New Temporary BETC Rules Issued by ODOE
The Oregon Department of Energy (ODOE) has issued new temporary BETC rules. The purpose of these rules, according to ODOE, is to clarify how the Section 1603 Grant will be deducted from BETC project costs. In an apparent reversal of ODOE’s recent position during the Tier Two and Tier Three application phases, the temporary rules appear to exclude from the definition of a “federal grant” any Section 1603 Grant that was obtained before April 18, 2011. However, the Section 1603 Grantwill be deducted from “certified” costs for projects that receive preliminary certification and that start construction after April 18, 2011 (the issuance date of these temporary rules). The temporary rules define certified costs to be the “costs certified in the final certification issued pursuant to ORS 469.215.” To see ODOE’s news release and a copy of the new temporary rules follow the links below.
http://oregon.gov/ENERGY/CONS/BUS/docs/TempBETCrules18APR11withedits.pdf [rules]
http://www.oregon.gov/ENERGY/news/1133BETCFedGrant.shtml [news release]
California Public Utilities Commission Holds Prehearing Conference on Energy Storage Procurement Targets
As we’ve previously discussed, California’s AB 2514 requires the CPUC and municipal utilities in California to open proceedings by March 1, 2012 to determine appropriate targets, if any, for the procurement of viable and cost-effective energy storage systems by load-serving entities. Over a year before that deadline, the CPUC opened Rulemaking 10-12-007 in December of last year to both implement AB 2514 and “on [the CPUC’s] own motion to initiate policy for California utilities to consider the procurement of viable and cost effective storage systems.” In early March, the CPUC held an initial workshop on the scope of the rulemaking proceeding.
On April 21, the Commission held a prehearing conference to determine the scope and schedule for the proceeding. Stoel Rives partner Seth Hilton attended the conference. Among the issues discussed at the prehearing conference, led by Administrative Law Judge Yip-Kikugawa, was whether to conduct the proceeding in phases (e.g., first examining how storage might be applied, and then in a subsequent proceeding setting what the mandate will be for storage procurement), the issues to be covered in each phase , and whether evidentiary hearings would be necessary.
According to ALJ Yip-Kikugawa, a scoping memo should issue in the next two to three weeks. The scoping memo will set out the issues to be considered in the proceeding and a schedule for their resolution.
We'll be posting further information on Renewable + Law Blog when the scoping memo comes out, so stay tuned for further developments.
LexisNexis Selects Renewable + Law Blog to its Top 50 Environmental Law Blogs List
Having first reported to our readers in February that LexisNexis had nominated the Stoel Rives Renewable + Law Blog for its Top 50 Environmental Law & Climate Change Blogs for 2011 award, we are pleased to announce we made the list of winners! In publishing its Top 50 list, LexisNexis declared that our Renewable + Law bloggers’ “avowed passion for solar energy, wind energy, biofuels, ocean and hydrokinetic energy, biomass, waste-to-energy, geothermal and other clean technologies is evident in the care they take with this blog-the posts are frequent, the topics are interesting and cutting edge, and the writing is top notch.”
Thanks again to all our readers who make regular use of Renewable + Law Blog and those who wrote in to support us for this award. We're honored and inspired, and we plan to keep those Blogs and letters coming.
RFI for Substation-Size Li-ion Energy Storage System Demonstration Project
Electric Power Research Institute (EPRI) and Technology Transition Corporation recently issued a request for information (RFI) to prepare for multiple demonstrations and the market introduction of 1MW / 2MWh lithium ion battery energy storage systems (ESS) for electric utility grid management solutions. EPRI and TTC have assembled a utility team for this project, and they encourage manufacturers of Li-ion systems and energy storage system integrators to respond to the RFI. The utility team will evaluate the responses to determine which ESS suppliers should be invited to a 2-day utility-manufacturer workshop to be held in June 2011 to discuss the project’s technical specification and demonstration plans. The responses to the RFI will also influence the forthcoming Request for Proposals and the technical specification for approximately three demonstrations scheduled for 2012.
To be considered for participation in the proposed ESS project, including receipt of the resulting RFP in Q3 2011, responses must be received electronically, by 8 pm (20:00) Eastern Time, Monday, May 2, at storagespec@ttcorp.com. A detailed description of the RFI process and the RFI response form can be found on the Technology Transition Corporation's website, here.
Thanks to Emanuel Wagner, Project Coordinator for TTC, for bringing this RFI to my attention. According to Emanuel, this would be the first Li-ion storage project of this size in the US, if not the world.
Petition for Review Filed in TXU v. FPL Curtailment Case
On April 11, 2011, FPL Energy, LLC, et al., filed with the Texas Supreme Court a petition for review of the Texas Court of Appeals’ decision FPL Energy, LLC, v. TXU Portfolio Management Company, L.P. The case illustrates the significant economic impact that curtailment can have on variable energy resources. For a detailed description of the case and its implications, see our Renewable + Law Blog entry on the Court of Appeals’ decision here.
The petition for review focuses on the question of whether the Court of Appeals was correct in enforcing the liquidated damages provisions contained in three wind energy power purchase agreements. The pertinent provisions in each PPA required the petitioners to pay $50 for every MWh that the plants fell short of achieving the their minimum REC output guarantees—the Court of Appeals’ holding meant that the petitioners owed TXU roughly $29 million in shortfall damages for a four year period of curtailment imposed by the transmission provider (ERCOT), on top of the pain of losing the contract price and the production tax credit on each MWh of energy curtailed.
Continue Reading...4th Annual Global Marine Renewable Energy Conference
On Friday April 29, Stoel Rives partner Cherise Oram will be presenting on "Accelerating the Decision Making Process for MHK Facilities" at the 4th Annual Global Marine Renewable Energy Conference in Washington, D.C.
This year's conference takes place from April 27 - 29. Here's a brief summary of what to expect:
- Wednesday April 27 is Industry Development Day. Sandia National Laboratories, the National Renewable Energy Laboratory and the Department of Energy will provide updates on issues facing the industry including marine and hydrokinetic ("MHK") reference models, instrumentation and measurements for MHK devices, and the role of ocean renewables in ocean planning.
- Thursday April 28 features industry updates from CEOs, and presentations from government officials including Paul O'Brien of Scottish Development International, Michael Bromwich, Director of the Bureau of Ocean Energy Management, Regulation and Enforcement ("BOEMRE"), and John Wellinghoff, Chairman of the Federal Energy Regulatory Commission ("FERC").
- Friday April 29 will feature reports from MHK test centers that are already up and running, updates on RD&D efforts in the United States and abroad, and presentations from government laboratories on their work to support the advancement of the MHK industry.
The conference will also feature technical posters, exhibits, networking opportunities. We hope you'll be able to join Stoel Rives attorneys and others at the conference who are working to bring clean renewable ocean power to the grid.
Landmark EPA Clean Air Act Settlement with TVA
On April 14, 2011, the EPA announced the settlement of a twelve year dispute with Tennessee Valley Authority (TVA) over Clean Air Act violations. In the settlement, TVA agrees to permanently retire 2,700 MW of coal power from Alabama, Kentucky and Tennessee and invest an estimated $3 to $5 billion on new and upgraded state-of-the-art pollution controls on 11 coal fired plants. The EPA estimates that this action will prevent an estimated 1,200 to 3,000 premature deaths, 2,000 heart attacks and 21,000 cases of asthma attacks each year, resulting in up to $27 billion in annual health benefits.
The dispute stems from an administrative compliance order that EPA issued to TVA in November 1999, alleging that TVA modified a number of coal-fired units at nine of TVA's plants without first obtaining preconstruction permits and installing and operating state-of-the-art pollution control technology. Under the settlement agreement, TVA will upgrade 92% of its remaining coal fired fleet by either installing state-of-the-art selective catalytic reduction, flue gas desulfurization, or repowering the assets to burn renewable biomass. The settlement also requires TVA to spend $240 million on energy efficiency initiatives and to provide $1 million to the National Park Service and the National Forest Service to improve, protect, or rehabilitate forest and park lands that have been impacted by emissions from TVA’s plants, including Mammoth Cave National Park and Great Smoky Mountains National Park.
TVA, a corporation owned by the U.S. government, provides electricity for 9 million people in parts of seven southeastern states at prices below the national average. TVA, which receives no taxpayer money and makes no profits, developed an “Integrated Resource Plan,” detailing two portfolio standards, 2,500 MW or 3,500 MW of renewable energy by 2020. Notably, only 2 of TVA’s 7 states, North Carolina and Virginia, are subject to RPS standards.
This settlement is a major boost for the renewable energy industry. By 2012, TVA will have 1,625 MW of renewables in its portfolio. In addition to needing 1,000 – 2,000 MW of new renewable generation to fill its renewable energy portfolio, it now must offset its retired 2,700 MW coal power by 2018.
For more information:
EPA Press Release on Settlement: http://yosemite.epa.gov/opa/admpress.nsf/ab2d81eb088f4a7e85257359003f5339/45cbf1a4262af67b8525787200516dd7!OpenDocument
EPA’s Overview and Settlement with TVA:
http://www.epa.gov/compliance/resources/cases/civil/caa/tvacoal-fired.html
Chinese Language Edition of Stoel Rives Law of Wind Guide Now Available
We are pleased to announce for our Chinese readers the publication of a new Chinese translation of the Stoel Rives Law of Wind guide. Purposed for Chinese investors and companies exploring business opportunities in the U.S. wind energy market, the guide covers such issues as real property procedures, permitting requirements, EPC agreements, project finance, tax, interconnection, transmission and power purchase negotiations, labor management, U.S. Securities regulations and U.S. Foreign Corrupt Practices Act compliance. The translation was prepared in cooperation with our friends at the U.S.-China Energy Cooperation Program (“ECP”) Wind Power Working Group, the only non-governmental organization with bi-lateral government recognition in the U.S.-China sustainable energy sector.
Download a copy (registration required)
Read the Stoel Rives/ECP press release: English version | Chinese version
Budget Compromise Looks OK for Projects in DOE Loan Guarantee Pipeline
The current version of the budget compromise provides relatively good news for projects seeking DOE loan guarantees. During the past several months, renewable energy projects in the DOE’s Loan Guarantee pipeline have been exposed to substantial uncertainty as a result of the budget crisis in DC. The developers of these projects have previously invested substantial resources to apply to the program which would become wasted effort if the program funds evaporate as the projects wait for DOE approval. The Loan Guarantee Program Office led by Jonathan Silver was clearly aware of this issue and prudently allowed all open solicitations to expire in early 2011 without issuing any new ones. The renewable energy project developers’ concern has been that the budget deal would involve a substantial claw back of previously appropriated funds that have not yet been committed to projects.
The battle is not yet resolved but the current compromise is encouraging for these projects. There is a claw back of $18.183 billion in uncommitted funds but these were funds appropriated under provisions that required that the Credit Subsidy Cost to be paid by developers. The Credit Subsidy Cost was the bane of the Loan Guarantee Program as it essentially required the program applicant to cover the present value risk that the project would default on the loan. The Stimulus Bill solved this problem and greatly increased the attractiveness of the Loan Guarantee Program by appropriating funds to cover the Credit Subsidy Cost. Similarly, the current budget compromise appropriates an additional $1.183 billion in funds and allows these funds to be utilized to cover Credit Subsidy Costs. Thus, while the provision claws back funds, these are funds that were not attractive due to program limitations whereas new funds are appropriated to the preferred program. In addition, the proposed legislation imposes an Office of Management and Budget certification of compliance requirement as a control on the program.
The current bill is HR 1473 and is likely to be voted on later this week and thus is still subject to amendments. To obtain the latest details and access to the bill, see the Open Congress site at http://www.opencongress.org/bill/112-h1473/show
Governor Brown Signs Bill Increasing California's Renewable Portfolio Standard to 33%
A Legal News Alert from Seth Hilton and the Stoel Rives Renewable Energy Law Group:
California’s Governor Jerry Brown signed Senate Bill ("SB") X1-2 on Tuesday requiring California's electric utilities to procure 33% of their energy from renewable resources by 2020. Upon signing the bill, Governor Brown stated the "bill will bring many important benefits to California, including stimulating investment in green technologies in the state, creating tens of thousands of new jobs, improving air quality, promoting energy independence and reducing greenhouse gas emissions."
Details concerning the implementation of the new legislation will have to be worked out at various California regulatory agencies, including the California Public Utilities Commission and the California Energy Commission. The legislation will likely spawn numerous regulatory proceedings as the various regulatory agencies struggle to come to grips with the new RPS mandate.
For more information about SBX1-2, please see our earlier blog post and detailed Renewable Energy Law Alert, dated March 29, 2011.
Montana Legislature Approves Wind Energy Rights Act; Mineral Estate Would Remain Dominant
Yesterday, the Montana legislature sent HB 295, the Wind Energy Rights Act (the “Act”), to Governor Schweitzer to be signed into law. The Act revises wind easements and wind energy rights in the state in several ways and will become effective on the date signed by the Governor:
- Wind Easements. The Act sets out the contents and requirements for wind easements. A wind easement is defined as “the right granted . . . to a wind energy developer guaranteeing the developer the right to use the real property legally described . . . and the wind resource on and flowing over its surface to develop a wind energy project.” Such wind easements would be interests in real property that run with the land.
- Wind Option Agreements. The Act sets out the contents and requirements for wind option agreements.
- Severance of Wind Rights Prohibited. The Act prohibits the severance of wind energy rights from the underlying real property. However, the Act does not “prohibit or limit the right of a seller of the real property to retain any payments associated with an existing wind option agreement or wind energy agreement” (including leases, licenses, and any other agreement that contains a wind easement).
- Mineral Estate Remains the Dominant Estate. The Act does not “change or alter common law” with respect to “the rights belonging to or the dominance of the mineral estate.” Therefore, even though a developer may acquire a real property interest in the wind resource under the Act, that right – like the right of the landowner to occupy the surface – is subject to oil and gas and other mineral interests that were recorded prior in time to (and without prior notice of) the wind energy agreement. Although the Act requires landowners to “ensure the undisturbed flow of wind over the property,” they are not required to restrict structures and equipment “necessary to access minerals as they relate to the rights belonging to or the dominance of the mineral estate.” But what if they did anyway? Because the mineral estate is the dominant estate, even if a landowner agreed to restrict future development of senior mineral interests by, for example, limiting the height or location of exploration equipment, that covenant could be subject to challenge by the mineral interest holder under common law.
- Grandfathering. Wind energy rights created by lease, contract, or other agreement prior to the effective date of the Act will not be affected by the Act.
- Repealer. The current law governing wind energy easements, MCA 70-17-303, would be repealed upon approval of the Act.
The severance of wind rights and conflicts between wind project developers and oil & gas and other mineral interest holders are some of the leading issues facing project developers. These issues can be quite complex and have implications for project financing as well as project siting. For more information on these issues, contact:
Richard Hall, rrhall@stoel.com, (208) 387-4211 (Boise)
Chad Marriott, ctmarriott@stoel.com, (503) 294-9339 (Portland)
April 21 Presentation: Changes Coming with New FTC Green Guides
Stoel Rives attorney Jay Eckhardt will give a presentation on April 21 addressing the proposed new FTC Green Guides. The presentation will focus on new FTC guidance and interpretations concerning renewable energy claims and carbon offset claims, as well as claims concerning renewable materials, and the use of green seals and certifications. Going beyond the Guides - the presentation will also review the broader enforcement environment. The program is sponsored by the Sustainble Future and Antitust & Trade Regulation Sections of the Oregon State Bar, and the Green Business Initiative at the University of Oregon School of Law.
For event details and logistics, click here. Admission to the live event in downtown Portland, Oregon is free. A telephone number and passcode will be provided for attendees unable to attend in person.
For more information on reguation of environmental marketing, see the Stoel Rives Green Guides Resource Page.
Upcoming Electric Energy Storage (EES) Workshops
California’s AB 2514 requires the CPUC and municipal utilities in California to open proceedings by March 1, 2012 to determine appropriate targets, if any, for the procurement of viable and cost-effective energy storage systems by load-serving entities. By October 1, 2013, the CPUC must (1) determine whether a procurement target for energy storage is appropriate and, if so, (2) adopt a procurement target for each load-serving entity under its jurisdiction to be achieved by December 31, 2015 and a second target to be achieved by December 31, 2020. Municipal utilities have an additional year to meet these requirements.
In December of last year, the CPUC opened Rulemaking 10-12-007 both to implement AB 2514 and “on [the CPUC’s] own motion to initiate policy for California utilities to consider the procurement of viable and cost-effective energy storage systems.” Order Instituting Rulemaking (“OIR”) at 1, R.10-12-007.
On March 9, 2011, a workshop was held to address the scope of the rulemaking proceeding. The workshop included discussions of current and emerging energy storage technologies, the goals and applications of energy storage, existing barriers to storage implementation, and whether a unified storage policy would work or whether the policy should be written to address specific barriers to entry. The workshop also considered how the CPUC could and should work with other agencies addressing energy storage or related issues, including the California Energy Commission, the California Independent System Operator, and the Federal Energy Regulatory Commission. You can find Seth Hilton’s report about the March 9 workshop here.
The CPUC has scheduled a pre-hearing conference in the rulemaking proceeding for April 21, 2011. The conference will be held before ALJ Amy C. Yip-Kikugawa, beginning at 10 am, in the Commission Courtroom, State Office Building, 505 Van Ness Avenue, San Francisco, California. Stoel Rives partner Seth Hilton will attend the conference.
In addition, as part of its 2011 Integrated Energy Policy Report (IEPR) Schedule, the California Energy Commission has scheduled a committee workshop on energy storage for renewable integration, which will begin at 9:30 on April 28 in Hearing Room A, CALIFORNIA ENERGY COMMISSION, 1516 Ninth Street, First Floor, Sacramento, California. Stoel Rives attorneys are planning to attend the workshop.
California Public Utility Commission to Reopen Rule 21 Working Group
A report from Stoel Rives attorney Jake Storms (Sacramento):
The California Public Utility Commission (“CPUC”) recently announced that it will reopen the Rule 21 Working Group. Rule 21 governs the interconnection of distributed generation to a utility’s distribution system.
Each of the three largest investor-owned utilities—Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric—have a version of Rule 21 in their electric tariffs, which are subject to approval by the CPUC. The last Rule 21 workshop was held in 2008. The CPUC stated that, given the substantial changes in the technical and regulatory landscape in the past several years, Rule 21 is in need of reconsideration and has set forth a list of issues it believes should be addressed by the new Working Group. These include:
• The need for transparency in processing, queue information, and customer application information
• The need for review and potential reconsideration of technical screens within Rule 21 to ensure that the appropriate issues are being studied
• The need for articulation of cost-allocation methodology when network upgrades are required
• The need for review of utility tariffs for consistency with each other and with state law
• The need for additional standard interconnection agreements to accommodate the different types of distributed generation projects anticipated to come online
The first meeting of the Rule 21 Working Group will be Friday, April 29, 2011 from 10:00 a.m. to 3:00 p.m. at the Auditorium of the CPUC located at 500 Van Ness Avenue, San Francisco, CA.
DOE and Interior Announce $26.6 Million for Hydropower R&D
At the National Hydropower Association conference in Washington, D.C. earlier this week, Department of Energy ("DOE") Secretary Steven Chu and Department of the Interior ("DOI") Secretary Ken Salazar announced a $26.6 million grant program to advance the development, testing, validation, modeling, and interconnection of advanced conventional hydropower systems. The agencies' news came at the same time that the DOE's Oakridge National Laboratory announced that as much of 12.6 GW (12,600 MW) of additional hydropower capacity can be drawn from the nation's waterways if generating facilities are added to 54,000 dams (including federal projects) that currently do not have them. The top 100 of those sites could add up to as much as 8 GW (8,000 MW) of capcity.
Topics 1, 2, and 3 of the Funding Opportunity Announcement (DE-FOA-0000486) will be funded by the DOE's Office of Energy Efficiency and Renewable Energy ("EERE"). Topic 4 will be jointly funded by the EERE and the DOI's Bureau of Reclamation. The topics are as follows:
- Topic 1. Sustainable Small Hydropower. $10.5 million over three years to advance research and development of small hydropower facilities to be installed at existing facilities (e.g., dams, conduits).
- Topic 2. Sustainable Pumped Storage Hydropower. $11.875 million over four years to provide assistance to projects already in development. Preference will go to projects that will begin construction in 2014 and assist with grid integration of variable resources like wind and solar.
- Topic 3. Environmental Mitigation Technologies for Conventional Hydropower. $2.25 million over three years for R&D related to issues facing conventional hydropower technologies (e.g., turbine efficiencies and fish mortality).
- Topic 4. Advanced Hydropower System Testing at a Bureau of Reclamation Facility. $2 million over three years for system testing of low-head hydropower technologies at existing, non-powered Bureau of Reclamation facilities.
Letters of Intent for the FOA are due no later than 11:59 p.m. Eastern Time on May 5, 2011. Applications are due no later than 11:59 p.m. Eastern Time on June 6, 2011.
Non-Profit Groups Challenge Colorado's RES and Question Public Policy Favoring Wind Energy
Stoel Rives partner Bev Pearman reviewed the complaint filed Monday in American Tradition Institute, et al., v. Colorado and prepared this analysis:
On April 4, 2011, the American Tradition Institute (“ATI”), the American Tradition Partnership (“ATP”), and Rod Lueck filed suit in the U.S. District Court for the District of Colorado arguing that Colorado is unconstitutionally discriminating against out-of-state renewable energy producers. ATI is a nonprofit organization “dedicated to the advancement of rational, free-market solutions to America’s land, energy, and environmental challenges,” and ATP is a lobbying organization “dedicated to fighting environmental extremism and promoting responsible development and management of land, water, and natural resources in the Rocky Mountain West and across the United States.” Rod Lueck is a member of ATI and ATP.
Colorado’s renewable energy standard (“RES”) states that by 2020 the state’s two major investor-owned utilities must get 30 percent of electricity sold from recycled or renewable resources. Renewable energy resources are “solar, wind, geothermal, biomass, new hydroelectricity with a nameplate rating of ten megawatts or less, and hydroelectricity in existence on January 1, 2005, with a nameplate rating of thirty megawatts or less.” “Fossil and nuclear fuels and their derivatives” are not “eligible energy resources” for complying with the RES. Additionally, each kilowatt of electricity generated in Colorado from certain recycled or renewable sources is given an enhanced value of one and one-quarter kilowatt-hours for purposes of meeting the mandated standards.
Plaintiffs raise both a sweeping Commerce Clause claim and a more focused Commerce Clause claim. The sweeping claim is that the statutory scheme is unconstitutional because it discriminates against non-renewable generation resources, both in-state and out-of-state, with plaintiffs alleging that such non-renewable generation is “legal, safer, less costly, less polluting and more reliable than renewable generation. A more focused claim is that the statutory preference given to in-state renewable electricity establishes a “market-bias against otherwise qualifying renewable sources located outside of Colorado and an inflated cost of complying with the RES requirements.”
Plaintiffs’ Commerce Clause claim is grounded in a U.S. Court of Appeals for the Tenth Circuit’s decision in KT&G Corp. v. Attorney General of the State of Oklahoma, 535 F.3d 1114, 1143 (10th Cir. 2008), which says a state may violate the dormant Commerce Clause by:
· Discriminating against interstate commerce in favor of intrastate commerce, unless “the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism;” or
· Imposing “a burden on interstate commerce incommensurate with the local benefits secured;” or
· Creating mandates with the “practical effect of extraterritorial control of commerce occurring entirely outside the boundaries of the state in question.”
We expect that Colorado will vigorously defend the RES as being constitutional because its interest in promoting renewable energy generation is an important policy choice. Plaintiffs are attacking that position head-on, however, by challenging the policy of favoring renewable resources, particularly wind energy. They allege that wind energy is not reliable, causes more pollution due to the cycling of coal and natural gas plants during times when wind generation is not possible, and drives up utility costs for consumers. They do not attack other forms of renewable energy as vociferously, but still argue that any scheme favoring renewable resources over other energy sources burdens interstate commerce and violates the Commerce Clause.
The more focused claim (based on the preference given in-state renewable resources) is similar to a Commerce Clause challenge was brought nearly a year ago in Massachusetts by TransCanada Power Marketing, Ltd. (“TransCanada”). The Massachusetts suit did not challenge the policy of promoting renewable energy over non-renewable energy sources. It instead focused on renewable energy mandates and incentives favoring in-state generation. We do not know what arguments Massachusetts would have raised in defense of its program because the case was stayed after the state suspended the regulation underlying the statute in question. It issued emergency regulations, which were later adopted as final regulations, but the statute that establishes the challenged policy has not been amended. On April 1, 2011, the Alliance to Protect Nantucket Sound, an advocacy group that is leading the opposition to the Cape Wind project, filed a motion to intervene in that proceeding. It argued that TransCanada does not represent the interests of Massachusetts ratepayers. Their economic interests are allegedly harmed because the program at issue discourages utilities from entering long-term contracts with out-of-state generators, which has the effect of reducing out-of-state competition and increasing the cost of renewable energy for ratepayers.
The outcome of both of these cases could have far-reaching effects on other state’s RESs and renewable portfolio goals (RPGs). If the plaintiffs are successful with their claims, then the states with RESs and RPGs may have to modify their standards so they are not discriminating against out-of-state renewable energy generators. As we have noted before, the RESs with regional preferences may not be as much at risk. A key question that the courts have yet to answer are whether the RESs and RPGs create protectionist barriers to interstate trade. Check here for regular updates as these groundbreaking cases moves forward.
NRG Bluewater Wind Signs Non-Competitive Agreement for Delaware Offshore Wind
NRG Bluewater Wind won the exclusive rights to negotiate with the federal government to build an offshore wind farm off the Delaware coast on March 24, 2011. As the first developer to enter into the “Smart from the Start” program released by the BOEMRE on February 7, 2011, NRG Bluewater Wind signed a non-competitive lease agreement for a proposed 450 MW offshore wind energy facility.
The reason for non-competitive lease? After the DOI released a RFI on April 26, 2010, only two commercial parties submitted interest, Occidental Development & Equities, LLC and NRG Bluewater Wind. The RFI, reviewed by the BOEMRE, invited submissions for interested parties to obtain one or more commercial leases for the construction of a wind energy project(s) on the Outer Continental Shelf (OCS) offshore Delaware. Subsequently BOEMRE determined that Occidental’s proposal “lacked development, construction, operation and maintenance or decommissioning cost details,” and as a result was rejected by the committee.
NRG Bluewater Wind has had their eye on the project since 2006, after Delaware's signed a RPS into law, requiring that 10% of the state's electricity come from renewable sources by 2018. In June and July of 2008 NRG Bluewater Wind and Delmarva Power finalized a 25 – year PPA for up to 200 MW. The project proposes 49 large turbines and 150 smaller ones approximately 13.2 miles off the Delaware coast. The contract requires the turbines start producing electricity no later than 2016. (NRG timeline link below)
The future is still unknown. Although the non-competitive lease agreement is in place, there are a whole slew of rigorous environmental reviews and an extensive permitting process at the federal, state, and local level. Ironically, the goal of “Smart from the Start” program was to cut, in half, the time associated with permitting processes. Optimistically, NRG Bluewater Wind allotted 12 – 24 months for permitting into the timeline. However, if Cape Wind can provide any insight to construction and operation, NRG Bluewater Wind may be in for a long ride.
For more information on BOEMRE announcement: http://www.doi.gov/news/pressreleases/Interior-Initiates-Process-for-First-Smart-from-the-Start-Lease-for-Commercial-Wind-Power-Offshore-Delaware.cfm
NRG Bluewater Timeline: http://www.bluewaterwind.com/de_timeline.htm
“Smart from the Start” http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=186636
RFI: http://www.boemre.gov/offshore/PDFs/FinalDelawareRFI.pdf
