibilities? Why All the Interest in Algae?" My partner, the always-entertaining John Eustermann, will be speaking at the Webinar along with Connie Lausten (VP, Regulatory and Legislative Affairs, New Generation Biofuels (NGBF)) and Glenn Johnston (VP, Regulatory Affairs, GEVO, Inc.). You can sign up for the Webinar at http://www.theenergydaily.com/events/bio_fuels_webinar/
Stoel Rives recently published its new "Law of Algae", a guide to the business and legal issues affecting the development of a commercial scale algae biofuels facility. We've introduced The Law of Algae in an on-line “wiki” format because the processes, technologies, and issues are changing rapidly with the commercialization of algae. The wiki format enables us to update the book frequently to bring you the most current information, so feel free to stop by often!
IRS Issues Notice on Depreciation of Ethanol Facilities
On Monday, August 24, the IRS issued Notice 2009-64. The notice sets forth a proposed revenue ruling that concludes that ethanol facilities are depreciable over 7 years (rather than 5 years). A link to the notice appears below.
The proposed ruling classifies ethanol facilities as assets used in Waste Reduction and Resource Recovery Plants (7 years) and not assets used for manufacture of Chemical and Allied Products (5 years).
The IRS did not state when it will issue a final revenue ruling. The notice does request comments , which must be submitted by November 23, 2009.
The reasoning underlying the proposed ruling is subject to potential criticism. This may explain why the ruling was issued in proposed form and comments requested.
Clients that are interested in learning more about the proposed ruling or submitting comments should speak with their favorite Stoel Rives attorney.
Washington Technology Center Provides No-Cost Access to MEMS Fabrication Equipment
Today, the Washington Technology Center announced the launch of its Microfabrication Laboratory Access Program. The new program provides access to sophisticated micro-electromechanical systems ("MEMS") fabrication equipment to small companies in Washington State. The goal of the program is to stimulate innovative technologies.
The new Microfabrication Laboratory is one of three state funded programs in Washington. The facility is 15,000 square feet and small businesses with less than 100 employees can apply for up to three months of free lab access (valued at up to $12,300). Eligible projects include, but are not limited to proof of concept, prototyping, testing, process development, and small-scale production. A more complete description of the program is available here.
Continue Reading...NV Energy Issues RFI for Short Term (1 Month to 3 Years) Energy Supply
On August 21, NV Energy issued a press release reminding renewable energy developers of that it has issued a Request of Information (RFI) for renewable energy that can be provided on a short-term basis. This solicitation is separate from NV Energy's recently announced 2009 Renewable Energy Request for Proposals. NV Energy will consider proposals for solar, wind, geothermal, biomass and other resources eligible for portfolio energy credits under the Nevada renewable portfolio standard.
NV Energy is now looking for proposals from entities that can deliver renewable energy to its system on or after Oct. 1, 2009 and for a period of one month to three years.
Parties interested in submitting a response to the RFI, or those seeking more information related to the RFI or renewable energy laws can contact NV Energy at: ShortTermRFI@nvenergy.com . In addition, prospective bidders can email any questions to Ron Helbing, rhelbling@nvenergy.com.
Bidders must submit their responses to NV ENergy's short term renewables solicitaion by 9:00 AM (PPT) on Sept. 2, 2009.
AWEA, Others File Protests at FERC to MISO Proposed Cost Allocation
On August 13, 2009, the American Wind Energy Association, Wind on the Wires and certain wind developers filed protests at the Federal Energy Regulatory Commission to the Midwest Independent Transmission System Operator's (MISO) recent filing at FERC. The MISO filing proposes to revise MISO's cost allocation methodology for network upgrades for generator interconnection, and resulted from MISO's Regional Expansion Criteria & Benefits (RECB) Task Force.
The current cost allocation methodology in place provides that the cost of network upgrades for generator interconnection are funded initially by generator interconnection customers, and the customer is entitled to a 50% reimbursement where it is demonstrated that the output will serve MISO’s network customers or the facility has been designated a network resource. For facilities rated 345 kV and higher, 20% of the refund cost is allocated to all MISO pricing zones on a postage-stamp basis, and 80% is allocated among pricing zones using a line outage distribution factor (LODF) method.
Under the MISO proposal, cost allocation would be as follows: (i) for network upgrades below 345 kV, 100% to the interconnection customer, and (ii) for network upgrades 345 kV and above, 90% to the interconnection customer and 10% to all transmission customers through a postage stamp-type charge.
To read any of the documents related to the MISO filing, go to the FERC eLibrary website and enter in Docket No. ER09-1431.
LAW OF ALGAE AVAILABLE NOW
We are pleased to announce that the first edition of THE LAW OF ALGAE is available now. The LAW OF ALGAE is a guide to the business and legal issues in developing a commercial scale algae biofuels facility. We are introducing THE LAW OF ALGAE in an on-line “wiki” format where the contents can be accessed at www.LawOfAlgae.com. Because the processes, technologies, and issues are changing rapidly with the commercialization of algae, the wiki format enables us to update the book frequently to bring you the most current information.
THE LAW OF ALGAE is one in a series of “LAW OF” books that Stoel Rives LLP has produced over the past five years. The others include THE LAW OF WIND—A Guide to Business and Legal Issues, LAVA LAW—Legal Issues in Geothermal Energy Development, THE LAW OF BUILDING GREEN—Business and Legal Issues of Sustainable Real Estate Development, THE LAW OF OCEAN AND TIDAL ENERGY—A Guide to Business and Legal Issues, LEX HELIUS: THE LAW OF SOLAR ENERGY—A Guide to Business and Legal Issues, The Law of Cooperatives, and SHOW ME THE MONEY—The Law of the Stimulus Package. If you are interested in any of these books, please visit our website at http://www.stoel.com/lawofseries.aspx to request a copy.
Detroit Edison Issues RFP Seeking Additional Renewable Energy Resources
On August 18, 2009, Detroit Edison issued request for proposals (RFPs) seeking additional renewable energy resources for its portfolio.
The first RFP involves development of a Michigan-based wind farm (or farms) capable of producing up to 75 MW of new wind power. The facilities must be operational by Dec. 31, 2011. Detroit Edison plans to take ownership of the facilities upon completion of construction, and to receive 100 percent of the wind energy and renewable energy credits. Responses to this RFP are due by Nov. 2, 2009.
The second RFP seeks long-term (20-year) agreements for the purchase of capacity, energy and renewable energy credits from approximately 106 MW of renewable energy resources. Eligible facilities include wind, solar, landfill gas and biomass. Responses to this RFP are due by Oct. 23, 2009.
Show Me the Money: State Energy Programs for Seven States and Territories Awarded $119 Million from the American Recovery and Reinvestment Act ("Recovery Act")
On August 14, 2009, the Department of Energy ("DOE") State Energy Program ("SEP") announced that more than $119 million in funding from the Recovery Act to support energy efficiency and renewable energy projects has been awarded to Alabama, American Samoa, the District of Columbia, Illinois, Maryland, North Dakota and Wyoming.
Here is a summary of how the monies will be used by each of the states and territories:
- Alabama has been awarded $22,228,000 in federal stimulus funds. Alabama will utilize the Recovery Act SEP funding to promote energy efficiency of businesses (with a particular focus on the automotive supplier industry), schools, and correctional facilities and the development of renewable energy resources in the state. The state will also use funds to create a new "energy revolving loan fund" to stimulate the creation and retention of jobs and increase the generation of renewable energy by providing low-interest loans for new and existing industries in the state. The loans will be used for the installation of renewable energy systems and the implementation of energy efficiency measures. After demonstrating successful implementation of its plan, Alabama will receive nearly $28 million in additional funding, for a total of more than $55 million. Click here for more information regarding Alabama's state energy program and use of Recovery Act funds.
- American Samoa was awarded $7,420,000 in federal stimulus funds. American Samoa will utilize the Recovery Act SEP funding to expand the use of renewable energy across the territory, as well as to supplement weatherization funds to improve home energy efficiency for low-income residents. Specifically, the territory will install a 1,000 kW photovoltaic solar-energy array near the Tafuna Power Station, 19 smaller 28 kW solar arrays on the roofs of government and other buildings, and a solar water heating system at the LBJ Tropical Medical Center. American Samoa is also interested in expanding its use of wind power, and will use Recovery Act funds to set up eight anemometers to measure and quantify the territory's wind potential. After demonstrating successful implementation of its plan, the territory will receive more than $9 million in additional funding, for a total of $18 million.
SHOW ME THE MONEY II AVAILABLE NOW
We announce the publication of the second edition to our “Show Me The Money - the Law of Stimulus Bill”. The second edition of the guide reviews the various programs and potential sources of federal funding for clean energy companies and projects. Like the first edition published in May, the second edition addresses funding opportunities under the ARRA for each of the following energy industry areas: wind, solar, biofuels, biomass, smart grid, transmission, geothermal, marine and hydrokinetic, green building, energy efficiency, advanced battery and fuel cell technology, clean energy equipment manufacturing, green vehicles and clean coal. The guide contains information about the funding opportunities released up to August 10, 2009, and we will be tracking federal and state level hrough our client alerts and blogs.
Click here to access Show Me the Money II.
DOE Unveils Hydrodynamic Testing Facilities Database
The U.S. Department of Energy's (DOE) Wind and Hydropower Technologies program recently unveiled a new database containing information on the test capabilities and services of a variety of U.S. hydrodynamic test facilities.
The first-of-its-kind database encompasses 81 commercial, academic, and government facilities and offshore berths in 18 states, and will directly facilitate the testing of technologies designed to extract energy from waves and the currents of oceans, tides, and rivers. The database will serve as a platform for marine and hydrokinetic technology developers to identify a U.S. facility where they can test and validate their prototype devices. Users can find out more information on dimensions, costs, and available personnel, as well as available sensors and applicable software used to gather and present data gathered during in-water testing.
For more information, please contact Cherise Oram.
Show me the Money: $66 Million for State Weatherization Assistance Programs
Today, the Department of Energy (“DOE”) announced more than $66 million in Recovery Act funding to four states for their weatherization assistance programs. The funding will help weatherize over 26,000 homes, lower energy costs, reduce pollution, and create green jobs across the country. Here is how the funds will be used in Alaska, Colorado, Connecticut and Hawaii:
Continue Reading...
Fish Farms?: Algae to Fuel Entrepreneurs Are Moving Up the Food Chain
Today, the Wall Street Journal's Russel Gold reported that entrepreneurs are looking into massive algae blooms in the Gulf of Mexico that create "dead-zones" for sea life as a potential feedstock of algae for biofuel production. The dead zones are a result of run-off of fertilizers and other agricultural waste creating nutrient rich areas for algae to grow. Eventually, the algae sinks to the ocean floor where it is consumed by bacteria that, in the consumption process, also depletes the local oxygen. The sea life in the area either dies or swims elsewhere for its oxygen supply.
Apparently, LiveFuels Inc., a Silicon Valley start-up, is taking it to the next level. Instead of focusing on harvesting the algae from these dead zones to turn into biofuel, they are experimenting with releasing into these dead zones fish that would act as "algae grazers". The algae-stuffed fish would then be processed for their oil to produce biofuel. However, the algae blooms are seasonal and move around, so Russel Gold's article suggested that mobile fish farms may be needed.
The Wind Energy Promotion Act: Turbo Charging the Renewable Energy Production Tax Credit
U.S. Representatives Collin Peterson (MN) and Tim Walz (MN) introduced the Wind Energy Promotion Act (WEPA) last month. If WEPA becomes federal law, the Renewable Energy Production Tax Credit (PTC) promises to become an even more potent driver for wind power project development. Under current law, the PTC may only be used to shelter passive activity income from tax liability.
If adopted, WEPA would allow the use of the PTC to shelter up to $40,000 of ordinary income, a modification that would boost the effectiveness of the PTC.
Click here to read the full analysis on WEPA and the opportunities this presents.
For more information, please contact Joel Dahlgren of our Minneapolis office, or any of our other energy attorneys.
Show me the Money: $343 Million Deployed to Transmission Project in Washington and Oregon
The Department of Energy has announced that $343 million from the American Recovery and Reinvestment Act has been provided to the Bonneville Power Administration's ("BPA") McNary-John Day transmission project (the "McNary-John Day Line") in Washington and Oregon.
The McNary-John Day Line runs 79 miles from the McNary Substation in Oregon, through Washington, and ending at the John Day Substation in Oregon. The BPA has stated that the new line will help promote wind and other renewable energy generation in the Pacific Northwest.
The McNary-John Day Line will be energized by 2012 and provide transmission service for over 575 megawatts of electricity.
SCE Solicits Feedback on Solar PV Program; CPUC to Host Feed-in Tariff Panel
SCE Solar PV Program:
Back in June, the California Public Utilities Commission (“CPUC”) issued a decision authorizing Southern California Edison (“SCE”) to execute contracts for up to 250 MW of generation from solar PV facilities owned and operated by independent power producers through a competitive solicitation process. The CPUC decision required SCE to file an advice letter outlining the criteria for selection of bids and containing a draft standard power purchase agreement (“PPA”).
SCE recently filed the requisite advice letter requesting approval of its proposed competitive solicitation process and criteria and a draft standard PPA. Anyone may file protests or responses to SCE’s advice letter. Protests are due on August 10, 2009. For more information, as well as a link to SCE’s draft standard PPA, go to the CPUC website.
CPUC Panel on Feed-in Tariffs:
The CPUC announced that it will host an interactive panel discussion on feed-in tariffs for renewable energy on August 27, 2009. The panel will feature international experts from Germany, Spain, the United States, and elsewhere with experience in the global solar power market. The panelists will offer their insights on the global solar market, the role of feed-in tariffs and other mechanisms for advancing renewable energy development, and California’s role in facilitating wholesale renewable distributed generation.
The panel will be held from 1-2:30 PM at the CPUC Auditorium, 505 Van Ness Ave., San Francisco, CA.
Show me the Money: DOE Proposes Amendments to its Loan Guarantee Program
Today, the Department of Energy (DOE) issued a notice of proposed rulemaking to amend 10 CFR Part 609, the rule regulating the loan guarantee program authorized by section 1703 of Title XVII of the Energy Policy Act of 2005. The two principal goals of section 1703 of Title XVII are to encourage commercial use of new or significantly improved energy-related technologies and to achieve substantial environmental benefits. (See these recent alerts regarding the DOE loan guarantee program and the related application process)
After reexamining Title XVII, the DOE has concluded that the statute does not require a first lien on all project assets. DOE has discovered that its current requirement that it be in lien position is in conflict with the financing structure of many energy projects. For example, many utility scale power plants are jointly owned by public power agencies, cooperative power systems and investor-owned utilities. In these cases, it may not be commercially feasible to obtain a lien on all project assets or the credit of a sponsor may be sufficient to support a more modest pledge of assets.
Furthermore, DOE has found that other parties are interested in participating as co-lenders, co-guarantors, or insurers of Title XVII loans. However, these other parties expect to share, on a pari passu basis, in any collateral securing such loans.
Consequently, DOE proposes two amendments to the current rules:
- Delete the requirement of a first priority lien on all project assets and leave to the Secretary (of DOE) the determination of an appropriate collateral package, as well as intercreditor arrangements; and
- Allow the Secretary (of DOE) to determine if pari passu lending is in the best interests of the United States
Continue Reading...
Stoel Rives Sponsors the 2009 Algae Biomass Summit
Stoel Rives, LLP has decided to sponsor the 2009 Algae Biomass Summit ("2009 ABS"). The Algal Biomass Organization ("ABO") is hosting the 2009 ABS in San Diego this October 7-9th. The event will take place at the Marriot San Diego Hotel & Marina.
This year's ABS will discuss the emerging issue of algae as a feedstock for biofuels and other products. In an earlier article (available here), oil giant Exxon-Mobil's $600 million investment into this area marks a significant upward trend of interest in this area. Exxon's investment involves a partnership with Synthetic Genomics, a biotechnology company founded by the genomics pioneer J. Craig Venter. Venter, along with other leaders in the algae biofuels world, will be attending the 2009 ABS, and will also be the opening keynote speaker.
Shortly after Exxon's announcement, the U.S. Environmental Protection Agency ("EPA") announced that it will measure the greenhouse gas impacts of algae-based biofuels in its final rule to implement the renewable fuels standard (for the article, click here). Algae as a renewable feedstock for biofuel is a hot area of development and those that are interested in getting involved and learning more about it, should consider attending the 2009 ABS.
Registration is currently open. Those interested in taking advantage of early registration prices must register for the 2009 ABS prior to September 1st.
Show Me the Money: $2.4 Billion for NexGen Batteries and Electric Vehicles
48 new advanced battery and electric drive projects will receive a total of $2.4 billion under the American Recovery and Reinvestment Act. The projects, which were selected through a competitive bidding process by the Department of Energy, will support U.S. manufacturing of batteries, electric drive components and electric drive vehicles. The dollar amount of the awards will be matched by the recipients and industry experts believe that the sum of $4.8 billion will create thousands of new manufacturing jobs in the U.S. battery and auto industries.
The awards were divided up as follows:
- $1.5 billion to produce batteries, battery components and to expand battery recycling capacity
- $500 million to produce electric drive components for vehicles
- $400 million to purchase thousands of plug-in hybrid and all-electric vehicles and charging stations.
Show me the Money: $5.5 million available for Ethanol Blends
Today, the Department of Energy (DOE) announced the release of a funding opportunity announcement (FOA) related to ethanol blends. The FOA provides up to $5.5 million from the American Recovery and Reinvestment Act to increase the use of higher ethanol blends through expanding refueling infrastructure and funding outreach to promote public awareness.
$3.5 million is available to fund refueling infrastructure related to higher ethanol blends. Potential projects include modifications, upgrades, or expansions of fuel pumps at retail gas stations.
$2 million is available to fund national campaign projects that increase public awareness of the benefits, safety, and use requirements of higher ethanol blends.
Applications for this FOA are due October 4, 2009.
United States and China to Cooperate on Climate Change and Energy
From our colleague, Jerry Chiang:
The United States and China signed a memorandum of understanding (“MOU”) on July 28, 2009, detailing the partnership between the two countries on climate change, energy, and the environment. The MOU commits both countries to reaching a successful international agreement that will address climate and energy issues. It also provides for cooperation in confronting climate change and developing, promoting, and implementing energy efficiency, renewable energy, smart grid technologies, electric vehicles, and other energy technologies.
The United States and China will have ongoing conversations on what each nation is doing to reduce greenhouse gas emissions and to further international climate negotiations in preparation for the United Nations Climate Change Conference in Copenhagen this December.
Steven Chu, Secretary of Energy, remarked at the signing ceremony, “Both of our countries understand the importance of clean energy for our economies and for our security. Both of us understand the imperative of fighting climate change. What the U.S. and China do in the coming decades will help shape the fate of the world . . . . Today’s agreement should send a clear signal that the United States and China are ready to work together on clean energy and climate change.”
Read the complete remarks at the signing ceremony here: http://www.state.gov/secretary/rm/2009a/july/126575.htm. For a funding opportunity on the U.S.-China climate and energy partnership, go here: http://www.stoel.com/showalert.aspx?Show=5653.
USDA Accepting Biomass Assistance Applications
On July 29, 2009, USDA Farm Service Agency (FSA) Administrator Jonathan Coppess announced that biomass conversion facilities can begin signing up to participate in the Biomass Crop Assistance Program (BCAP), which will help increase production of renewable energy. The program, authorized in the 2008 farm bill, provides financial assistance to producers who deliver eligible material to biomass conversion facilities and the FSA will provide financial assistance to collect, harvest, store and transport eligible materials.
Biomass conversion facilities and material owners or producers should contact their FSA state offices or visit the FSA website for more information. FSA will begin accepting applications from biomass facilities interested in participating in the BCAP.
The purpose of the matching payments is to assist biomass producers with the CHST cost of delivering biomass to a qualified biomass conversion facility. Biomass conversion facilities may become "qualified" by submitting a Memorandum of Understanding (MOU) to the FSA state offices. Once a facility becomes qualified, eligible material owners or producers who deliver biomass to that facility may be eligible to receive CHST payments. Eligible material owners or producers who market eligible material to a qualified biomass conversion facility may apply for the matching CHST payment at their FSA county office. An application must be submitted before the eligible material is sold and delivered to a qualified biomass conversion facility, where it will be reviewed by the FSA and county offices before CHST payments are authorized.
For additional information, please contact John Eustermann or any of our other energy attorneys.
