Renewable + Law : Renewable Energy Lawyer & Attorneys : Stoel Rives Law Firm : Climate Change, Emissions, Carbon Markets, Wind, Solar, Biofuels : Western United States

An alert written by Stoel Rives partner Seth Hilton:

Last night, the California legislature failed to pass Senate Bill 722—the 33% Renewable Portfolio Standard (RPS) legislation—by the close of the legislative session. The bill would have increased California’s RPS to 33% for both investor-owned and publicly owned utilities. It would also have placed limits on the use of renewable resources located out-of-state to meet California’s RPS—utilities would have been required to meet a certain percentage of their RPS obligations through resources whose first point of interconnection was a California balancing authority, or whose power is transmitted to California through a dynamic transfer arrangement or scheduled hourly or inter-hourly into California. The proposed legislation also would have authorized the use of renewable energy credits (RECs)—the environmental attributes of renewable power separated from the power itself—for RPS compliance, but would have imposed limits on the amount of RECs that could be used to meet the utilities’ RPS obligation.

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Tuesday's Wall Street Journal included an editorial by Robert Bryce titled "Wind Power Won't Cool Down the Planet," claiming that wind power does not reduce carbon pollution, based on fossil fuel industry studies.  In response to Bryce's editorial, Renewable Northwest Project has released a statement from Ken Dragoon, RNP research director, countering Bryce's claims with facts from independent sources. (http://www.rnp.org/index.php?q=node/1001)

American Wind Energy Association (AWEA) has also issued a similar statement.  http://awea.org/newsroom/pdf/08-27-10-Wind_and_emissions_response.pdf.

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Last week, the Minnesota Public Utilities Commission resolved a longstanding dispute over who owns Renewable Energy Credits (RECs) when the Power Purchase Agreement (PPA) is silent.  Following the establishment of an REC tracking system for Minnesota, Xcel Energy asked the Commission to clarify ownership of RECs associated with 46 wind, biomass, hydro, and landfill gas facilities totaling 467.5 MW.  These PPAs were written before the concept of RECs existed. 

On August 17, 2010, the Commission resolved the dispute partially in favor of Xcel and partially in favor of the generators.  The Commission divided the disputed PPAs into two categories: 1) PPAs signed under 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) PPAs signed under Minnesota’s 1994 wind and biomass mandates (Minn. Stat. §§216B.2423 and 216B.2424).

For the PURPA contracts, the Commission decided that the generators are the rightful owners of RECs because they had only been paid avoided cost with no premium for the electricity being from renewable sources.

For the wind and biomass mandate PPAs, the Commission favored Xcel and decided that the utility had acquired ownership of the RECs, unless the generator can make a showing that the PPA is not silent on REC ownership.  For this category, the Commission reasoned that Xcel had contracted to buy electricity that would meet specific renewable mandates.  Without the RECs, the electricity would not satisfy the renewable mandates.

The Commission exempted two PPAs close to being privately settled from its decision as well as 13 PPAs that were already privately settled.

Filings related to the "silent PPAs" dispute can be found by searching for Docket No. E-002/08-440 in Minnesota’s eDocket system.

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There has been a wave of good and bad news this past week regarding the DOE's Loan Guarantee Program.  On the positive side, Secretary Chu announced on Friday that the Department would be adding an additional compliance period for the Innovative Solicitation.  The current deadline for the Part I application under the program is August 24th.  Secretary Chu announced the applications would be accepted until October 5th thus providing six more weeks of time to applicants.  Secretary Chu did not extend the Part II deadline and cannot extend the September 30, 2011 start construction deadline as that deadline was established by the Stimulus Bill itself.  Still, the extension was generally viewed as a respite and perhaps an indication of a willingness to further extend the program.

On the bad news side, the Senate approved the FMAP state aid bill to avert teacher layoffs and pay for Medicaid which is to be funded in part by taking $1.5 billion in funds that the Stimulus Bill appropriated to the DOE Loan Guarantee program.  Clearly driven by Pay-Go requirements, this is a reminder of the $2.0 billion fleecing that the Loan Guarantee Program suffered when Cash for Clunkers program was passed.  While it has been promised that the funds will be restored, the fact that the Cash for Clunkers funding has not yet been restored raises concern about whether the restoration will occur. 

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From our colleague Edna Vassilovski:

On July 29, 2010, the following U.S. patent applications were published relating to biofuels:

U.S. Pat. Pub. No. 20100191022 (Undisclosed assignee) relates to the use of Arundo donax feedstock in a gasification process to produce ethanol. According to the application, ethanol is produced substantially without by-products except for an ash stream of the inorganic plant nutrients.

U.S. Pat. Pub. No. 20100191008 (Energy & Environmental Research Foundation Center) relates to a process for the simultaneous production of chemical feedstocks and fuel blendstocks such as jet fuel from biomass feedstock, and specifically from unsaturated and polyunsaturated vegetable oils and/or algal oils. The process involves integrating metathesis reactions with other processes to produce suitable chain-length fuel components and chemicals.

U.S. Pat. Pub. No. 20100191004 (Sartec) relates to the use of certain metal oxides to catalyze the production of pentose and hexose derivatives from carbohydrates. Embodiments include the use of alumina, hafnia, titania and zirconia to catalyze the production of 5-hydroxymethylfurfural (HMF) or a biofuel from glucose, sucrose, fructose, and cellulolose at a temperature of greater than 100 degrees C.

U.S. Pat. Pub. No. 20100190259 (Undisclosed assignee) relates to a recombinant thermophilic, Gram-positive bacterium, a strain of B. thermoglucosidasius, having an ldh (lactate dehydrogenase) mutation and in which the stability of the ldh mutation has been enhanced. The application also relates to a process for improving the stability of the mutation by specific homologous recombination between a plasmid and the insertion sequence within the ldh gene. According to the specification the strain is useful for producing of ethanol in fermentation.

US Pat. Pub. No. 20100190226 (Iogen Energy Corporation) relates to a process for feedstock pretreatment. The process involves wetting grasses, cereal straws or stover of a particular length, pressing the wet feedstock through one or more roll presses, slurrying the pressed feedstock, and subjecting the slurried feedstock to dilute acid pretreatment to produce pretreated feedstock. According to the specification, the process allows for the crushing and shearing of feedstock and the removal of much of the soluble salts, proteins, sugars, alkaline compounds and organic acids from the feedstock.

U.S. Pat. Pub. No. 20100189076 (Verenium) relates to lignocellulolytic enzymes that hydrolyze sugarcane bagasse. According to the specification, the enzymes hydrolyze soluble cellooligsaccharides and arabinoxylan oligomers into monomer xylose, arabinose and glucose.

U.S. Pat. Pub. Nos. 20100187822 and 20100187818 (Louisville Clean Energy) relate to a combined heat and power production system, which improves the energy efficiency of individual production systems in the combination. Specifically, gasification, combined heat and power/combined-cycle, methane reactor, biodiesel, and ethanol fermentation methods of energy production are combined such that waste heat from one method serves directly as the heat reservoir for a successive method.

U.S. Pat. Pub. Nos. 20100186736 and 20100186735 (SunOpta BioProcess Inc.) relate to a method and apparatus for conveying cellulosic feedstock. The ‘736 application discloses an apparatus comprising a holding tank having an inlet and an outlet, wherein the outlet is at an elevation below the inlet, and at least one screw conveyer having a variable pitch along its length. In operation, the apparatus withdraws cellulosic feedstock from the tank in a direction transverse to the direction of travel of the feedstock through the tank. According to the specification, embodiments of the invention enable actively withdrawing feedstock from different portions of the outlet, preferably evenly from across the outlet, leading to a achieving a generally uniform residence time of feedstock in the tank. The ‘735 application discloses a similar apparatus but which includes two conveyers, the first conveyer delivering a first portion of the feedstock in a first direction, and the second conveyer delivering a second portion of the feedstock in a second direction.

U.S. Pat. Pub. No. 20100186291 (China Fuel (Huabei) Bioenergy Technology Development Co., Ltd.) relates to a process for producing biofuel via co-gasification of cellulosic biomass and coal in the presence of a catlyst. According to the specification, the process is a highly effective method of producing biofuel because the mixed use of cellulosic biomass and coal provides syngas, with a composition approaching the optimal ratio for producing methanol and ethanol, in a one-step gasification. The specification also suggests that co-gasification can reduce the ash fusion temperature of coal.

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From our colleague Sarah Johnson Phillips:

Last month, Governor Pat Quinn of Illinois signed two pieces of legislation expanding state policies that encourage investment in the state’s renewable energy sector.

H.B. 4797 extends the Illinois program providing for uniform statewide property-tax assessment of wind energy systems through 2016. Prior to 2007, assessments were made based on a county-by-county basis, which created significant inconsistency across the state. The uniform program allows wind projects to anticipate operating costs.

H.B. 4758 expands Property Assessed Clean Energy (PACE) financing opportunities to unincorporated areas of the state. PACE programs allow local governments to issue bonds to help finance energy improvements on homes and businesses. The PACE funding is then repaid by property owners through a surcharge on their property tax bills. At least 23 states have authorized PACE programs since 2008. Illinois first adopted PACE enabling legislation in August 2009 (SB 583) and now expands access to the program in 2010.

While popular, PACE programs around the country are facing an uncertain future following actions by the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac that have effectively shut down many programs. At issue is the fact that under most PACE programs, a lien is placed on the property that has priority over the mortgage. FHFA is characterizing these liens differently from routine tax assessments, arguing that they pose “unusual and difficult management challenges for lenders, servicers, and mortgage securities investors” that justify calling a halt to PACE financing while these concerns are addressed. The State of California has sued Fannie Mae and Freddie Mac for blocking its PACE program.

But despite the near standstill in implementation, Illinois and other states (including Minnesota and Missouri) have continued to authorize and expand PACE programs this year.

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On July 27, 2010, the Court of Appeals of Texas, Fifth District, Dallas, issued its decision in TXU Portfolio Management Company, L.P., v. FPL Energy, LLC, et al., 2010 Tex. App. Lexis 5905 (2010).  The case arose when three FPL wind farms (the "Wind Farms") located in the McCamey area of West Texas experienced ERCOT-imposed generation curtailments imposed by the Electric Reliability Council of Texas ("ERCOT") during 2002-2005.  The Wind Farms had each entered into a power purchase agreement (“PPA”) with TXUPM under which they agreed to deliver a minimum quantity of energy and renewable energy credits (RECs) each year. Because of the deficiencies caused by the ERCOT generation curtailments, TXUPM sued the Wind Farms for deficiency damages under the PPAs.  The Wind Farms counterclaimed, asserting that TXUPM materially breached each of the PPAs by failing to insure enough "transmission capacity" to allow the three wind farms to generate and deliver all of the electricity they were theoretically able to generate given wind conditions.

Section 2.03 of the PPAs required TXUPM to arrange for "all services, including without limitation Transmission Services . . . necessary to deliver Net Energy."  The Texas Court of Appeals concluded that this provision required TXUPM to supply transmission service sufficient to accept delivery of energy actually generated by the project and delivered to the interconnection point.  Contrary to the Wind Farms' argument, however, Section 2.03 did not require TXUPM to make sure there was enough transmission capacity in the McCamey area to make sure that the three wind plants could in fact generate every MWh they were theoretically capable of generating given wind conditions. 

This outcome is not too surprising--it would have been very unusual had the Court of Appeals concluded that an offtaker's duty to supply transmission services at the delivery point amounted to an implied duty to arrange for the construction of (very expensive) transmission infrastructure sufficient to avoid generation curtailments.  Utilities everywhere can breathe a sigh of relief that the Court of Appeals did not read this duty into the PPAs. 

The fact that the Wind Farms had failed to deliver enough output to meet the annual minimum quantities specified in  the three PPAs was not in dispute.  Since the court concluded that TXUPM had not breached the PPAs by failing to supply transmission capacity, the only remaining question was the calculation of damages. 

Stepping away from the court’s decision for a moment, though, it’s worth noting that there's a separate provision that is typically included in PPAs for intermittent renewable energy, and it apparently was not included in the three PPAs in dispute here, perhaps because of their 2000-2001 vintage.  An annual minimum output guarantee requires a wind developer to take both mechanical availability risk and wind risk--the plant's output can be reduced below the minimum level if the wind doesn't blow as hard or as often as expected, or if the wind turbines and other equipment are not available as often as they should be.  However, these risks are to some extent within the developer's control--wind risk can be addressed by thorough wind studies, and mechanical availability can be managed using the developer’s O&M program.   Generation and transmission curtailment, on the other hand, are typically outside the developer's control and can be affected by delays in completing transmission infrastructure, additions of other intermittent resources to the grid, routine maintenance of the transmission system, emergencies and other factors. 

Recognizing this, renewable energy PPAs usually provide that curtailed energy is counted as if it were generated for purposes of determining  whether a plant has achieved its output guarantees.  Although the requisite language is often omitted from utility pro forma renewable PPAs, most utilities are willing to agree if pressed that energy that could have been generated but for curtailment(s) should be counted as if it were generated for purposes of testing the project’s output guarantee. There may be a little scuffling over the proper method for calculating the quantity of energy and RECs that would have been generated “but for” the curtailment, but the real fight is usually over whether the PPA is in whole or in part a "take or pay" contract in which the utility is required to pay for some or all of the output that is actually curtailed. Cf. FPL Energy Upton Wind I, L.P., v. City of Austin, 240 SW3d 456 (2007), reh’g denied 2007 Tex App LEXIS 9306 (Tex App Amarillo 2007) (the Texas Court of Appeals ruled that ERCOT-imposed curtailments are not the same as voluntary economic curtailments by the power purchaser under a PPA and thus are not curtailments that the purchaser must pay for).

In any case, the Wind Plants in this case did not receive credit for curtailed energy under the three PPAs, so the court considered the deficiency as a given and turned to calculating the amount of damages.  The three PPAs had hard-wired $50/MWh as the liquidated damage payment due for each MWh of deficiency below the annual output guarantee.  This number was based on the per MWh penalty the Texas PUC was expected to impose, as of the time the PPA was entered into, on utilities that failed to secure enough renewable energy.  The Wind Plants argued that this amount bore no resemblance to TXUPM's cover damages at the time of the alleged breach and had persuaded the trial court to declare the liquidated damages clause to be unenforceable.  The Texas Court of Appeals reversed, concluding that the Wind Farms had failed to prove (1) that a measure of damages was ascertainable when the PPAs were entered into, or (2) that the $50/MWh rate was an unreasonable estimate of TXUPM's actual damages. 

Using the deficiency rate of $50/MWh and the Wind Farms' total net deficiencies of 580,465 MWh for 2002 through 2005, TXUPM claimed $29,023,250 in deficiency damages.  Bear in mind that these are just the deficiency damages, and thus only a part measure of the pain the plants suffered--they also had to forego a sale at the contract price and lost a Production Tax Credit (PTC) on each MWh curtailed.  For utilities that are slow to acknowledge that curtailment risk is an important issue for the intermittent energy developer, this case offers a very succinct $29 million dollar explanation of why developers, lenders, and equity care so much about the topic.

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Governor Tim Pawlenty signed into law the Small Business Investment Tax Credit, also known as the “Angel Tax Credit,” on April 1, 2010.   The Angel Tax Credit is expected to stimulate investment in Minnesota businesses utilizing or developing new technologies, including those related to renewable energy and energy efficiency and conservation. Qualified investors are eligible for a 25 percent individual tax credit (maximum of $125,000 per year per individual or $250,000 per year for those married and filing jointly) for an investment made in a qualified small business. A total of $11 million in credits is currently allocated for 2010. The Minnesota Department of Employment and Economic Development (DEED), which will administer the program, recently made available the application requirements and certification forms on its website. 

Qualified Investors

The following is a general list of criteria for investors to consider in whether they may qualify for certification under the Angel Tax Credit program:

• Be a natural person.
• Meet the requirements of an accredited investor under Regulation D.
• If not an accredited investor, be a non-accredited investor investing in exempt filings per Minn. Stat. 80A.46 (13) or (14) or Minn. Stat. 80A.50 (b).
• Not receive more than 50 percent of their annual gross income from the business.
• Be certified by DEED before investment is made. Non-accredited investors making exempt transactions may file for certification within 30 days of making investment. There is a certification filing fee of $350.
• Make a minimum qualifying investment of $10,000. Three or more investors may join to create a fund. Funds have a minimum investment of $30,000, which may be divided among investors as the fund wishes.

Qualified Businesses

A qualified business must be engaged in technological innovation in Minnesota through the use or research and development of proprietary technology in specified “qualified high technology fields” which include aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, materials science technology, nanotechnology, telecommunications, biotechnology, medical devices, pharmaceuticals, diagnostics, biologicals, chemistry, or veterinary science. The following is a general list of criteria for businesses to consider in whether they may qualify for certification under the Angel Tax Credit program:

• Be headquartered in Minnesota.
• Have a minimum of 51 percent of employees and 51 percent of payroll in Minnesota.
• Have fewer than 25 employees.
• Pay employees annual wages of at least 175 percent of poverty level, currently $18.55 per hour. Does not apply to business’ executives, officers, board members, 20 percent-plus owners.
• Not have been in operation for more than 10 years.
• Not previously have received private equity investments of more than $2 million.
• Not have been disqualified from investment under Minn. Stat. 80 A.50 (b)(3) Small corporation offering registration disqualifications.
• Not have generated more than $4 million in investments that have received an Angel Tax Credit. The Angel Tax Credit is capped at $1 million per business.
• Be certified by DEED before investment is made. The certification filing fee is $150.

For more information on the Minnesota Angel Investment Tax Credit, please visit the Angel Tax Credit section of the DEED website.

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The EPA has issued proposed RFS2 rules for 2011 that provide some indications that the agency is dedicated to jump starting the advanced biofuels industry.  Most notably, the EPA held fast to an overall mandate of 13.95 billion gallons of renewable fuel.  While the agency intends to deviate downward on cellululosic biofuels with a cut of 90% or more anticipated, the proposed rule maintains the overall Advanced biofuel mandate at 1.35 billion gallons and the Biomass-based diesel requirement at 800 million gallons.  Thus the agency is paying significant attention to the existing capacity of the biodiesel industry despite the lack of approval for the blender's credit six months into the year.  Biofuel supporters hope that this policy gap will be addressed shortly or that RIN values will continue to increase for Biomass based diesel.  

The proposed rule contains two other notable components:  tentative but retroactive RIN credit for canola, sorghum, pulpwood and palm oil biofuel producers; and a petition process for foreign countries to avoid the onerous feedstock obligations that now apply in favor of the aggregate approach available within the US.  The referenced feedstocks have been under consideration by EPA for Life Cycle Analysis since prior to the original RFS2 Final Rule was released but the work has still not been completed.  The severe challenge for this group of biofuel producers is that EPA has previously indicated that RIN generation would trigger only when the pathway was certified.  EPA's proposed new flexibility is an improvement but still falls short of providing full RIN value for these producers due to the lag time and uncertainty associated with the approach.  The proposed petition process for foreign countries is an apparent attempt to level the playing field for foreign producers who now must trace and certify feedstocks such as soy and corn in a manner not required within the US.

The rules will be published in the Federal Register shortly and the public comment period will likely run to approximately August 13th.

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To follow up on my colleague Janet Jacobs' blog on this exciting topic, here's some more detailed information about the MOU, especially as it relates to marine and hydrokinetic ("MHK") technologies:

 

The United States Department of Energy’s Office of Energy Efficiency and Renewable Energy (“EERE”) and the United States Department of the Interior’s newly-renamed Bureau of Ocean Energy Management, Regulation, and Enforcement (“BOEMRE”) (see Note below) signed a Memorandum of Understanding for the Coordinated Deployment of Offshore Wind and Marine and Hydrokinetic Energy Technologies on the United States Outer Continental Shelf (the “MOU”).

 

The purpose of the document is to prioritize and facilitate environmentally-responsible deployment of commercial-scale offshore wind and MHK energy technologies on the Outer Continental Shelf (the “OCS”) through collaborative efforts.  In a recent blog, I mentioned that the DOE has committed $15.36 million to help researchers and developers alike to bring various MHK technologies closer to commercial deployment.  This MOU represents yet another effort to spur the growth of the burgeoning offshore renewable energy industry.

An interagency working group has been tasked with developing an action plan that addresses the deployment of offshore renewable energy projects, including both offshore wind and MHK technologies, within 30 days.  The action plan will outline how the BOEMRE and EERE can work together to streamline leasing and regulatory processes on the OCS for those sites with high energy resource potential.  The MOU also outlines how the agencies will share information and undertake collaborative activities such as stakeholder engagement, technical and environmental research, joint evaluation of standards and timelines for development, and the dissemination of information to decision makers. 

Note:  On June 21, 2010, DOI Secretary Ken Salazar issued Order 3302 renaming the Minerals Management Serivce the BOEMRE.

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From our colleagues Beverly Pearman and Jeremy Sacks:

Massachusetts Department of Public Utilities (“DPU”) has modified the two programs challenged by TransCanada Power Marketing Ltd. (“TransCanada”) in a federal law suit. TransCanada filed its complaint on April 16, 2010, alleging that portions of the Green Communities Act that were intended to increase in-state renewable energy resources were unconstitutional because they favor Massachusetts producers in violation of the Commerce Clause. The Commerce Clause generally prohibits states from enacting laws that burden out-of-state businesses in order to give a competitive advantage to in-state businesses.

The first modification came in early June as a result of settlement negotiations. Massachusetts modified the Solar Carve-Out program to grandfather in rates for Alternative Compliance Payments (“ACP”) that were contractually committed or renewed before January 1, 2010. ACP are paid by electric companies that do not hold the required amount of Solar Renewable Energy Credits (“SRECs”) that must be produced only by facilities located in Massachusetts. In exchange for this rule change, TransCanada dismissed its claims challenging the Solar Carve Out on June 9, 2010, but continued to press forward with its Commerce Clause challenge to a Request for Proposals for Long-Term Contracts for Renewable Energy Projects (the “RFP”) issued by the Massachusetts Department of Energy Resources (“DOER”) this year.

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From our colleagues Beverly Pearman and Jeremy Sacks:

Mitsubishi Heavy Industries, Ltd. and Mitsubishi Power Systems Americas, Inc. v. General Electric Company

On May 20, 2010, Mitsubishi Heavy Industries, Ltd. (“MHI”) and Mitsubishi Power Systems Americas, Inc. (“MPSA”) (collectively “Mitsubishi”) filed suit in the U.S. District Court for the Western District of Arkansas contending that General Electric Company (“GE”) is engaged in a scheme to monopolize the sale of variable speed wind turbines in the United States in violation of state and federal statutes. They seek a compensatory damages award in excess of $100 million, an award of treble damages, punitive damages, and a permanent injunction prohibiting further litigation by GE for infringement of specified patents that GE claims to own. Mitsubishi’s claims are brought pursuant to Section 2 of the Sherman Act, Section 43(a) of the Lanham Act, and a state law claim of tortious interference with contractual and prospective business relationships.

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We are pleased to announce that the first edition of THE LAW OF BIOMASS is available now. THE LAW OF BIOMASS is a guide which contains insights and lessons that our team has developed through our position as a market leader in renewable energy legal issues. THE LAW OF BIOMASS focuses on electricity generated from biomass sources. As changes in the energy markets and views on natural resources create a compelling case for renewable and sustainable energy, biomass is emerging as a positive solution.

We hope that you find THE LAW OF BIOMASS useful. To request a copy of THE LAW OF BIOMASS, please visit our website: http://www.stoel.com/lawofseries.aspx.

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This year's International BIOMASS Conference and Expo will be held in Minneapolis, Minnesota on May 4-6.  The 6 program tracks will provide specified topic panels and discussions on Crop Residues, Dedicated Energy Crops, Forest and Wood Processing Residues, Livestock and Poultry Wastes, MSW and Urban Wastes as well as Food Processing Residues.

Please join Mark Hanson, Jennifer Martin, David Quinby, Kevin Johnson, Kevin Prohaska, Joe Thompson, Edna Vassilovski, Mary Sennes, Katie Roek , Bill Holmes and Debra Frimerman for a Stoel Rives-sponsored lunch on Day 1 of this year's International Biomass Conference or stop by Booth #609 in the Expo to speak with our attorneys.   We'll also be debuting our new Law of Biomass, the latest installment in the highly regarded Stoel Rives' "Law of" series, and complimentary copies of the new book will be on offer at our booth.

David Quinby, partner in the Minneapolis office, will moderate Track 4: Livestock & Poultry Waste: Downstream Approaches to Upgrading Biogas Quality, Wednesday, May 5 at 3:30 p.m. and Jennifer Martin, partner in the Portland office, will present as part of the Bonus Panel: Biomass to Energy Projects: Key Issues to Consider in Power Purchase and Feedstock Agreement, Thursday, May 6 at 1:30 p.m.

We look forward to seeing you at the Conference! To learn more or to register for this event, please visit: http://biomassconference.com/ema/DisplayPage.aspx?pageId=About.

•  When: 5/4/2010

•  Where: Minneapolis Convention Center, Minneapolis, MN

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Today, the U.S. Department of Energy (the "DOE") released the long-awaited Financial Assistance Funding Opportunity Announcement ("FOA") titled "Marine and Hydrokinetic Technology Readiness Advancement Initiative."  Federal funding for this initiative for fiscal year 2010 is expected to be up to $15.36 million, with the possibility of continued funding at, or near, that level for up to an additional two years.  (Because all federal funding is subject to annual appropriations, these figures should be treated as estimates.)

The DOE has recognized that marine hydrokinetic ("MHK") technologies can provide renewable, environmentally responsible, and predictable baseload electricity to load centers along the nation's coastlines.  And to help accelerate the development and deployment of these technologies, the DOE intends to advance the technological and operational readiness of MHK systems and components across a range of technology readiness levels ("TRLs") through this Funding Opportunity Announcement.

Although TRLs have been used for years by both NASA and the Department of Defense to develop advanced, mission-critical systems, this is the first time TRLs have been used by the DOE to assess the technological readiness of new renewable energy technologies.  Recognizing that MHK devices and components are still largely in the early stages of research and development, the DOE has adopted a simplified TRL structure for purposes of this Funding Opportunity Announcement.  The DOE is seeking applications in two topic areas: (1) MHK Technologies Concept Development (TRLs 1-3) and (2) MHK Technology Readiness Level Advancement (TRLs 4-9). 

Funding will be made available in each topic area for both "systems" and "components."  The DOE organized and grouped the TRLs into four discrete funding categories:

1. Discovery / Concept Definition / Early Stage Development, Design and Engineering (TRL 1-3);
2. Proof of Concept (TRL 4);
3. System Integration and Technology Laboratory Demonstration (TRL 5/6); and
4. Open Water System Testing, Demonstration, and Operation (TRL 7/8).

Each category has prescribed funding levels and project performance periods.  A brief summary of the expected number of awards in each topic area and the associated expected federal funding is included below.  For a complete funding breakdown for systems and components, see the Funding Opportunity Announcement.

Topic Area Summary

Topic Area	Period of Performance	Expected Number of Awards	Total  Estimated Federal Funding	Estimated FY 2010 Federal Funding
MHK Technologies Concept Development (TRLs 1-3)	12 months	8    (4 systems, 4 components)	$1.6M	$1.6M
MHK Technology Readiness Level Advancement (TRLs 4-9)	18-36 months     (see FOA)	18    (11 systems, 7 components)	$36.72M	$13.76M

 

Applications are due to DOE by 11:59 PM Eastern Time on June 7, 2010.

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On March 11, 2010, I posted a blog about the U.S. Department of Energy's (the "DOE") upcoming Funding Opportunity Announcement ("FOA") for hydrokinetic technology development.  The DOE issued a Notice of Intent announcing the FOA earlier that week.  To access the Notice of Intent, click here, and enter "hydrokinetic" in the search field. 

The DOE was expected to issue the FOA by March 31, 2010.  This blog is intended as a reminder that all interested parties should make sure they have followed the necessary steps to apply or submit questions regarding the FOA.  For official procedures, see the Notice of Intent.

To respond to FOAs, either as an applicant to to submit questions, parties must first be registered with FedConnect.  In order to register for FedConnect, a party must:

• Have a Duns and Bradstreet Data Universal Numbering System (a "DUNS Number").  If you do not know your company's DUNS Number or if your company does not have one, you can search for it or request one here; and
• Be registered with the Central Contractor Registry (the "CCR").  If you are not currently registered for the CCR, you can register at the CCR website.

If you are the first person to register in your company for FedConnect, you will need your company's CCR MPIN.  If your company is already registered with the CCR, then you can find out who has your CCR MPIN by going to the CCR website and clicking "Search CCR."  A company's CCR must be updated annually.  To update your company's CCR, visit the CCR renewal website.

NOTE:  CCR and FedConnect registration can take at least 21 days to complete.  Since the DOE is expecting a quick turnaround on the FOA once it is released, interested parties should begin the registration process as soon as possible.

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The Nevada State Office of Energy (“NSOE”) announced on March 16, 2010, that is it has issued a Request for Proposals (“RFP”) for renewable energy projects under the $8M+ Revolving Loan Program. Projects must be no more than 60kW in size for solar PV and 20kW maximum for wind turbines and solar thermal. Loan terms will be less than 15 years and interest rates three percent or lower. Applicants may apply for a minimum of $200,000 and a maximum of $1,645,000, and must be able to enter a loan contract prior to June 30, although projects may begin after that date. It is the intent of the RFP to approve a minimum of five applications. The solicitation may close at any time upon determination by the Director of the Nevada State Office of Energy that a sufficient number of qualified applications have been received to satisfy the needs of the RFP. If the RFP fails to produce a sufficient number of eligible applicants the Director may consider granting loans exceeding the published maximum amount.*

Interested parties should go to http://energy.nv.gov/recovery/RevolvingLoan.htm or contact Robert Nellis, Energy Program Manager at (775) 687-1850 x7304 for more information.

 

*Request For Proposal No. 0001 for ARRA Revolving Loan Program For Renewable Energy Systems Release, dated March 15, 2010.

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On March 24, 2010, three federal agencies announced a Memorandum of Understanding for Hydropower (the “MOU”) that impacts developers of traditional hydropower, hydrokinetic, pumped storage, and small-scale hydropower facilities. The Department of Energy (“DOE”), the Department of the Interior (“DOI”), and the Department of the Army, through the U.S. Army Corps of Engineers (“USACE”) (collectively, the “Agencies”), signed the MOU to "meet the Nation’s needs for reliable, affordable, and environmentally sustainable hydropower by building a long-term working relationship, prioritizing similar goals, and aligning ongoing and future renewable energy development efforts" between the agencies. The MOU comes at a time when industry representatives and eleven U.S. Senators are requesting that DOE support a $200 million appropriations request for the advancement of both conventional and advanced waterpower technologies.

 In this “new approach to hydropower,” the Agencies intend to focus their collective efforts on advancing sustainable, low-impact, and small hydropower projects and promoting the goal of energy efficiency through water conservation or improved water management. Operating under the MOU, the Agencies will work together to advance four primary objectives:

• Support the maintenance and sustainable optimization of existing Federal and non-Federal hydropower projects;
• Elevate the goal of increased hydropower generation as a priority of each Agency to the extent permitted by their respective statutory authorities;
•  Promote energy efficiency; and 
• Ensure that new hydropower generation is implemented in a sustainable manner.

For more information on the MOU, including potential next steps for the Agencies, read the Energy Law Alert by Stoel Rives attorneys Cherise Oram, Michael O'Connell, and Chad Marriott posted here.

If you would like to sign up to receive our Energy Law Alerts when they are released, click here.

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On Thursday March 11, 2010, the California Public Utility Commission (the "CPUC") created a market for tradable renewable energy credits ("TRECs") in the state.  That's big news.  In its 149-page decision, the CPUC stated that investor-owned utilities ("IOUs"), energy service providers, and community choice aggregators may now use TRECs to comply with California's ambitious renewable portfolio standard ("RPS").  These entities are now permitted to purchase a portion of their RPS compliance from generation sources other than those they own (e.g., distributed solar generation facilities within the state and certain out-of-state facilities).

 

Continue Reading...

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Proposed legislation in the Senate would greatly limit the effectiveness of the grant in lieu of tax credits for renewable energy projects under section 1603 of the American Recovery and Reinvestment Act.

The section 1603 grant currently applies to renewable energy projects, such as wind, solar, geothermal and biomass, that are placed in service before 2011 or for which construction begins in 2009 or 2010 (and that are placed in service by certain dates). In its current form, if a project qualifies for the grant, the Treasury Department is required to pay the grant.

Expressing concern that a significant portion of the grants paid so far have gone to non-U.S. companies,  Senator Charles Schumer (NY) and three other Democratic senators have sponsored a bill that would make payment of the grant subject to the discretion of the Treasury Department. It also would make the grant subject to the Buy American requirements of the stimulus bill, and would require that Treasury conduct an analysis of the "domestic job preservation and creation provided by" a project for which a grant application is submitted.

Various trade associations involved in renewable energy (such as AWEA, GEA and SEIA) are taking immediate action to register their opposition. Their focus will be on the incorrect assumptions underlying the proposal (for example, that it does not create U.S. jobs) and that, if enacted, it likely would destroy the effectiveness of the program.

We encourage our readers to register their strong opposition with their members of Congress and with the trade associations with which they are associated. The more opposition that is registered, and the longer the proposal drags out, the less likely it is to be enacted. 

Read the March 4, 2010 Stoel Rives Law Alert on this proposed legislation.

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On February 10, 2010, the Oregon House passed HB 3680, which if enacted would substantially curtail the BETC for certain renewable energy projects. HB 3680 would impose an overall statewide cap, on the amount of potential tax credits that the Department of Energy could certify. The statewide cap would be $300 million for the 2009-11 biennium, and $150 million for the year beginning July 1, 2011 and ending June 30, 2012. HB 3680 would also authorize the Department of Energy to write rules relating to the priority to be given if applications for preliminary certification exceed those caps. In addition to the overall cap discussed above, HB 3680 would also impose the following cutbacks for large wind facilities (more than 10 megawatts):

• For facilities that obtain preliminary certification between January 1, 2010 and January 1, 2011, the BETC would be limited to $3.5 million
   
• For facilities that obtain preliminary certification between January 1, 2011 and January 1, 2012, the BETC would be limited to $2.5 million
   
• For facilities that obtain preliminary certification after January 1, 2012, the BETC would be limited to $1.5 million

HB 3680 would adopt several criteria implemented by the Department of Energy in the Temporary Rules adopted in November 2009, and would modify the definition of a “transportation facility” to include efficient truck technology for commercial motor vehicles. These provisions would apply retroactively to July 1, 2009. HB 3680 would also allow the Department of Energy to suspend or revoke a final certificate if a facility is no longer operating. This provision would apply retroactively to January 1, 2009. Finally, HB 3680 would extend the sunset date to January 1, 2014, for renewable energy resource equipment manufacturing facilities, but would not extend the sunset date for other facilities.

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Congress is considering a complete rewrite of the 1603 grant program.  Some of the changes being considered are very helpful while others would be extremely troubling.  Please continue reading to get the full story ...

 

 

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Earlier today, the Securities Exchange Commission (SEC) posted its climate change interpretive release, which can be found at http://www.sec.gov/rules/interp/2010/33-9106.pdf.  Our prior Blog on the subject is here, and our alert on the topic can be found here.  Stoel Rives corporate securities partners Ron McFall and CJ Voss will be posting a follow up alert shortly. 

 If you'd like to sign up for our Energy Law Alerts, click here. 

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My partner Tom Wood circulated this preliminary alert this afternoon:

"Earlier today the U.S. Securities & Exchange Commission (SEC) approved interpretive guidance intended to inform public companies how climate change must be taken into account when applying existing disclosure requirements.  Specifically, the SEC's interpretative guidance highlights the following areas as examples of where climate change must be considered in crafting disclosures:

 

·         The direct effects of existing and pending environmental regulation, legislation and international accords and treaties on the company’s business, its operations, risk factors and in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A);

 

·         The indirect effects of climate change legislation and regulation on a company’s business—this could include new opportunities or risks posed by legal, technological, political and scientific developments related to climate change; and

 

·         The actual and potential effect on a company’s business and operations resulting from physical changes to the planet resulting from climate change.

 

"The interpretive guidance specifies that public companies must have adequate knowledge of their greenhouse gas emissions—a requirement that is consistent with recent EPA regulations requiring many (but not all) significant greenhouse gas emitters report their direct emissions starting in calendar year 2010.  The SEC stated “management should ensure that it has sufficient information regarding the registrant’s greenhouse gas emissions and other operational matters to evaluate the likelihood of a material effect arising from the subject legislation or regulation.”

Unsurprisingly, the SEC said that registrants must weigh whether climate change related information is material or not.  In doing so, they said that if it was a close question, the company should decide in favor of disclosure."

 

The complete language of the interpretive guidance has not yet been released.  Corporate securities partners C. J. Voss and Ron McFall are reviewing the issue and will be issuing an Energy Law Alert on the topic.  If you'd like to sign up for our Energy Law Alerts, click here. 

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With 3/5 of the States having Renewable Portfolio Standard in place and the prospect of a Federal RPS, many utilities are seeking to become first time purchasers of the output from wind projects. And utilities with a history of purchasing wind are seeking additional resources. In 2009, the presenters collectively worked on over 40 wind power purchase agreements for projects located throughout the United States, enabling them to present a comprehensive overview of the impact of these developments. A number of first time purchasers have been using the RFP process as a vehicle for educating themselves about wind, and often experience difficulty in translating PPA terms that are appropriate for base load resources into PPA terms that work for intermittent resources like wind. Through various PPA terms, utilities are increasingly seeking to place the risk of non-compliance with the RPS on the wind project developer. These developments can result in PPA terms that are very problematic for the financing of the project. This webinar will explore these recent developments, including issues related to output and availability guarantees, allocation of curtailment risk for long-distance transmission to load, wind integration charges, delay damages, conditions precedent, termination rights and the measure of damages.

Moderator:
Edward D. Einowski, Partner, STOEL RIVES LLP

Panelists:
Teresa Hill, Partner, STOEL RIVES LLP
William H. Holmes, Partner, STOEL RIVES LLP
Jennifer H. Martin, Partner, STOEL RIVES LLP
Marcus Wood, Partner, STOEL RIVES LLP

To register: http://infocastinc.com/index.php/conference/255

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Today, the U.S. Supreme Court issued an important ruling clarifying how the Federal Energy Regulatory Commission (FERC) must apply the Mobile-Sierra doctrine.  The Mobile-Sierra doctrine informs how FERC should evaluate whether a contract rate for energy is just and reasonable, and the doctrine provides that FERC's sole concern should be whether the contract rates being challenged adversely affect the public interest--a high hurdle.  Until today, some people questioned whether the Mobile-Sierra doctrine was limited to parties to a contract, and whether non-contracting parties bringing a challenge would be held to a lower standard.  The Court, however, made clear that the Mobile-Sierra doctrine should apply to any party (including FERC) challenging whether energy rates are just and reasonable, stating that a presumption that applies to contracting parties only, but not anybody else, fails to establish the contractual stability that Mobile-Sierra aimed to secure.

To read more about today's U.S. Supreme Court decision, click here.

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DOE Secretary Chu's announcement today regarding $80 million of ARRA funding for biofuels is potentially a positive development for the long-term development of the biofuels industry.  What is worrisome from a practical perspective  is the division of funding.  The National Alliance for Advanced Biofuels and Bioproducts, centered in St. Louis, received $44 million to develop a systems approach for the sustainable commercialization of algal biofuel and bioproducts.  The National Advanced Biofuels Consortium, based here in the Pacific Northwest, received up to $34 million to develop infrastructure compatible biomass-based fuels.  Meanwhile eight infrastructure projects received up to $1.6 million to support expanded fueling infrastructure for ethanol blends. While the Administration is ahead of the curve in recognizing the importance of long-term support for the development of advanced biofuels, it is overlooking the increasingly challenging environment in first generation biofuels.  Simply put- and purely in my opinion- there will be no second generation of biofuels if the first generation does not again thrive.  The ethanol industry has hit a blend wall that the EPA has not been willing to help them overcome in the short term.  Adding $1.6 million in E-85 infrastructure is but a chip in that wall when one considers the massive costs involved in building a national infrastructure.  On the biodiesel side, the current industry has not yet received an extension of its tax credit and was already facing severe challenges.  The investors who supported the expansion of the first generation biofuels industry are still tracking their investments and the policy support for the industry.  While government funding will further the development of the science of advanced biofuels, private sector involvement will be essential to the ultimate commercialization of these fuels.  To accomplish its ultimate goals, the Administration will need to begin to address these issues in a systematic manner.

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The California Public Utilities Commission ("CPUC") issued a proposed decision on December 23, 2009 that would, if adopted, allow California investor-owned utilities, energy service providers, and community choice aggregators to purchase renewable energy credits alone, without the associated energy (sometimes referred to as "unbundled renewable energy credits ("RECs)" or "tradable RECs"), to satisfy their obligations under California's RPS. California's largest investor-owned utilities—Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric—would be limited to meeting no more than 40% of their annual procurement targets under the RPS with tradable RECs, and a price cap of $50 would be imposed. The CPUC will revisit both the percentage cap and the cost cap and whether those caps should be revised within 24 months of the decision.

Out-of-state renewable energy projects could be adversely impacted if the proposed order were adopted. The proposed decision would define all renewable generation purchased from out-of-state facilities1 as the purchase of unbundled or tradable RECs, making any out-of-state renewable energy sale subject to the cap that bars the large investor-owned utilities from using such sales to meet more than 40% of their overall RPS obligation. Although the proposed decision states that this classification would apply only to contracts signed on or after the effective date of the decision, contracts signed prior to the effective date would be considered REC-only contracts from the effective date forward, and would be "subject to the limits and rules applying to REC-only contracts" according to the proposed decision. Furthermore, although the purchase of tradable RECs from out-of-state facilities would be permitted, the delivery requirement in the RPS legislation would still have to be met, so a comparable amount of power would have to be imported into the state, along with the RECs. The jurisdiction to determine whether and how this delivery requirement is met, however, still remains with the California Energy Commission.

Comments on the proposed decision are due on January 19, 2010, and reply comments are due January 25, 2010.

For additional information about the history and effect of the proposed decision, see our Stoel Rives alert on the topic.

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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.

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On December 7, 2009, Energy Secretary Steven Chu announced the issuance of a final rule amending the October, 2007 Final Regulations implementing the Loan Guarantee Program under Section 1703 of Title XVII of the Energy Policy Act of 2005 (the "Section 1703 Program").  The amendments implemented through the final rule were first identified in a Notice of Proposed Rulemaking and Opportunity for Comment  issued by the Department of Energy ("DOE") on August 7, 2009.  The comment period for the proposed amendments ended on September 22, 2009; the comments received by the DOE from the industry and other interested parties were largely supportive of the proposed amendments.

In a nutshell, the amendments to the regulations outlined in the final rule are designed to:

• provide flexibility in the determination of an appropriate collateral package to secure the guaranteed loan obligations;
• eliminate the requirement that the Secretary receive a first priority lien on all project assets as a condition for obtaining the loan guarantee;
• facilitate collateral sharing and related intercreditor arrangements with other project lenders; and
• provide a more workable interpretation of certain statutory provisions regarding DOE's treatment of collateral that is more consistent with the intent and purposes of Title XVII.

Continue Reading...

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Stoel Rives partner Tom Wood reports:

Minutes ago EPA announced its long awaited “endangerment” and “cause or contribute” findings in relation to six key greenhouse gases – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.  While technically this announcement is of limited significance (applying only to motor vehicle emissions), the policy import of these determinations is tremendous. 

 

In 2007, the U.S. Supreme Court held that greenhouse gases are air pollutants covered by the Clean Air Act in the Massachusetts v. EPA decision.  This case arose in relation to EPA’s choice not to regulate carbon dioxide emissions from new motor vehicles.  The Court held that EPA must determine whether or not emissions of greenhouse gases from new motor vehicles cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or whether the science is too uncertain to make a reasoned decision.  

 

Earlier this year EPA proposed to issue the two part finding required to commence regulation of greenhouse gas emissions from new motor vehicles.  This required first a finding that greenhouse gas emissions endanger public health and welfare and a second finding that emissions from new motor vehicle engines cause or contribute to greenhouse gas air pollution.  The comment period for these proposed findings ended June 23, 2009 and EPA received over 380,000 public comments.  Today, Lisa Jackson (EPA Administrator) signed final findings that greenhouse gases endanger both the public health and the public welfare of current and future generations and that the combined emissions of these greenhouse gases from new motor vehicles and new motor vehicle engines contribute to the greenhouse gas air pollution that endangers public health and welfare.

 

As a legal matter, today’s findings relate only to vehicle emissions.  However, the precedent that they create will almost certainly result in substantial regulation for other source categories.  It is no coincidence that this finding was announced on the first day of the Copenhagen talks on climate change.  The Obama administration both wanted to show that some progress was being made in the U.S. and it wants to leverage this progress into further statutory or regulatory requirements. 

 

Towards this goal, one of the more interesting things to come out of the determinations is the formal establishment of the new pollutant: “Well-Mixed Greenhouse Gases.”  This term is now officially entered into EPA’s regulatory lexicon as a pollutant to be regulated.  Well-Mixed Greenhouse Gases consists of the 6 Kyoto gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride) but introduces the grouping now as a regulatory unit.  It is noteworthy that vehicles are not material sources of all of these greenhouse gases and so the use of this term should be seen as setting the stage for future regulation.

 

Also of interest is an EPA restatement in a footnote that at this time it does not consider greenhouse gases to be a regulated air pollutant.  This is of tremendous significance to stationary sources of greenhouse gases as the moment that greenhouse gases become regulated, there is the potential argument that they are subject to Title V and major new source review permitting.  At the risk of understating the issue, that would be a mess of biblical proportions. 

 

For those wishing to read all 284 pages of the findings document, it can be found at:  http://www.epa.gov/climatechange/endangerment/downloads/FinalFindings.pdf

The findings are not valid until 30 days after they are published in the Federal Register.  Expect publication to occur later this month.

 

 

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Join us for Structured Tax Incentives Part Deux! Our follow-up webinar will again include Vicky McDowell, Chief Administrator of the Treasury ITC Grant program. Unlike the first session, we will not use a formal presentation; instead, we will cover in greater detail the issues raised in your comments and will attempt to answer as many of your questions as we can.

We invite and encourage you to submit questions to us in advance. Please email your questions by Monday, November 16, to Nicole Lyman at nmlyman@stoel.com or call (612) 373-8842.

Speakers:

Greg Jenner, a tax partner in our Minneapolis office, has worked extensively on energy-related tax issues. Previously, he served as Deputy Assistant Secretary and Acting Assistant Secretary of the Treasury for Tax Policy from 2002 through 2004.

Victoria McDowell is the Deputy Administrator for the Alcohol and Tobacco Tax and Trade Bureau (TTB). In 2009, she was detailed to Main Treasury to be Chief Administrator of the Treasury ITC Grant Program.

Kevin Pearson, a tax partner in our Portland office, focuses principally on federal income tax law, including both transactional matters and tax controversy matters.

When:
Thursday, November 19, 2009
10 a.m. Pacific; 11 a.m. Mountain; 12 p.m. Central; 1 p.m. Eastern

Cost:
Complimentary

Register:
Register online at http://www.stoel.com/webcasts.

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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).

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The State of Minnesota’s Office of Energy Security (OES) is requesting proposals from organizations that are engaged in or will engage in the manufacture of renewable energy systems or fuels, energy storage systems, geothermal energy systems for heating and cooling, components of these systems, or equipment for the manufacture of these systems or components.

The maximum award is $1 million. Up to a total of $2 million is available to all recipients. OES anticipates that two to six projects will be selected for awards under this solicitation.

All work to be performed within a proposed scope of work must be completed no later than June 30, 2011.  An applicant must provide at least 40 percent of the total cost of the proposed scope of work. Applicant’s match may be cash or in-kind. 

Each applicant must submit a notice of intent no later than December 4, 2009 to be eligible. Final proposals are due on December 18, 2009. OES anticipates provisional notification of successful applicants no later than January 29, 2010. Final selection will be contingent on determination by U.S. Department of Energy of compliance with the National Environmental Policy Act.    

For more information and to download a copy of the RFP, please visit www.energy.mn.gov and click on Active Request for Proposal (RFP).

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Avista announced earlier this week that it is seeking proposals from suppliers of renewable energy.  Avista wants to acquire roughly 35 average megawatts (aMW) of long-term qualified renewable energy, to be supplied by the end of 2012 . The company is looking for proposals from wind, solar, geothermal, biomass, qualified hydroelectric and other renewable resources that meet Washington's RPS standard.

Avista plans to host a conference call for potential bidders on September 30. Responses to the  request for proposals are due by October 23, 2009. The full RFP and instructions for bidders can be found here. 

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In an earlier blog, my colleagues, Debra Frimerman and Janet Jacobs reported about the Rural Energy for America Program (“REAP”), in general and specifically in regards to small wind projects.  REAP is a Department of Agriculture (“USDA”) program that provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems.  Eligible renewable energy systems include those that generate heat, electricity or fuels from wind, solar, biomass, geothermal, hydro power, and hydrogen based feed stocks.

The USDA has announced that it has awarded more than $13 million in REAP funds for 233 renewable energy projects in 38 states. Examples of the awards include a $1.8 million guaranteed loan and $500,000 grant for Milford Wind Energy, LLC; a $435,271 guaranteed loan and $435,271 grant for Unaka Forest Products, Inc.; and a $15,000 grant to Pacifica Marine, Inc.

 

 

Continue Reading...

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On a webinar yesterday, Michael Fraser, Senior Program Manager at the DOE, advised that the DOE plans to release a commercial solicitation for the loan guarantee program later this month or in early October.  The current solicitation that is active for renewable energy projects requires that projects satisfy the innovative requirement.  A project is defined as innovative only if it has not been employed in three or more similar applications in the US of five years duration.  Thus many established renewable energy projects such as those utilizing wind or geothermal technology that is tested and proven, cannot apply under the current solicitation. The release of a commercial soliciation has been eagerly awaited by renewable energy project developers.  These loans will be backed by private banks as well with DOE typically only guaranteeing 80-90% of the loan.  DOE hopes that this structure will motivate private lenders to perform much of the due diligence necessary and only bring shovel-ready and bankable projects to the table.  Interest rates on the loan are anticipated to run at Treasury plus 25 to 75 basis points.  This is a very attractive interest rate but there are substantial fees associated with the program that will offset a portion of this value.  The other key factor for projects to consider is whether they will be able to meet American Reinvestment and Recovery Act requirements and thus be eligible to have their credit subsidy costs covered by government funding.  I am cautiously optimistic that DOE will be successful with these efforts and we will see a flurry of good projects moving forward Q1-Q2 2010 with the assistance of this program.

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The U.S. Department of Energy is hosting a free webinar on "How to Build a Strong Application" for the DOE Loan Guarantee Program on Tuesday, September 8, 2009 from 1:00 PM - 2:00 PM EST.  The webinar is intended to explain the loan guarantee program and help lenders and applicants navigate the application process.  DOE will also be providing suggestions on how to create a strong loan guarantee application. 

DOE recently released two solicitations under the program for innovative energy efficiency, renewable energy and advanced transmission and distribution technologies and transmission infrastructure investment projects.  DOE is particularly interested in wind, closed-loop biomass, open-loop biomass, geothermal, landfill gas, trash-to-energy, hydropower and solar projects that are able to commence construction before September 30, 2011. 

DOE will be hosting a series of free webinars on the application process over the next few months. 

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From my colleague Adam Walters:

On August 20 the Australian government announced the passage of a bill quadrupling its Renewable Energy Target (RET) to ensure that 20% (approximately 45,000 GWh) of Australia’s electricity is generated from renewable energy sources by 2020.

 

How does Australia’s RET Scheme Work?

 

The RET scheme is an expansion of Australia’s Mandatory RET scheme introduced in 2001, the first of its kind in the world. It works through the creation and sale of Renewable Energy Certificates (RECs) by renewable power generators to “liable parties” (mainly large-scale electricity utilities and consumers), who must provide a designated quantity of REC’s to Australia’s renewable energy regulator to demonstrate compliance and avoid having to pay charges for any shortfall. One of the changes brought about the new legislation is to increase from $40/MWh to $65/MWh.

Renewable energy sources eligible for accreditation under the RET scheme include: solar, wind, hydro, tidal, wave, biomass and geothermal, as well as solar water heaters and other smaller generation units. Hydro has historically dominated Australia’s renewable energy landscape, but recent project announcements and funding opportunities for wind and solar projects signal greater diversification of the industry, particularly for proven technologies.        

Continue Reading...

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On August 21, NV Energy issued a press release reminding renewable energy developers of that it has issued a Request of Information (RFI) for renewable energy that can be provided on a short-term basis.  This solicitation is separate from NV Energy's recently announced 2009 Renewable Energy Request for Proposals.  NV Energy will consider proposals for solar, wind, geothermal, biomass and other resources eligible for portfolio energy credits under the Nevada renewable portfolio standard.

NV Energy is now looking for proposals from entities that can deliver renewable energy to its system on or after Oct. 1, 2009 and for a period of one month to three years.

 

Parties interested in submitting a response to the RFI, or those seeking more information related to the RFI or renewable energy laws can contact NV Energy at: ShortTermRFI@nvenergy.com .  In addition, prospective bidders can email any questions to Ron Helbing, rhelbling@nvenergy.com.  

 

Bidders must submit their responses  to NV ENergy's short term renewables solicitaion by 9:00 AM (PPT) on Sept. 2, 2009.     

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SCE Solar PV Program:

Back in June, the California Public Utilities Commission (“CPUC”) issued a decision authorizing Southern California Edison (“SCE”) to execute contracts for up to 250 MW of generation from solar PV facilities owned and operated by independent power producers through a competitive solicitation process. The CPUC decision required SCE to file an advice letter outlining the criteria for selection of bids and containing a draft standard power purchase agreement (“PPA”).

SCE recently filed the requisite advice letter requesting approval of its proposed competitive solicitation process and criteria and a draft standard PPA. Anyone may file protests or responses to SCE’s advice letter. Protests are due on August 10, 2009. For more information, as well as a link to SCE’s draft standard PPA, go to the CPUC website.

CPUC Panel on Feed-in Tariffs:

The CPUC announced that it will host an interactive panel discussion on feed-in tariffs for renewable energy on August 27, 2009. The panel will feature international experts from Germany, Spain, the United States, and elsewhere with experience in the global solar power market. The panelists will offer their insights on the global solar market, the role of feed-in tariffs and other mechanisms for advancing renewable energy development, and California’s role in facilitating wholesale renewable distributed generation.

The panel will be held from 1-2:30 PM at the CPUC Auditorium, 505 Van Ness Ave., San Francisco, CA.

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From our colleague, Jerry Chiang:

The United States and China signed a memorandum of understanding (“MOU”) on July 28, 2009, detailing the partnership between the two countries on climate change, energy, and the environment. The MOU commits both countries to reaching a successful international agreement that will address climate and energy issues. It also provides for cooperation in confronting climate change and developing, promoting, and implementing energy efficiency, renewable energy, smart grid technologies, electric vehicles, and other energy technologies.

The United States and China will have ongoing conversations on what each nation is doing to reduce greenhouse gas emissions and to further international climate negotiations in preparation for the United Nations Climate Change Conference in Copenhagen this December.

Steven Chu, Secretary of Energy, remarked at the signing ceremony, “Both of our countries understand the importance of clean energy for our economies and for our security. Both of us understand the imperative of fighting climate change. What the U.S. and China do in the coming decades will help shape the fate of the world . . . . Today’s agreement should send a clear signal that the United States and China are ready to work together on clean energy and climate change.”

Read the complete remarks at the signing ceremony here: http://www.state.gov/secretary/rm/2009a/july/126575.htm. For a funding opportunity on the U.S.-China climate and energy partnership, go here: http://www.stoel.com/showalert.aspx?Show=5653.

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About a month ago we issued an alert regarding a $45 million funding opportunity announcement ("FOA") for the development of a wind turbine drivetrain testing facility (alert available here).

Today, the Department of Energy ("DOE") announced that they are hosting a webinar regarding this FOA.  The webinar will be held July 30, 2009 at 11:00 a.m. Eastern.  Through this webinar, DOE will provide a brief overview of the FOA and will participate in a question and answer period.  However, all questions must be submitted in advance (by July 27, 2009 at 2:00 p.m. Eastern) to windDynamometer@go.doe.gov

To attend this webinar, register in advance by clicking here.

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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.

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The Department of Energy (DOE) announced this week that up to $22 million from the Recovery Act would be allotted to up to 4 eligible communities nationwide in order to encourage utility-scale renewable energy systems that provide clean, reliable, and affordable energy supplies for their communities, while creating jobs and new economic development opportunities. The projects will demonstrate how multiple renewable energy technologies, including solar, wind, biomass, and geothermal systems, can be deployed at scale to supply clean energy to communities.  Eligible applicants are local and state governments, Indian Tribes and Tribal Energy Resource Development Organizations or Groups.

Successful applicants will be awarded financial assistance to support the implementation of an integrated renewable energy deployment plan for a community, and the construction of renewable energy systems.  DOE expects each project to also have substantial private sector investment in addition to the funds from DOE.  Completed applications are due September 3, 2009 and the DOE will select awardees by the end of November 2009.

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The recent blog posting (available here) regarding Exxon's $600 million investment in biofuels served as a reminder to me that comments are due soon (August 3, 2009) on the Department of Energy's draft  "National Algal Biofuels Technology Roadmap" (the "Roadmap").

The Roadmap was prepared by a working group commissioned by DOE.  The working group was commissioned to assess the current state of algae technology and to determine the next steps toward commercialization.  For more information, see my earlier blog.

To submit comments, complete the "Algal Road-Mapping: Request for Information (RFI) Response Form" and submit it as an attachment  to an e-mail message addressed to algaeRFI@go.doe.gov

Further, Gary Hunt has reported (available here) that Prize Capital, LLC has issued a $10 million algae fuel prize to encourage the development of advanced algal fuels.  For more information about this contest, click here.

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The American Recovery and Reinvestment Act of 2009 (ARRA), which was enacted in February, permits an applicant to receive a grant from Treasury in lieu of claiming investment tax credits (ITCs) or production tax credits (PTCs).

Today the U.S. Treasury Department issued much-anticipated guidance concerning applications to receive cash grants in lieu of claiming income tax credits for certain renewable energy projects. Although the guidance includes a sample application form, the U.S. Treasury has stated that it will not accept applications until August 1.

Read the full analysis on this guidance including grant details, eligibility and the application process at www.stoel.com. 

If you have questions about today's Treasury Department guidance and grants in lieu of ITCs or PTCs, contact:

Chris Heuer at ckheuer@stoel.com
Greg Jenner at gfjenner@stoel.com
Carl Lewis at cslewis@stoel.com
Kevin Pearson at ktpearson@stoel.com
Adam Kobos at  ackobos@stoel.com

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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). 

Continue Reading...

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  Today, the U.S. Department of the Treasury (the "Treasury") and the U.S. Department of Energy (the "DOE") announced an estimated $3 billion for the development of renewable energy projects around the country.  Funded through the American Recovery and Reinvestment Act ("ARRA"), the program will provide direct payments in lieu of tax credits in support of an estimated 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities.

  ARRA authorized the Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009.  A company can only apply for payment after the renewable energy property has been placed in service.  Previously these companies could file for a tax credit to cover a portion of the renewable energy project's costs; under the new program, applicants would agree to forgo tax credits down the line in favor of an immediate reimbursement of a portion of the property expense.  This direct payment program allows for an immediate stimulus in local economies.

  In recent years, the tax credit has been widely used.  As an example, in 2006, approximately $550 million in tax credits were provided to 450 businesses.  However, the rate of new renewable energy installations has fallen since the economic downturn, as projects have had a harder time obtaining financing.  The Treasury and DOE expect a fast acceleration of businesses applying for the announced energy funds in lieu of the tax credit.

  To expedite implementation of the program, the DOE and Treasury have made the terms, conditions, guidance, and sample application available at www.treas.gov/recovery/1603.shtml.  The Treasury and DOE are not accepting applications yet, but these available forms will allow companies to prepare applications and expedite the implementation of the program when the government is ready for submissions on August 1, 2009.  The DOE and Treasury have 60 days to process the application once submitted.

 

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The United States officially joined the International Renewable Energy Agency (“IRENA”) last week, increasing the number of countries participating in the organization to 136, including several African countries, the Middle East, Europe, Australia, Greenland, India, Japan, and parts of South America. The new agency will engage governments in making a rapid transition toward using renewable energy in their respective countries.

The United States is also expanding its international efforts north of the border. Last week, DOE hosted the first U.S.-Canada Clean Energy Dialogue Roundtable, with clean energy leaders from private industry and from the U.S. and Canadian governments present, to discuss how the two nations can work together to develop clean energy technologies and combat climate change. Specific areas for further bilateral cooperation under the Clean Energy Dialogue include renewable and energy efficiency technologies, carbon capture and sequestration, and smart grid technologies.

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The Prosperity Partnership, a coalition of over 300 government, business, labor and community organizations from King, Kitsap, Pierce, and Snohomish counties in the state of Washington, has developed a beginner’s guide to the Recovery Act entitled: “A Basic Introduction to Energy-Related ARRA Funding Opportunities.” The goal of the guide is to help local (i.e. Washington state)  entities identify and apply for ARRA funding opportunities, especially competitive grants or contracts. The focus of the guide is on energy-related funding opportunities, and contains useful information describing the process for submitting applications for federal and Washington state funds.

 

You can download the guide at http://prosperitypartnership.org/recovery/PP-ARRAGuide.ppt.

 

 

 

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Yesterday, the Department of Energy (“DOE”) announced more than $154 million in Recovery Act funding to four states for their State Energy Programs (“SEPs”). The funds were awarded to California, Missouri, New Hampshire, and North Carolina. The funding is to be provided in two stages to the four states with the second stage requiring successful performance at the first level. The funding is to be utilized in the areas of energy efficiency, workforce training, education and related programs.

Continue Reading...

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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. 

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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. 

 

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On June 11, 2009, the Department of Agriculture ("USDA") announced that thirty projects, located in fourteen states, would receive $57 million in Recovery Act funding.  Of these funds, $49 million will be for wood-to-energy grants and $8 million is for biomass utilization.

These funds will serve two important objectives.  First, the funds will promote the development of biofuels from wood and stimulate renewable energy infrastructure. Second, the projects will create a market for low value woody biomass that would otherwise constitute fuel for wildfires.

For information about specific projects, please call the United States Forest Service or go to http://fs.usda.gov

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The Department of Agriculture ("USDA") is now accepting proposals for its Small Business Innovation Research Program ("SBIR").  SBIR has $18.5 million available to fund research projects that address important problems facing American agriculture.  Research areas include, but are not limited to:

• Biofuels and biobased products;
• Air, water, and soils;
• Rural development;
• Aquaculture; and
• Animal Manure management

Individual awards can be as high as $90,000 and proposals are due September 3, 2009.  For more information click here.

Click here for more information on USDA funding opportunities.

 

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Numerous federal agencies are actively seeking services and materials related to solar power.  For example, the following opportunities are currently open:

• The Department of Defense is seeking a ten year photovoltaic (PV) solar power purchase agreement related to its Defense Distribution Depot in Tracy, California.  The total contract quantity is 12,200,000 kWh.  Responses are due July 28, 2009.
• Federal Prison Industries is seeking integrator and financing services for PV panel systems.  The work includes, but is not limited to, the design, construction, supplies, and financing for turnkey PV systems.  Responses are due July 6, 2009.
• The Fish and Wildlife Service is requesting proposals for the equipment, labor, and material necessary to install a grid tied 20KW nominal PV system at a site in Southwest Montana.  Responses are due July 10, 2009.
• The Western Montana Acquisition Zone is requesting proposals to generate power at a site in Missoula, Montana.  Responses are due July 1, 2009.

 

 

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The Western Governors' Association ("WGA") gathered in Park City, Utah for its annual meeting, which was held on June 14-16, 2009.   Attendees at the meeting included Governors Bill Ritter (Colo.); C.L. "Butch" Otter (Idaho); Brian Schweitzer (Mont.); Dave Heineman (Neb.); Bill Richardson (N.M.); Benigno Fitial, Northern Mariana Islands; Ted Kulongoski (Ore.); Mike Rounds (S.D.); Dave Freudenthal (Wyo.); and Jon Huntsman, Jr. and Lieutenant Governor Gary Herbert (Utah) , along with Canadian Premiers Ed Stelmach, Alberta; Gary Doer, Manitoba; and Brad Wall, Saskatchewan. 

The morning session on Monday, June 15, 2009, was kicked off with the unveiling of the Western Renewable Energy Zones-Phase 1 Report, which was a product of a joint initiative between the WGA and the U.S. Department of Energy (the "WREZ Initiative").  The intention of the WREZ Initiative is twofold:  (1) to identify Western Renewable Energy Zones in the Western Interconnection and (2) to facilitate the development of high voltage transmission to those areas with abundant high-quality renewable resources and low environmental impacts.  Governor Schweitzer provided an overview of the WREZ Phase I report, which included a summary of the process for obtaining feedback from a diverse group of stakeholders to provide the analysis and tools for constructing a plan to facilitate the construction of new, utility scale renewable energy facilities and any needed transmission to deliver that energy across the Western Interconnection.  The WREZ Initiative has developed a modeling tool for evaluating the relative economic attractiveness of costs of delivered renewable energy, including transmission costs, from specific renewable resource areas delivered to specific load centers. 

Continue Reading...

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The Western Governors' Association ("WGA") will hold its annual meeting in Park City, Utah on June 14-16, 2009.  Based on a review of the Agenda posted to the WGA's website, the focus of the meeting will be on developing regional and global strategies for addressing important issues related to energy resources, climate change and water.  I will be attending the annual meeting this year and reporting on the outcome of discussions on the following topics:

On June 14, 2009, there will be a panel discussion on policies and technologies to address water use in an era of declining water supplies due to climate change.  Panelists include:  Dr. Peter H. Gleick, co-founder and president of the Pacific Institute; Professor Eilon Adar, Zuckerberg Institute for Water Resources, Ben-Gurion University of the Negev; Doug Miell, Principal, Miell Consulting; Cameron J. Brooks, Ph.D., Director of Solutions and Business Development for IBM Corporation's Big Green Innovations initiative.

On June 15, 2009, Secretary of Agriculture Tom Vilsack, Secretary of the Interior Ken Salazar, Secretary of Energy Steven Chu and FERC Chairman Jon Wellinghoff will provide their perspectives on developing large amounts of clean energy in the West and the transmission lines needed to bring it to market.  Following their remarks, they and the Governors will have the opportunity to discuss what cooperation is needed between states and the federal government to accelerate progress.  An outline of discussion points that might be expected from the Governors during this session could include topics addressed in the letter dated May 1, 2009 from the WGA to the Senate Energy & Natural Resources Committee.

Continue Reading...

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Late last week, the Federal Energy Regulatory Commission (“FERC”) and the State of Washington signed a Memorandum of Understanding (“MOU”) to coordinate their review of hydrokinetic energy projects in Washington state waters.  The MOU is intended to  reduce some of the regulatory barriers associated with siting and permitting such projects, while also ensuring that projects are undertaken in an environmentally and culturally sensitive manner. 

As described in the MOU, FERC and Washington have pledged to collaborate in the following ways:  (1) notifying each other of potential applicants for a preliminary permit, pilot project license, or license; (2) agreeing upon a schedule for processing license applications that will include milestones and encourage collaboration among various stakeholders; (3) coordinating the environmental reviews of projects proposed in Washington state waters and consulting with stakeholders on the design of applicable studies; and (4) agreeing that if Washington prepares a comprehensive plan with respect to the siting of hydrokinetic projects, in determining whether to approve a project license, FERC will consider whether the project is consistent with the state plan.  Notably, the MOU recognizes that Washington may submit an amendment to its coastal zone management plan to the National Oceanic and Atmospheric Administration (“NOAA”) for approval, and that such a plan may identify a limited number of areas within Washington state waters where hydrokinetic projects may be initially located.  Whether NOAA would approve such a plan is unclear. 

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In an earlier blog, my colleague, Debra Frimerman reported about the Rural Energy for America Program (REAP).  REAP provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems.

REAP is a program under the Food, Conservation, and Energy Act of 2008 (the "2008 Farm Bill").  The 2008 Farm Bill also includes numerous other programs to help develop renewable energy in rural areas and promote the production of sustainable feedstocks for renewable energy production.  Please see this recent alert for specifics.

 

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Minnesota politicians held a news conference yesterday on the state capitol mall to provide an overview of recent legislation relating to solar energy projects. Minnesota has allocated $14.5 million in stimulus money for renewable energy projects, with a portion flagged for solar projects to encourage the installation and use of solar-powered systems. Another piece of legislation gives utilities the opportunity to double their commitments to solar energy projects under the Conservation Improvement Program currently in place. Representatives from Xcel Energy Inc. (Xcel), which serves more than 1.2 million customers in Minnesota, announced yesterday that they filed a $280 million plan with regulators to offer incentives for Minnesota customers to conserve energy, which could include installation of solar panels on homes and businesses.  Under Xcel’s proposed “Solar Rewards Program,” Xcel would provide rebates to customers who install solar photovoltaic systems of up to 40 kilowatts on their premises.

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Governor Bill Richardson and the New Mexico Office of Recovery and Reinvestment have announced $37 million US funding from the U.S. DOE through the American Recovery and Reinvestment Act for New Mexico's State Energy Program, the Energy Efficiency and Conservation Block Grant Program, and the Energy Efficient Appliance Rebate Program. 

The initial Request for Application (RFA) solicits applications for demonstration projects that will generate renewable energy, reduce reliance on imported energy, increase energy efficiency, and improve electricity and fuel supply reliability. These projects may include use of renewable energy and clean-burning transportation fuels.

For the State Energy Program funding under this RFA, only public entities including schools (K-12), local governments, state agencies, colleges and universities, Indian tribes and pueblos are eligible to apply and compete, although they may subcontract all or part of the work required for their projects. Under the Energy Efficiency and Conservation Block Grant Program, only municipalities and counties are eligible to compete for funding. Grants will range from $50,000 to $500,000. The deadline for applications is June 26, 2009, with a webinar to help guide potential applicants through the application process hosted by the Energy Conservation and Management Division on Monday, June 1, 2009.

Additional public and private sector funding opportunities will be available through RFAs and Requests for Proposals that will be issued later this summer.

 

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The USDA announced today that it is accepting applications under the Rural Energy for America Program (“REAP”).  REAP provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems.

REAP funds are available in the following amounts:

• Grants for energy efficiency projects are available for up to the lesser of $250,000 or 25% of the project costs.
• Grants for renewable energy systems are available for up to the lesser of $500,000 or 25% of the project costs.
• Grants for feasibility studies for renewable energy systems are available for up to the lesser of $50,000 or 50% of the costs of the study.
• Loan guarantees are available for up to the lesser of $25 million or 75% of the project costs. 

Applicants must be agricultural producers or rural small businesses.  Agricultural producers are farmers or ranchers that obtain more than half of their gross income from agricultural operations.  Small rural businesses are small businesses, as determined in accordance with the Small Business Administration's small business size standards, located in rural areas.  Applications are due July 31, 2009.

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My colleagues Michael O'Connell and Stephen Kelly, both of whom have a great deal of experience representing clients engaged in energy and natural resources transactions with Indian tribes, are putting on a webinar entitled "Doing Business with Indian Tribes." Since the best private lands are often already spoken for, renewable energy developers are looking more and more at developing projects on public lands and Tribal lands. The Webinar that Mike and Steve are presenting will discuss doing business with tribes generally, but their presentation will be relevant to those seeking to develop renewable energy projects in partnership with Indian tribes or on tribal lands.

Details are as follows: 

Please join Stoel Rives attorneys Michael O’Connell and Stephen Kelly for a webinar on Doing Business with Indian Tribes on Wednesday, June 10, 2009. They will conduct a lively, interactive program that will cover:

There are over 550 federally recognized Indian tribes. Indian tribes engage in a broad range of business transactions governed by a complex array of federal, tribal and state laws. Stoel Rives is pleased to offer a webinar that will offer you tools to recognize the unique legal status of Indian tribes and how it affects business transactions with Indian tribes.

• Tribes and tribal business structures
• Contracting, sovereign immunity, and dispute resolution
• Leases, easements, and other agreements for use of tribal land
• Tribal and federal environmental reviews and approvals
• Taxation issues

When:	Wednesday, June 10, 2009 11:30 - 11:45 a.m. PST - Registration and Lunch 11:45 a.m. - 1:30 p.m. PST - Presentation
Cost:	Complimentary (lunch included)
Where:	Stoel Rives LLP 900 SW Fifth Avenue, Suite 2600 Portland, OR 97204 Or at your computer. Information on how to access the webinar will be provide to those who register.
Parking:	We will validate parking for most nearby parking garages.
RSVP:	Space is limited! Register online by Monday, June 8.

 

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Last week DOE released a new funding opportunity announcement for up to $480 million for pilot-scale and demonstration-scale integrated biorefinery projects. An integrated biorefinery uses an “acceptable feedstock” to produce a biofuel or bioproduct as the “primary product.” Acceptable feedstocks include:

• Algae
• Certain woody biomass
• Renewable plant materials so long as it is not generally intended for use as food
• Crop reside (cobs, stover, etc.)
• Yard and food waste
• Certain post-sorted MSW

The projects must be either pilot-scale (processing at least one dry tonne of feedstock per day) or demonstration-scale (processing at least 50 dry tonnes of feedstock per day).

The maximum award for a pilot-scale project is $25 million and the maximum award for a demonstration-scale project is $50 million. Generally, the cost share requirements from non-Federal sources are 20% for pilot-scale projects and 50% for demonstration-scale projects. 

Applications are due June 30, 2009. Although not required, DOE suggests all prospective applicants submit a notice of intent to apply, which can be submitted through May 29, 2009.

Visit www.grants.gov or www.fedconnect.net for more information on this opportunity.

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On, May 5, 2009, President Obama announced federal efforts to increase investment and use of advanced biofuels. The President signed a Presidential Directive establishing the Biofuels Interagency Working Group, ordering the Department of Agriculture (“USDA”) to implement financing opportunities from the Food Conservation and Energy Act of 2008 (“FCEA”), and announcing additional Recovery Act funds for renewable fuel projects.

The Biofuels Interagency Working Group will be co-chaired by the Secretaries of Agriculture and Energy and the Administrator of the Environmental Protection Agency. The Biofuels Interagency Working Group will coordinate existing policies and identify new policies to support the development of sustainable next-generation biofuels production. 

President Obama has directed the USDA to immediately begin restructuring existing renewable fuels investments in order to preserve industry employment and develop a comprehensive approach to accelerate the production of American biofuels. Further, the USDA has 30 days to begin deployment of renewable energy financing opportunities from the FCEA. Financing opportunities under the FCEA include loan guarantees and grants for research, development, construction and retrofitting of demonstration and commercial scale biorefineries. 

President Obama also announced that $786.5 million from the American Recovery and Reinvestment Act (for more information on the American Recovery and Reinvestment Act please see Show Me the Money: The Law of the Stimulus) will be used to expand commercial biorefineries and jumpstart advanced biofuels research and development. The money will be divided as follows:

• $480 million for integrated pilot and demonstration scale biorefinery projects
• $176.5 million for commercial-scale biorefinery projects
• $110 million for fundamental research
• $20 million for ethanol research

 

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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.

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Legislators recently adopted legislation aimed at helping Utah stay competitive with surrounding states in the fast growing national clean energy movement.  Five (5) bills dealing with renewable energy and energy efficiency passed with strong bi-partisan support.  Three (3) resolutions, while non-binding, send strong messages to local governments and utilities that the legislature encourages, and wants to remove barriers to, renewable energy and energy efficiency across all sectors. The success of the 2009 legislative session indicate that renewable energy will play critical roles in Utah’s future.

House Bill 430 - Economic Development Incentives for Alternative Energy Projects, is designed to attract new clean energy industries and projects to Utah.  The bill allows the Governor’s Office of Economic Development (GOED) to establish energy development zones and offer tax credits to companies and projects located in those zones. 

Senate Bill 76 SO3- Energy Amendments, address the barriers to renewable energy transmission by creating a political subdivision of the State tasked with the development of a master plan for renewable energy production and transmission infrastructure.  This subdivision will have the ability to apply for and seek out federal grants, as well as bonding authority to pay for transmission lines for renewable energy.

Senate Joint Resolution 1 S02 Renewable Energy System, urges the Utah State Energy Program and municipal governments to collaborate on the development of model renewable energy ordinances to streamline the development process at the local government level. 

Senate Joint Resolution 10 - Alternative Training Center, recognizes the need to train the growing clean energy workforce in Utah.  The bill supports the establishment of an Alternative Energy Training Center in Beaver County, an area with high concentration of existing, upcoming and potential renewable energy development.

House Joint Resolution 9 - Effective Energy Efficiency and Utility Demand Side Management,  recognizes energy efficiency as a priority resource and urges state and local governments and utilities to promote and encourage all available cost-effective energy efficiency and conservation, setting voluntary energy savings goals for Rocky Mountain Power and Questar Gas and expresses support for regulatory mechanisms that remove disincentives to utility energy efficiency and conservation. 

 

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Washington State's legislature has passed a bill expanding the Energy Freedom Program and the uses to which the Energy Freedom Account can be put.  Previously, funds from the Energy Freedom Account could be applied to biofuels projects only, and appropriations from the Energy Freedom Account to a separate account - the Green Energy Incentive Account - could be used solely to develop alternative fuels fueling stations and related projects.  The bill extends the Program to clean energy projects, energy efficiency and energy technologies and establishes a Energy Recovery Account as another means of funding innovative renewable energy projects through loans or grants.  A more detailed Client Alert will be issued once Governor Gregoire signs the bill.

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Among all the interesting presentations at this month's AWEA transmission and wind workshop, American Superconductor's presentation about developments with superconducting transmission lines was particularly noteworthy.  Superconducting direct current lines offer greater efficiency, as well as siting and aesthetics benefits, but have historically fallen victim to much higher costs when compared to traditional overhead transmission lines.  However, with talks of extra-high voltage "green superhighways" transmitting renewable energy from the nation's interior to load zones, it appears from American Superconductor that the costs of a 5 GW, 200 kV superconductor line are nearly equivalent to 765 kV overhead lines when built on a 1,000 mile scale.  Perhaps we will see a superconducting pipeline instead of an extra-high voltage overlay.

For more information about the viability of superconducting transmission lines, look for American Superconductor's White Paper in the near future.  

 

 

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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.
   
 

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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.

 

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From our colleague Jason Johns:

The Federal Energy Regulatory Commission will host a technical conference on March 2 to discuss the challenges of integrating large amounts of variable generation into wholesale markets and the grid. The Commission is also asking for innovative proposals that will help accomplish such large integration. Notably, the conference could hardly occur at a more appropriate time, as wind installation grew by 8,358 MW in the US in 2008 (more than gas-fired capacity) and certain regions of the country are hotly debating the costs of putting wind on the grid. Conference panelists will include Don Furman (Iberdrola Renewables), Brian Parsons and Brendan Kirby (National Renewable Energy Laboratory), Bob Kahn (Northwest & Intermountain Power Producers Coalition) and Steve Oliver (Bonneville Power Administration, which put its first wind integration charge in place in 2008).

The technical conference is available by free webcast.

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From a bootleg copy of the tax provisions in the stimulus bill:

The grant in lieu of tax credits is in the bill. However, it is now Treasury rather than DOE that will issue the checks. The provision has also been changed to allow the grants to be issued even though the property is not placed in service before 2011, so long as the credit is still in effect and construction began before 2011.

In addition, the bill also includes:

1. the placed in service date for the PTC is extended three years,
2. taxpayers can elect the ITC (30%) in lieu of the PTC, beginning in 2009 through 2013 (2012 in the case of wind),
3. the allocation for CREB bonds is increased by $1.6B,
4. the allocation for qualified energy conservation bonds is increased by $2.4 B,
5. Bonus depreciation and small business expensing extended through 2009,
6. 5-year NOL carryback allowed but only for small businesses,
7. A 30% investment credit for investment in qualified advanced energy projects,
 

Stoel Rives will be issuing an alert describing the provisions in detail in the near future.  If you are not already a subscriber, please click on the "Subscribe" button to sign up.
 

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The staff of the US Senate Energy Committee, chaired by Jeff Bingaman (D- New Mexico) has just released the draft of a proposed renewable portfolio standard.  The draft RPS would require that, by 2020, at least 20% of the electricity sold to retail consumers be obtained from renewable sources, such as wind, solar, geothermal and biomass.  The Committee has also announced that it will hold a hearing on Tuesday, February 10, to take testimony on the draft RPS.

In addition, Rep. Ed Markey, chair of the House Select Committee on Energy Independence and Global Warming, has introduced his own bill that would impose an RPS of 25% by 2025.

Stoel Rives will be issuing an email alert with more details about the proposals.  If you are not already receiving our email alerts, please click on "Subscribe" to ensure that you do.

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On Friday, January 23, the Chairman of the Senate Finance Committee released his version of the economic stimulus bill.  Like its House counterpart (H.R. 598), the proposal by Chairman Max Baucus ("Chairman’s Mark") is called the American Recovery and Reinvestment Tax Act of 2009.  The Chairman’s Mark is scheduled to be considered in the Finance Committee on Tuesday, January 27.

As with H.R. 598, the Chairman's Mark would extend the production tax credit ("PTC") sunset date, permit taxpayers to elect to claim the investment tax credit ("ITC") in lieu of the PTC for certain projects, and extend bonus depreciation through 2009.  Importantly, however, the Chairman’s Mark does not include the provision in the House bill that would enable taxpayers to receive cash grants in lieu of the ITC for certain projects.  Without this grant provision, questions have been raised as to whether the Chairman's proposal would accomplish the legislative purpose of promoting investment in renewable energy development.  Other provisions of note in the Chairman's Mark are modifications to the general business credit and a new 30% credit for investment in certain property used in a "qualified advanced energy manufacturing project."

Click here for a detailed summary of the Chairman's Mark.  To view our recent Energy Law Alert on the House bill, click here.

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Oregon Governor Ted Kulongoski continues to take aggressive action in the green business realm. Having made renewable energy one of his budget priorities, Gov. Kulongoski filed nine bills under the climate change umbrella to be considered in the 2009 legislative session. According to Gov. Kulongoski, the bills will “build on our leadership in renewable energy that will create jobs and reduce greenhouse gas emissions.”

Continue Reading...

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