California's Utilities Must Lower Barriers to Energy Storage Systems

In a proposed decision issued yesterday from the California Public Utilities Commission, an administrative law judge (ALJ) determined that energy storage devices (i) that are paired with net energy metering- (NEM) eligible generation facilities, and (ii) that meet the Renewables Portfolio Standard Eligibility Guidebook requirements to be considered an "addition or enhancement" to NEM-eligible systems are "exempt from interconnection application fees, supplemental review fees, costs for distribution upgrades, and standby charges when interconnecting under current NEM tariffs.  

The issue of whether solar PV-integrated energy storage could interconnect through NEM tariffs heated up in recent months as utilities in California determined that such systems were not NEM-eligible and therefore imposed additional requirements (and costs) in order for a paired solar PV system itself to be NEM-eligible.  These requirements and costs acted as a barrier to using energy storage technologies with distributed generation.  But in this proposed decision, the ALJ encouraged the state's utilities to take a "more proactive and collaborative approach to avoid creating barriers," and found that energy storage should be exempt from these additional requirements when certain conditions are met.  

Sizing.  The proposed decision states that NEM-paired storage systems with storage devices sized at 10 kW or smaller are not required to be sized to a customer's demand or the NEM generator.  For NEM-paired storage systems with storage larger than 10 kW, (x) the discharge capacity of the storage system may not exceed the NEM generator's maximum capacity, and (y) the maximum energy discharged by the storage device shall not exceed 12.5 hours of storage per kW. 

Metering.  With respect to metering requirements, the proposed decision again draws distinctions between storage systems above 10 kW discharge and those at 10 kW and below discharge capability, although the decision proposes to impose certain requirements on both categories in order to "preserve the integrity of NEM."  For systems at 10 kW and below, the decision proposes using a de-rate factor to measure the AC energy that flows into, and out of, the NEM generator.  NEM-paired systems larger than 10 kW will be required to adhere to metering requirements similar to those under the NEM Multiple Tariff Facilities provision of utilities' NEM tariffs, although the costs of metering will be capped at $500.  In either category, the proposed requirements aim to ensure that only NEM-eligible generation receives NEM credit.  

The full proposed decision may be viewed here:  CPUC Proposed Decision re Energy Storage

1.3 GW California Energy Storage Procurement Mandate Approved

The California Public Utilities Commission has unanimously approved a 1,325 MW energy storage procurement target for the state’s largest utilities in Decision 13-10-040. PG&E, SDG&E, and SCE must collectively procure 1,325 MW of energy storage resources by 2020, for installation no later than 2024. The first of at least four competitive solicitations for energy storage projects will take place on December 1, 2014. While the press has hailed the 1.3 GW procurement target as the first of its kind in the nation, the Commission actually first authorized energy storage procurement in California last February, ordering SCE to procure at least 50 MW of energy storage in Decision 13-02-015. The amount of capacity up for grabs in the biennial RFOs is set by Decision 13-10-040, but storage projects already in the pipeline and contracts for storage approved by the Commission in other proceedings will likely eat into the capacity available. There is also a potential off-ramp, if proposed projects are not reasonable in cost or the utilities do not receive enough bids for operationally viable projects, each can defer up to 80% of its procurement target. As the utilities’ cost and fit evaluation methodologies will be developed over the coming year, what would constitute unreasonable cost has yet to be determined.

For more details about the energy storage procurement framework approved by the Commission, see our previous client alerts, here and here.

Upcoming Webinar on Order No. 755 (Frequency Regulation) and Energy Storage

 

In October 2011, the Federal Energy Regulatory Commission (FERC) issued Order No. 755, which requires regional transmission organizations (RTOs) and independent system operators (ISOs) to pay for frequency regulation services based on the actual amount of service provided in response to actual or expected frequency deviations or interchange power imbalances.  The order directs RTOs and ISOs to implement a two-part payment for frequency regulation services consisting of (1) a capacity payment that includes the marginal unit's opportunity costs, and (2) a performance  payment that reflects the quantity of frequency regulation service that a resource provides when it is accurately following the dispatch signal. In February 2012, FERC issued Order 755-A, denying a motion for rehearing filed by Southern California Edison. 

On Tuesday April 10, 2012, 11 am to 12:30 pm Eastern time (8 am to 9:30 am Pacific), I'll be moderating a Webinar produced by that Infocast to discuss the implications and effect of Order No. 755.  We'll review the Order itself, the process that is underway in the RTOs and ISOs to implement the Order, and the Order's implications for energy storage, demand response and other aspects of the frequency regulation market. 

Infocast has assembled an excellent panel for this Webinar.    Jacqueline DeRosa, Director of Regulatory Affairs, California, Customized Energy Solutions and Rahul Walawalkar, PhD, CEM, CDSM, Vice President,  Emerging Technologies Markets, Customized Energy Solutions,  will jointly provide a cross-market overview of the current approaches and proposed responses to Order No. 755 in key ISOs and RTOs (i.e., PJM, NYISO and CAISO) .   Eric Hsieh, Regulatory Affairs Manager, A123 Systems, Inc., (which participated actively in the Order No. 755 docket) will offer a technology provider's perspective on the order and the ongoing process.   Praveen Kathpal, Director of Marketing and Regulatory Affairs, The AES Corporation, will provide the perspective of a technology-neutral independent energy storage developer.

You can register for the Order No. 755 conference here.  Use the Stoel Rives discount code (128505”) to reduce the tuition to $150.

In the meantime, for those who are following energy storage, I'm "tweeting" regularly on that topic at @BillHolmesStoel (#energystorage)

California Energy Commission Releases Comprehensive Energy Storage Analysis

This week the California Energy Commission's PIER program released a comprehensive report titled "2020 Strategic Analysis of Energy Storage in California."  The report discusses the state of technology, policy, barriers to deployment and suggested reforms.  A staff workshop related to the report will be held on November 15, 2011 at 10 am at the CEC located at 1516 Ninth Street, Sacramento, California 95814 (webex also available).

CUB Policy Center and UO Hold Inaugural Smart Grid Conference in Portland

The CUB Policy Center, in partnership with the University of Oregon School of Law,  will be holding its inaugural policy conference: Smart Grid: Today's Regulation and Tomorrow's Technology, on Friday, October 21, 2011, at the University of Oregon White Stag Block (70 NW Couch St., Portland, OR 97209).  The luncheon keynote speaker will be former FERC Commissioner Nora Mead Brownell, who is the co-founder of ESPY Energy Solutions.

The conference is designed to educate utility analysts, policy analysts, attorneys, industry professionals, stakeholders and others on the current regulatory environment in Oregon and the region and to provide a forum for investigating the opportunities and challenges of integrating the Smart Grid into that environment. The CUB Policy Center notes that space for this conference, which promises to be well attended, is limited and encourages attendees to register early.   

I'll be participating in the Closing Panel to recap and discuss lessons learned during the day, and I hope to see you there.

Energy Storage in the MISO Footprint

Two new energy storage studies are getting underway this summer in the Midwest Independent System Operator (MISO) footprint: the Energy Storage Study and the Manitoba Hydro Wind Synergy Study. At MISO’s Energy Storage Workshop held on June 29, 2011, MISO explained that its goals are to explore the potential reliability, market, and planning benefits of energy storage technologies and estimate the price inflection point where energy storage provides benefits to MISO markets. 

The Energy Storage Study will focus on battery technology, compressed air, and pumped storage. The first phase of the study will be completed in November 2011 and a second phase by the end of June 2012. MISO’s new Energy Storage Technical Review Group will meet for the first time on August 3, 2011, when it will consider the Draft Energy Storage Study Scope. The Manitoba Hydro Wind Synergy Study will focus on Manitoba Hydro’s capabilities as essentially a “super-sized pumped storage plant.”

These studies are the next steps in MISO’s efforts to incorporate long-term storage into its markets. In February 2008, a FERC Order on Ancillary Market Services directed MISO to evaluate operational and procedural adjustments to remove barriers to the comparable treatment of new technologies (Docket No. ER07-1372). In a December 31, 2009 Order, FERC conditionally accepted MISO tariff provisions for Stored Energy Resources (Docket No. ER09-1126), finding that the operating requirements and compensation for Stored Energy Resources would be comparable to other resources providing regulating reserves. Pursuant to the December 31, 2009 Order, MISO also submitted an informational report to FERC on March 1, 2010 describing its efforts to incorporate long-term storage resources into the market. The two energy storage studies starting this summer move these efforts to a formal study phase. 

Report on CPUC Workstop on Electric Energy Storage Workshop

On Tuesday, June 28, 2011, the CPUC held an Electric Energy Storage Workshop as part of its R10-12-007 proceeding for AB 2514, which defines the process by which the CPUC will consider electric energy storage standards for California’s investor owned utilities. A large number of interested stakeholders attended including Stoel Rives’ Seth Hilton and myself. There were presentations from the UC Berkeley/CEC team, CAISO, SCE and CAISO, as well as informal presentations from participants. (Click on this link for copies of these presentations and the proposal or go to: http://www.cpuc.ca.gov/PUC/energy/electric/storage.htm.) The discussion that followed each presentation was lively and well-informed.

The theme of the workshop was to identify and address the barriers to the inclusion of Electric Energy Storage (EES) and to brainstorm action that the CPUC could take to ameliorate those barriers, both internally and by its participation in other forums. A ruling seeking additional comments from the workshop participants will be issued in the next week or so – we will keep you posted.

The overarching takeaways from the workshop were:

  • EES encompasses many different technologies and many potential applications for generation, transmission, distribution and customer-side.
  • There needs to be a valuation methodology endorsed by all stakeholders that encapsulates all the benefits that EES can provide.
  • A meaningful cost/ benefit analysis of any EES technology cannot be conducted independent of its application. CPUC could address some of these challenges itself, particularly in the following areas:
    • Contract evaluation
    • Rate design
    • Avoidance of over-generation and subsequent curtailment
    • Load, resource adequacy and capacity
  • CPUC could also participate in other forums:
    • CAISO’s transmission analysis and planning process
    • FERC through a Notice of Intent

A pall was cast over the proceedings by the news that Michael Colvin (whose enthusiasm for EES has been a key component in maintaining the momentum of the R10-12-007 proceeding) is leaving his current post to take up a staff position with Commissioner Mark Ferron and California does not currently have the budgetary wherewithal to backfill Mike’s position.

FERC Seeks Comments on Ancillary Markets and Energy Storage

On June 16, 2011, the Federal Energy Regulatory Commission (FERC) issued a Notice of Inquiry (NOI) seeking comments on what it described as two separate but related issues, both of which apply to electric energy storage (EES). 

First, because FERC is interested in facilitating the development of robust competitive markets to provide ancillary services from all resources types, it seeks comment on “existing restrictions on third-party provision of ancillary services, irrespective of the technologies used for such provision.” In soliciting these comments, FERC noted the growing interest in rate flexibility among sellers of ancillary services, and a desire from those obligated to purchase those services to increase the available supply. Although a variety of resources can provide ancillary services, FERC believes that many are discouraged from doing so by the Commission’s restrictions on market-based pricing coupled with a lack of access to information that could help satisfy the requirements of those policies. Access to information is particularly difficult outside of areas served by RTOs/ISOs, which areas are often with the greatest need for an ancillary services market.

 

FERC pointedly invites comments on whether it should revise or replace the restriction set forth in Avista Corp., 87 FERC ¶ 61,223, order on reh’g, 89 FERC ¶ 61,136 (1999), which prohibits, absent a study showing lack of market power, third-party market-based sales of ancillary services to transmission providers seeking to meet their ancillary services obligations under the Open Access Transmission Tariff (OATT). Assuming that FERC revises or replaces the Avista restriction to facilitate the provision of ancillary services, it also seeks input on how it should contemporaneously ensure just and reasonable rates. In a related inquiry, the Commission is seeking comments on whether the various cost-based compensation methods for frequency regulation that exist in regions outside of organized markets can be adjusted to address the speed and accuracy issues identified in FERC’s recent Frequency Regulation Notice of Proposed Rulemaking for organized wholesale energy markets. See Frequency Regulation Compensation in the Organized Wholesale Power Markets, 76 FR 11177 (March 1, 2011), Notice of Proposed Rulemaking, FERC States & Regs ¶ 32,672 (2011). The June 16 NOI, when considered in context with this year’s NOPR on Frequency Regulation and last year’s NOI on EES, could signal that a broader rulemaking regarding EES is on the horizon.

 

Recognizing that “the role of electric storage and other new market entrants play in competitive markets is still evolving,” the Commission seeks comments on whether it should revise “current accounting and reporting requirements as they pertain to the oversight of jurisdictional entities using electric storage technologies” other than pumped storage hydro (for which FERC has established methods of accounting, reporting and rate recovery). Current utility accounting requirements do not appropriately fit EES due to the technology’s abilities to act like generation, transmission, and distribution assets. Accordingly, FERC is soliciting “specific details regarding whether and, if so, how to amend the current accounting and reporting requirements to specifically account for and report energy storage operations and activities.”

 

The NOI was published in the Federal Register on June 22, 2011, and comments are due sixty (60) days from that date.

 

Thanks to my colleague Jason Johns for his comments on this posting!

CPUC Issues Scoping Memo in Energy Storage Proceeding; Workshop Set for June 28

 On May 31, 2011, the California Public Utilities Commission (“CPUC”) issued a scoping memo (“Scoping Memo”) identifying issues to be considered and setting a procedural schedule for its energy storage proceeding. In December, 2010, the CPUC opened Rulemaking 10-12-007 to implement the provisions of Assembly Bill 2514, which directs the CPUC to determine appropriate energy storage procurement targets for load serving entities. To date, the CPUC has issued an Order Issuing Rulemaking, held an initial workshop and a prehearing conference, and received public comments from interested parties. After considering such background and input, the CPUC issued the Scoping Memo.

The Scoping Memo splits the proceeding into two phases: Phase 1 – Policies and Guidelines and Phase 2 – Cost Benefit Analysis and Allocation. The Scoping Memo provides that Phase 1 will consider the following topics:

  1. How are energy storage technologies currently being used? To what extent are these current uses indicative of how energy storage should be utilized on a going forward basis? As the Commission is developing a generalized view towards energy storage, what lessons learned should the Commission consider, both in terms of successes and failures?
  2. What policies are needed to encourage effective energy storage that will: reduce greenhouse gas emissions; reduce peak demand; defer and/or substitute for an investment in generation, transmission or distributions; and improve reliable grid operations?
  3. How can energy storage technologies be best integrated into the utilities’ existing portfolios?
  4. How could energy storage technologies be integrated with the Commission’s loading order, such as energy efficiency, demand response, renewable procurement, distributed generation and other items in the Commission’s loading order? What about other overarching policies like smart grid?
  5. Are there current state or federal policies that impede the ability of energy storage technologies from being utilized more widely or serve as barriers to the development of energy storage systems? What, if anything, can be done to remove these impediments and barriers?
  6. Is it possible to develop a single unifying policy for energy storage when storage has a wide variety of uses?
  7. Regardless of the technology used, are there certain energy storage applications/attributes that should be encouraged? To what extent do the costs and benefits associated with these different applications/attributes differ?
  8. How should ownership model of energy storage be considered? Do the current value streams favor one type of ownership model over another?

The Scoping Memo contemplates that Phase 1 will involve a series of workshops, the first of which is set for June 28, 2011 at the CPUC Golden Gate Room, 505 Van Ness Ave., San Francisco, CA.

The Scoping Memo notes that the outcome of Phase 1 will influence the scope of Phase 2. Accordingly, the Scoping Memo declines to set the scope of Phase 2, but states that Phase 2 shall consider at least the following topics:

  1. How should energy storage applications/attributes be valued?
  2. What are the costs for the various types of energy storage applications?
  3. What should be taken into consideration to determine whether energy storage technologies are cost effective? Should they be compared against the other types of resources currently being procured by the utilities? How should the benefits associated with energy storage technologies be taken into consideration when determining cost-effectiveness?
  4. How should the costs and benefits associated with energy storage technologies be allocated among retail end-use customers?

The CPUC will issue a future scoping memo to definitively set the scope of Phase 2.

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.

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.  

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, 2011The 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.

Come Learn What Every Renewable Energy Developer and Storage Provider Needs to Know About Integrating Variable Energy Resources

Wind & Solar Integration Summit, Scottsdale, AZ

January 24, 2011, 8 a.m. – 5 p.m., Workshop

January 25, 2011, 7 a.m. – 5:15 p.m., Conference

January 26, 2011, 9 a.m. – 11:45 a.m., Conference

 

As the Workshop Chair, I would like to extend you an invitation to the Wind & Solar Integration Summit, presented by Infocast. Join me and my colleagues in sunny Scottsdale, Arizona as we gather with industry experts—federal and state regulators, representatives from ISOs, independent power producers, and pioneers in energy storage—to discuss the challenges posed by renewable energy integration and the opportunities for businesses that make the necessary adjustments to prepare for the 21st century grid. We will be kicking off the conference with a keynote address by FERC Chairman, Jon Wellinghoff.

 

This 3-day event will include a pre-conference workshop on the fundamentals of integrating variable energy resources and electric energy storage (EES), and will feature a presentation by Stoel Rives partner and Conference Chair, Stephen Hall. The conference will address issues and recent developments in integration, including market solutions and investments to facilitate renewable energy integration, changes to the regulatory landscape, and the role of EES in enabling increased renewables integration. Stoel Rives partners Ed Einowski, Bill Holmes, and Jennifer Martin will present on managing the risks associated with curtailment and integration issues in PPAs. 

 

In case you need another good excuse to get to Arizona in January, Stoel Rives is currently offering a discount on registration. For more event details and registration information, please see: http://www.stoel.com/showevent.aspx?Show=7277

Smart Grid Oregon Announces Its First Policy Conference--November 9, 2010

Following on the heels of a September 2010 report by GTM Research forecasting that the smart grid market in the U.S. will grow more than 70%, from $5.6 billion in 2010 to $9.6 billion by 2015, Smart Grid Oregon today announced the new organization’s first conference to be held on November 9, 2010 at the World Trade Center in downtown Portland.

The conference will feature keynoters Kurt Yeager, Executive Director of the Galvin Electricity Initiative and President and Chief Executive Officer of the Electric Power Research Institute; and Roy Hemmingway, past Chair of the Oregon Public Utility Commission and also past Chair of the New Zealand Electricity Commission.

 

Smart Grid Oregon is a trade association that was launched in June 2009 and is dedicated to making Oregon a leader in the implementation of Smart Grid technologies and in supporting companies that build and market Smart Grid products and services.  The aim of the first Smart Grid Oregon Public Policy Conference is to help public and utility officials, regulators, legislators, city and county governments and other stakeholders in Oregon and the region gain a better understanding of the Smart Grid and policy decisions that will need to be addressed in the coming years.

 

Stoel Rives is a member of Smart Grid Oregon, and we are a sponsor of the November 9 conference.  See you there!

To learn more, go to www.smartgridoregon.org or contact Ashley Henry at Ashley@smartgridoregon.org or 503-866-9191.

Sen. Kerry's Energy Tax Bill Would Help Energy Storage Technologies

On August 5, 2010, Sen. John Kerry (D-Mass.) introduced S.3738—the Clean Energy Technology Leadership Act of 2010—which would have some impact on the growth of energy storage technologies in the United States. 

Among other things, the bill would provide for an extension and modification of the Advanced Energy Manufacturing Tax Credit (the “MTC”), a credit authorized under the American Reinvestment and Recovery Act aimed at stimulating and expanding the domestic manufacturing industry for clean energy technologies.  The MTC is also referred to as Section 48C of the Internal Revenue Code (the “IRC”). The proposed modifications would extend the MTC to “statutory advanced energy property,” the definition of which includes property used exclusively to manufacture or fabricate fuel cell power plants and systems for the electrochemical storage of electricity (other than lead-acid batteries) for use in connection with electric grids. 

Also noteworthy is that S.3738 is similar to the STORAGE 2010 Act, introduced by Sens. Bingaman (D-NM), Wyden (D-OR), and Shaheen (D-NH) in July. Click here for more on that bill. Both bills amend Section 54C of the IRC to allow grid-connected energy storage systems to qualify for Clean Renewable Energy Bonds (“CREBs”). In addition to including energy storage technology in the CREBs program, S.3738 would expand the program by increasing the national new clean renewable bond limitation by $3.5 billion in 2010; sixty percent (60%) of that amount must be allocated by the Department of the Treasury to public power providers, and forty percent (40%) must be allocated to electric cooperatives. 

A major distinction between Sen. Kerry’s bill and the STORAGE 2010 Act is that Sen. Kerry’s bill does not add energy storage devices to the list of technologies eligible for the federal investment tax credit.  The full text of the bill can be found here.

FERC Comments on Electric Storage Technologies Due August 9

Just a friendly reminder that the deadline to submit comments to the Federal Energy Regulatory Commission (“FERC”) on electric storage technologies is just around the corner. In its Request for Comments Regarding Rates, Accounting and Financial Reporting for New Electric Storage Technologies, FERC’s Office of Energy Policy and Innovation seeks comments on the following issues: 

  1. The use of and rate treatment for storage facilities, including when it is appropriate to classify a storage facility as a transmission asset.
  1. The mechanisms by which a storage project that is used for multiple purposes may be compensated. Specifically, FERC seeks comment on whether a storage project may be compensated as transmission (e.g. for supporting unbundled transmission service by supplying reactive power) and also be compensated for providing ancillary services or for enhancing the value of merchant generation (e.g. by shifting output from an off-peak period to an on-peak period).
  1. The possibility of creating a stand-alone contract storage service and whether the storage provider would provide the service of electricity storage, enabling its customers to determine how to use their contracted share of the storage.
  1. Whether new accounting and reporting requirements should be created in order to facilitate cost of service or other rate policies for new storage technologies, such as chemical batteries and flywheels.

In addition to the issues outlined above and other specific questions posed by FERC in its Request for Comments, FERC invites comments on other related aspects of the storage issues not specifically addressed by FERC in the above-referenced document.  Comments are due on Monday, August 9, 2010 and should reference Docket No. AD10-13-000.     

Senators Propose Making Energy Storage Property Eligible for ITC & CREBs

Last week, Senators Jeff Bingaman (D-NM), Ron Wyden (D-OR), and Jeanne Shaheen (D-NH), introduced legislation that would add grid-connected energy storage property to the list of technologies eligible for the federal investment tax credit (the "ITC").  Under the Storage Technology for Renewable and Green Energy Act of 2010 (the "STORAGE 2010 Act"), eligible energy storage property would include hydroelectric pumped storage and compressed air energy storage, regenerative fuel cells, batteries, superconducting magnetic energy storage, flywheels, thermal energy storage systems and hydrogen storage.  Systems that can sustain a power rating of at least one megawatt for a minimum of one hour would be eligible for a 20% tax credit under the ITC program.  Should the bill become law, the tax credit would provide significant assistance to intermittent energy resource developers that are seeking new ways to shape and firm their projects' output.

The STORAGE 2010 Act would limit the available credits to $1.5 billion, and no single project may be allocated more than $30 million.

Importantly, the bill creates special extended deadlines for hydroelectric pumped storage facilities.  Whereas the majority of energy storage property considered under the bill would be required to be placed in service within two years of the date the ITC was allocated, pumped storage facilities would have three years to secure required licenses and permits, five years to begin construction, and eight years to be placed in service.

Compressed air energy storage systems would enjoy similar extended deadlines- i.e., would be reqired to begin construction within three years and be placed in service within five years.

The bill would also allow grid-connected energy storage property to qualify for Clean Renewable Energy Bonds under section 54C of the Internal Revenue Code.  The full text of the bill can be viewed here.

CPUC Staff Issues White Paper on Electric Energy Storage (EES)

Energy Electricty Storage (EES) is likely to become more and more important as intermittent solar and wind energy resources penetrate the grid.   EES may be a very useful and perhaps essential way to manage the variability of intermittent renewable energy resources to allow developers to continue building wind and solar projects at an accelerating pace.

On July 9, 2010, the Policy and Planning Division of the California Public Utility Commission (CPUC) issued an interesting Staff White Paper entitled "Electric Energy Storage: An Assessment of Potential Barriers and Opportunities." The report is worth reading for those who are interested in the future of renewable energy and the roll that EES can play in enhancing the deployment of intermittent renewables.

The report describes "a promising new set of Electric Energy Storage ("EES") technologies [that] appear to provide an effective means for addressing the growing problems of reliance on an increasing percentage of intermittent renewable generation resources."  The report observes that EES can provide several basice services, such as (1) supplying peak electricity demand by using electricity generated during periods of lower demand (e.g., storage of wind energy generated at night for use during daily peak periods), (2) balancing electricity supply and demand fluctuations over a period of minutes, and (3) deferring expansion of electric grid capacity (including generation, transmission and distribution). 

Potential storage technologies include pumped hydro, compressed air energy storage ("CAES"), batteries, thermal storage (e.g., solar thermal plants), flywheels, unltracapacitors and superconducting magnetic storage--the report provides short but helpful description of each technology.  Storage presents interesting legal and policy issues, because "[r]egulators are uncertain how EES technologies should fit into the electric system, in part because EES services provide multiple services such as generation, transmission and distribution."  In addition, "regulators do not yet know how EES costs and benefits should be allocated among these three main elements of the electric system." 

The report makes a number of recommendations, including that the CPUC should conduct a rulemaking to develop policies to remove barriers to the deployment of EES technology in California.  The report also proposes that the CPUC consider placing EES within California's energy resources loading order, require utilities to incoporate EES into their integrated resource planning processes, encourage CAISO to change ancillary service market rules to allow EES systems to more easily bid into regulation markets, and integrate EES into utility transmission planning.

The report concludes that "the major barrier for deployment of new storage facilities is not necessarily the technology, but the absence of appropriate regulations and market mechanisms that properly recognize the value of the storage resource and financially comepnsate the owners/operators for the services and benefits they provide."

You can find the report here.

CPUC Staff Issues White Paper on Electric Energy Storage (EES)

Energy Electricty Storage (EES) is likely to become more and more important as intermittent solar and wind energy resources penetrate the grid.   EES may be a very useful and perhaps essential way to manage the variability of intermittent renewable energy resources to allow developers to continue building wind and solar projects at an accelerating pace.

On July 9, 2010, the Policy and Planning Division of the California Public Utility Commission (CPUC) issued an interesting Staff White Paper entitled "Electric Energy Storage: An Assessment of Potential Barriers and Opportunities." The report is worth reading for those who are interested in the future of renewable energy and the roll that EES can play in enhancing the deployment of intermittent renewables.

The report describes "a promising new set of Electric Energy Storage ("EES") technologies [that] appear to provide an effective means for addressing the growing problems of reliance on an increasing percentage of intermittent renewable generation resources."  The report observes that EES can provide several basice services, such as (1) supplying peak electricity demand by using electricity generated during periods of lower demand (e.g., storage of wind energy generated at night for use during daily peak periods), (2) balancing electricity supply and demand fluctuations over a period of minutes, and (3) deferring expansion of electric grid capacity (including generation, transmission and distribution). 

Potential storage technologies include pumped hydro, compressed air energy storage ("CAES"), batteries, thermal storage (e.g., solar thermal plants), flywheels, unltracapacitors and superconducting magnetic storage--the report provides short but helpful description of each technology.  Storage presents interesting legal and policy issues, because "[r]egulators are uncertain how EES technologies should fit into the electric system, in part because EES services provide multiple services such as generation, transmission and distribution."  In addition, "regulators do not yet know how EES costs and benefits should be allocated among these three main elements of the electric system." 

The report makes a number of recommendations, including that the CPUC should conduct a rulemaking to develop policies to remove barriers to the deployment of EES technology in California.  The report also proposes that the CPUC consider placing EES within California's energy resources loading order, require utilities to incoporate EES into their integrated resource planning processes, encourage CAISO to change ancillary service market rules to allow EES systems to more easily bid into regulation markets, and integrate EES into utility transmission planning.

The report concludes that "the major barrier for deployment of new storage facilities is not necessarily the technology, but the absence of appropriate regulations and market mechanisms that properly recognize the value of the storage resource and financially comepnsate the owners/operators for the services and benefits they provide."

You can find the report here.

New Tool for Renewable Energy Investors, Entrepreneurs, and Companies

On June 30, 2010, the U.S. Department of Energy ("DOE") launched its Technology Commercialization Portal (the "Portal").  The Portal is an online resource that provides a mechanism for investors, entrepreneurs and companies to identify new technologies coming out of DOE laboratories and other participating research institutions.  Relevant technologies include:

  • Advanced Materials
  • Biomass and Biofuels
  • Building Energy Efficiency
  • Electricity Transmission and Distribution
  • Energy Analysis Models, Tools and Software
  • Energy Storage
  • Geothermal
  • Hydrogen and Fuel Cell
  • Hydropower, Wave and Tidal
  • Industrial Technologies
  • Solar Photovoltaic
  • Solar Thermal
  • Vehicles and Fuels
  • Wind Energy

The Portal contains marketing summaries about the various DOE technologies that are available for licensing.  Each marketing summary describes a technology's applications, advantages, benefits and state of development.  Further, the Portal also provides access to information on patents and patent applications that have been created using DOE funding since 1992.

The Portal is located at http://techportal.eere.energy.gov/

FERC Determines That Battery Storage Devices Qualify as Transmission Facilities. Is the Door Open for Other Energy Storage Devices?

In late January, FERC issued an order in response to a filing by Western Grid Development LLC that asked FERC to declare that Western Grid's proposed battery storage devices are transmission facilities eligible for certain rate incentives.  Western Grid described its battery technology as 10 to 50 MW sodium sulfur batteries that would be installed at strategic places on the California ISO transmission grid in order to provide voltage support and protect against transmission overloads.  In a description that seemed significant to FERC, Western Grid stated that its batteries would only enhance transmission reliability at the California ISO's direction, and that the batteries would not operate or participate in energy markets or provide electricity for commercial sale. 

FERC examines energy storage devices on a case-by-case basis because storage devices don't fit squarely within the traditional transmission, distribution, or generation categories of assets.  In this case, FERC gravitated to the notion that the battery devices would not provide capacity or energy to be sold in the energy market, and that Western Grid would not retain any revenues outside of the transmission access charge (unlike generators).  For these and other reasons, FERC distinguished Western Grid from similar filings (see Nevada Hydro II--pumped storage), and determined that Western Grid's technology will act enough like transmission assets to warrant eligibility for transmission rate incentives.  FERC's approval of rate incentives, however, was conditional upon the California ISO approving Western Grid's projects in the transmission planning process. 

Although FERC repeated numerous times that its decision was based on the "specific circumstances and characteristics" of Western Grid's projects, the order shows potential for energy storage devices.  If such devices can show that they act sufficiently like traditional transmission assets (like capacitors), they may be able to obtain very valuable transmission rate incentives.  Whether this opens the door for compressed air energy storage and pumped hydro (but see Nevada Hydro II) is still up in the air, but rest assured that these questions will be at FERC before too long.

Stoel Rives Clients Receive Huge Tax Credit Awards

Stoel Rives would like to congratulate REC Silicon and SolarWorld on their awards of tax credits by the IRS and DOE. These two companies, combined, received over 10 percent of all the tax credits awarded nationwide under section 48C of the tax code.

On Friday, January 8, the Department of Energy awarded to 183 companies $2.3 billion in tax credits for projects designed to expand, re-equip or establish manufacturing facilities for the production of equipment used to produce renewable and other green energy. The $2.3 billion was the full amount authorized by Congress in the stimulus bill as part of new section 48C of the tax code.

Applications for the credit far exceeded the dollar amount of credits available. Stoel Rives is proud to have been directly involved with these companies in preparing the complex applications for the credit. REC Silicon received the largest award of any company -- $154.8 million. SolarWorld received the seventh largest award -- $82.2 million. These credits will provide these companies with a dollar-for-dollar offset against their federal income tax liability.

There is considerable discussion in Congress regarding adding additional funds to the section 48C program, which will permit another round of awards. Please contact your favorite Stoel Rives attorney if you have any questions about these awards or extension of the section 48C credit.

Zino Green Investment Forum

The ZINO Society, a Seattle-based angel investment group, announced last week that its annual “ZINO Green Investment Forum” would be held on March 4, 2010, at the McKinstry Innovation Center in Seattle.   Up to fifteen early-stage companies in “green tech, clean tech, and sustainable products or services” will be selected by the ZINO Green screening board to present their businesses to angel investors and business leaders attending the investment forum. Finalists will be selected to compete for a $50,000 award from ZINO’s investment fund.

Last year’s winner of ZINO Society’s $50,000 GreenFund award was Hydrovolts, the developer of a hydrokinetic turbine.  After winning the award last year, Burt Hamner, CEO of Hydrovolts, stated that “Our new technology makes it possible to generate renewable energy from fast water currents that could not be tapped before, using a really novel turbine design.  It’s a challenge to explain [our technology] quickly and the presentation, coaching and business model feedback we received from ZINO Society members was incredibly helpful.” Hydrovolts went on to win the  2009 Clean Tech Open National Sustainability Award.

Stoel Rives has been a proud sponsor of The Zino Society since its inception.

The application to apply to present at ZINO Green may be found at https://angelsoft.net/angel-group/zino-society. More information about the event is available at ZINO’s website http://www.zinosociety.com/calendar/1143/ or by contacting Rob Brown at r.brown@zinosociety.com or 206-621-0466.

Come Visit Us at E3, The Midwest's Premier Energy, Economic and Environmental Conference, on Nov. 17, 2009

As a proud Exhibit Hall sponsor of E3, the Midwest’s premier energy, economic and environmental conference, Stoel Rives LLP would like to encourage you to attend this annual event. Hosted by the University of Minnesota’s Initiative for Renewable Energy and the Environment, E3 will focus this year on the intersection of innovative technologies and policies, environmental benefits and emerging market opportunities across the renewable energy spectrum.

Stoel Rives attorneys Mark Hanson, Bill Holmes and Greg Jenner are part of the event faculty. Mark will moderate a panel presentation on the challenges and opportunities of converting carbon dioxide to fuels. Bill will moderate a panel discussing exactly how sophisticated smart power grids need to be in order to scale up renewables as a major U.S. energy contributor. Greg, meanwhile, will participate in a panel discussion on the most efficient and effective strategies for financing renewable energy projects.

 

For more information and to register, please visit the following link: http://bit.ly/XUUjJ. We hope to see you there, and encourage you to visit our booth (#24). In addition to our presenters, Debra Frimerman, Kevin Johnson, Kevin Prohaska, Katie Roek, Mary Sennes, Joe Thompson and Vicki Twogood will be available to discuss any questions you may have. Don’t forget to pick up complimentary copies of our Law of Series handbooks, including The Law of Solar, The Law of Wind, The Law of Biofuels, The Law of Building Green, Lava Law,and our most recent additions The Law of Algae and Show Me the Money: The Law of the Stimulus (2d ed).

November 17: Energy, Economics and Environment (E3) Conference

The University of Minnesota’s annual conference on Energy, Economics and the Environment – E3 – will be held in St. Paul on November 17. Hosted annually by the University of Minnesota’s Initiative for Renewable Energy and the Environment (IREE), this year’s conference will explore current technologies, environmental benefits and market opportunities in renewable energy.

Stoel Rives will be a sponsor of the E3 conference and will, as usual, host a booth at the event. Minneapolis tax partner Greg Jenner will join a panel to discuss “What’s the most efficient and effective strategy for financing renewable energy projects?” To review the agenda and register for the conference, click here.

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:

  1. 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
  2. Allow the Secretary (of DOE) to determine if pari passu lending is in the best interests of the United States

 

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Energy Storage Developers Call for National Storage Portfolio Standard

On July 13-14, 2009, I attended Infocast’s Storage Summit in La Jolla, California. The conference attracted over 200 attendees.

On day one, Jim Woolsey, Venture Partner and Senior Advisor for VantagePoint Venture Partners and Former Director of the CIA, delivered a keynote address that focused on the theme of the role of energy storage in achieving energy independence and security. Panel discussions included the following topics:

  1. Bringing Energy Storage to the Power Grid
  2. State Regulatory Policy
  3. Revising Regional Market Designs to Facilitate Storage: System Operators Views
  4. Utility Perspectives on Implementing Energy Storage
  5. Views of Storage Suppliers: What Policy and Market Change are Needed to Stimulate a Robust Storage Market?

On day two, Dr. Imre Gyuk, U.S. DOE Program Manager for Energy Storage Research, reported on ARRA stimulus funding initiatives and described research funding opportunities. With respect to the challenges facing DOE as it attempts to deploy massive amounts of funding, Gyuk stated, “It’s like trying to drink out of a fire hose.”

Many storage system developers reported that they are having problems “creating value” and monetizing their systems. These developers consistently called for a national storage portfolio standard similar to the RPS for renewable energy. This vibe created a lack of confidence in the attendees that were contemplating entering the market.

There was not much discussion of co-location of storage and renewable projects, but the wind and solar developers in attendance seemed open to the concept of co-location of storage if the price is right.

There was definitely a sense that the market is still in somewhat early stages.  However, a few days later, on July 16, 2009, the Federal Energy Regulatory Commission issued a policy statement that identified energy storage as one of four grid functionalities that FERC views as key to the development of future standards that will apply to smart grid technologies.  Hopefully, FERC's support of the energy storage industry will stimulate further development and deployment of energy storage systems.

Show me the Money: Applications Available for the Washington State Energy Program

Washington previously received $60.9 million in Recovery Act funding for its State Energy Program (“SEP”). The Washington Legislature later provided $38.5 million to the Washington State Community, Trade and Economic Development (“CTED”) agency to administer a loan and grant program for eligible projects in the areas of energy efficiency, renewable energy and clean energy innovation (see our earlier blog entry here for more details). The deadline for submitting a notice of intent to apply is July 27, 2009 at 5:00 p.m. Pacific time, and the application is due August 17, 2009 at 5:00 p.m. Pacific time.

I attended an informational meeting held by CTED on July 13, 2009. The meeting provided an overview of the loan and grant program, as well as funding details, eligibility guidelines and evaluation criteria. Eligible projects can receive between $500,000 to $2 million in loans and grants in the first round, with the requirement that applicants provide other sources of funding at least equal to the amount of the loan or grant request. The non-SEP funding may include amounts spent or committed to the project since January 1, 2009. Projects will be evaluated based on the feasibility and quality of the project plan, the experience and qualifications of the project team, the ratio of matching funds to SEP funds, job creation, and energy savings/production. CTED intends to announce award decisions in September 2009.

Show me the Money: Applications Available now for Washington's State Energy Program

On July 1, 2009, Washington State’s Department of Community, Trade and Economic Development (“CTED”) issued application guidelines and forms for its State Energy Program (“SEP”) (available by clicking here). The American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) provided $60.9 million in new funding for Washington’s SEP. Subsequently, the Washington Legislature allocated $38.5 million to CTED to administer a loan and grant program for energy efficiency and renewable energy program (see our client alert, available here, regarding the legislative action). 

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DOE Announces $59 million in Conditional Loan Guarantees

On July 2, 2009, the Department of Energy ("DOE") announced $59 million in conditional loan guarantees in the form of $16 million for a wind turbine assembly plant and $43 million for a 20 megawatt flywheel energy storage plant.

Nordic Windpower, USA has been conditionally offered a $16 million loan to support the tooling and commercial-scale set up of its assembly plant in Pocatello, Idaho.  This assembly plant produces one megawatt two blade turbines which are 10% less costly to manufacture, install, operate, and maintain than competing systems.

Beacon Power was conditionally offered a $43 million loan to support the construction of a 20 megawatt flywheel energy storage plant in Stephentown, New York.  The flywheel system is utilizing a newly developed technology to provide frequency regulation services by absorbing and discharging energy to maintain the consistency of power on the electric grid.

Stoel Rives Expands Its San Diego Office

 

We welcome energy attorneys Morten Lund and David Quinby to the firm’s San Diego office as members of the Energy and Telecommunications group. They join attorneys Howard Susman and Brian Nese. The San Diego office has relocated to a larger space at 12265 El Camino Real, Suite 303, to accommodate further expansion (new contact information below).

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Morten Lund, formerly a partner with Foley & Lardner LLP in Milwaukee, has experience in a broad variety of financing transactions, with particular focus on the development and financing of wind and solar energy projects. Morten is a frequent presenter and author on renewable energy topics. He earned his law degree from Yale University in 1995 and obtained his A.B. at Augustana College in 1992. He is admitted to practice law in the state of Wisconsin and is pending bar admission to the state of California.

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David Quinby is the current office managing partner of the firm’s Minneapolis office, and will now split his practice between California and Minneapolis. He concentrates his practice on corporate, securities, finance, and merger and acquisition matters, with a particular focus on renewable energy clients and their project development efforts. David is admitted to practice law in the state of Minnesota and is pending bar admission to the state of California.

The California energy team's capabilities also include real estate, land use and permitting, equipment procurement and construction, state and federal regulation, environmental matters, and dispute resolution.

Stoel Rives has received a national ranking for its Renewables and Alternative Energy practice from Chambers USA: America's Leading Lawyers for Business (2009), rating among the top law firms in this category. The firm has been at the forefront of growth in renewables in recent years and represents many of the industry leaders in solar, wind energy, geothermal, biomass, hydroelectric, ocean, combined-cycle natural gas, carbon sequestration and biofuels project development in California, the United States, Canada and abroad.

For more information about the Stoel Rives Renewable Energy Group, visit www.stoel.com/renewableenergy or contact:

Howard Susman at  (8... or hesusman@stoel.com
David Quinby at  (8... or dtquinby@stoel.com
Morten Lund at  (8... or malund@stoel.com
Brian Nese at  (8... or bjnese@stoel.com

 

Show me the Money: Florida, Idaho, and Kansas State Energy Programs Received $77.1 Million from the Recovery Act

On June 24, 2009, the Department of Energy (“DOE”) announced more than $204 million in Recovery Act funding to ten states for their State Energy Programs ("SEPs"). 

Here is a summary of how the monies will be used in Florida, Idaho, and Kansas:

Florida's SEP will fund energy efficiency, renewable energy, and alternative fuels projects in the state.  Florida will deploy these funds through several loan and grant programs to promote the commercialization of new clean technologies.  Florida was awarded $50.4 million, and will receive an additional $63 million after demonstrating successful implementation of its SEP.

Idaho's SEP will launch a set up new programs, including the Renewable Energy Business Development Program, to further renewable energy development in the state while creating new jobs and stimulating the economy.  Further, new zoning regulations will be created to attract renewable energy developers and projects.  Idaho received $11.4 million and will receive more than $14 million in additional funding after demonstrating successful implementation of its SEP.

Kansas's SEP will launch several initiatives to boost energy efficiency in commercial buildings, increase financial options for renewable energy, and increase cost savings for individual homeowners in its state.  A portion of the money will also be deployed to create a new utility rate price plan and to fund an energy audit rebate plan.  Kansas received $15.3 million and expects to receive an additional $19 million after demonstrating successful implementation of its SEP.

 My colleagues are blogging on the other states that received funds. 

Show me the Money: Conneticut and Utah State Energy Programs

Today, the Department of Energy (“DOE”) announced more than $204 million in Recovery Act funding to ten states for their State Energy Programs ("SEPs"). 

Here is a summary of how the monies will be used in Connecticut and Utah:

Connecticut will use its SEP funding to further a variety of programs. Examples include the deployment of alternative-fuel vehicles and in-home energy audits. In-home energy audits involve a specialist performing an energy assessment, weatherizing the home, and installing energy conservation devices. After demonstrating successful implementation of its plan, the state will receive an additional $19 million, for a total of $38 million.

Utah will use its SEP funding to collect data about potential renewable energy resources in the state and to improve energy efficiency. The energy efficiency program will provide financial incentives to upgrade residential, commercial, public education, and government buildings. New construction developments will also qualify for rebates if they meet specific energy efficiency goals. After demonstrating successful implementation of its plan, the state will receive an additional $17 million, for a total of $35 million.

My colleagues are blogging on the other 8 states that received funds today. 

 

DOE Funds Seven Advanced Battery Projects for Electric Drive Vehicles

On June 16, 2009, the Department of Energy ("DOE") announced the funding of seven research projects for the development of advanced batteries for electric drive vehicles.  The projects focus on improving performance and decreasing the cost of batteries for plug-in hybrid electric vehicles ("PHEVs").  PHEVs are designed to be driven in electric-only mode and can be recharged from a standard electric outlet.

These research projects were selected under a Funding Opportunity Announcement ("FOA") released on February 29, 2008.  So far, a total of ten projects have been awarded under this FOA.  The most recent awardees include:

Company Award Project Description
A123Systems, Inc. $1.1 million High throughput electrode fabrication process for lithium ion battery technology
Angstron Materials LLC, K2 Energy Solutions, General Motors Corp., and HST Auto up to $3.2 million Hybrid nano carbon fiber/graphene platelet-based high-capacity anodes for lithium batteries
 EnerDel Inc.  up to $3.3 million Chemical shuttle agent that will eliminate the danger of overcharging lithium ion batteries
 MaxPower Inc.  up to $500,000 Adapt MaxPower's present battery management systems for lithium-ion batteries to recognize the imminent appearance of an internal short circuit
 North Carolina State University and American Lithium Energy LLC  up to $1.35 million High-energy composite nanofiber anodes for materials for lithium ion batteries
 SION Power Corp  up to $800,000 Lithium sulfur (Li-S) rechargeable battery chemistry
 TIAX LLC  up to $2.36 million Understanding and preventing internal short circuits in lithium ion cells

 

Show me the Money: Seminar for Identifying Funding for Renewable Energy Projects

The American Recovery and Reinvestment Act provides almost $94 billion dollars in direct and indirect spending to clean energy company and projects. See Show me the Money: A Guide to Sources of Funding through the American Recovery and Reinvestment Act

On June 17, 2009, I will be speaking in Cle Elum, Washington about how to get your project "shovel ready" for Stimulus Funding.  The seminar will also include sessions on identifying sources of funding and application mechanics.

Please click here for event information

LLC Law Monitor

Renewable energy developers often use limited liability companies (LLCs) as project companies and to form entities for other purposes.  My partner Doug Batey has started a new law blog that will likely be helpful to those charged with setting up, understand and maintaining these LLCs.  Here's today's announcement: 

Stoel Rives LLP is pleased to introduce its new LLC law blog, LLC Law Monitor, at www.llclawmonitor.com

The LLC Law Monitor focuses on the rapidly developing laws affecting limited liability companies. LLCs are a popular form of business entity and are a relatively new development in the law. LLC statutes vary from state to state, and cases of first impression are being decided by state courts every month.

In light of this new and evolving legal environment, Stoel Rives has launched LLC Law Monitor to provide business executives, attorneys, accountants and other professionals engaged in or working with LLCs with timely updates and insights on the new and developing laws shaping this burgeoning business sector.

LLC Law Monitorauthor Douglas L. Batey has nearly 30 years of experience advising executives on corporate and business legal matters. His experience includes counseling clients in a wide range of industries on company formation, mergers and acquisitions, and general corporate governance matters.

We hope that you will find the LLC Law Monitor helpful.

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Douglas L. Batey
Stoel Rives Corporate Attorney

"Show Me The Money"

 

We announce the publication of a guide to federal clean energy funding opportunities under the $787 billion American Recovery and Reinvestment Act (“ARRA”). Titled “Show Me The Money,” the guide reviews the various programs and potential sources of federal funding for clean energy companies and projects. The guide 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 also contains information about some of the funding opportunities and updates at the federal and state level which we will continue to track closely.

President Obama Clamps Down on Lobbyists and First Amendment

On March 20th, President Obama issued a directive to the heads of executive branch departments and agencies.  The directive is aimed at achieving the laudable goal of ensuring merit based decision-making for grants and other forms of stimulus funds provided by the American Recovery and Reinvestment Act of 2009 (usually referred to as the Stimulus Bill).  It seems that while candidate Obama promised repeatedly during his campaign to limit the influence of lobbyists in Washington DC, the passage of the Stimulus Bill has sent record numbers of lobbyists to D.C. to scramble for federal dollars.

In apparent response to this, President Obama has singled out registered lobbyists and regulated their contacts with the executive branch.  His directive provides that “executive department or agency officials shall not consider the view of a lobbyist registered under the Lobbying Disclosure Act of 1995, concerning particular projects, applications, or applicants for funding under the Recovery Act unless such views are in writing.”  Officials are directed to inquire regarding the possible presence of registered lobbyists both upon the scheduling and commencement of phone calls and in-person conversations “with any person or entity concerning particular projects, applications, or applicants for funding under the Recovery Act.”  If any registered lobbyists are detected, the directive forbids them from attending the meeting or participating in the phone call.

Not surprisingly, the American League of Lobbyists (ALL) has objected to the Obama Administrations restrictions.  In a demonstration that politics does indeed sometimes make strange bedfellow, ALL has been joined by the ACLU and the Citizens for Responsibility and Ethics in Washington (CREW).  In a letter to the President released Tuesday, these three groups requested that President Obama rescind the constitutionally offensive provisions of the directive immediately.   

As tempting a political target as they may be, registered lobbyists have a place in our political system and rights under our Constitution.  The President should heed the groups’ advice and tailor his directive to enable transparency while not muzzling any voices--including those paid to advocate.

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.
   
 

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.