The Price of Developing Power Projects in Kern County Just Went UP

The East Kern Wind Resource Area (EKWRA)--it's a mouthful--and it's also a hotbed for renewable energy development and the location of a fight over millions of dollars among Southern California Edison (SCE), the California ISO, and independent power developers (IPPs).  Late last week, the Federal Energy Regulatory Commission (FERC) scored that fight in favor of SCE and the California ISO.

For the past few years, SCE has been working to reconfigure the transmission system in the EKWRA region in order to address a reliability issue occurring there.  But the reconfiguration would have another impact--it would modify the transmission system in the area so that it became a distribution system under SCE, rather than CAISO, control.  To IPPs, that modification came with significant cost consequences:  in the interconnection process, IPPs funding network upgrades on the transmission system receive a full reimbursement for the cost of those upgrades; distribution upgrades, on the other hand, result in no reimbursement.  For IPPs who had assumed they would be reimbursed the network upgrade costs that appeared in their interconnection agreements (which often cost a single project millions of dollars), it came as something of a surprise when they learned that the reconfiguration might cause their reimbursements to dry up.

And so the IPPs challenged SCE and the California ISO.  In its decision, FERC determined that the reconfigured EKWRA facilities are distribution, or non-integrated facilities, and that the California ISO correctly transferred control over the facilities to SCE's tariff.  As a result, no further reimbursements to the IPPs will occur.  "Despite being informed of the possibility of reclassification, [the IPPs] made a business decision to proceed with interconnection."  For some IPPs, this could have a very costly impact.  

You can read the entire order here:  EKWRA Order.

California's Utilities Must Lower Barriers to Energy Storage Systems

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

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

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

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

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

Ameren Should LOSE the Latest Battle Over Option 1 Network Upgrade Funding in the Midcontinent ISO Region

Ameren is at it yet again--perpetuating a method for funding generator interconnection network upgrades in MISO that the Federal Energy Regulatory Commission (FERC) found to be unjust, unreasonable, and discriminatory over three years ago.  Ameren has already won two cases that allowed it to continue using Option 1 funding for certain interconnection customers.  But Ameren should lose this one.  Here's why:

A Brief History.  Prior to March 22, 2011, the MISO tariff provided three methods for funding interconnection network upgrades.  Option 1 required an interconnection customer to upfront fund the cost of network upgrades (post security and pay monthly construction costs); when those upgrades became commercially operational, the transmission owner would reimburse the full amount paid by the customer and then establish a transmission rate to charge the customer for using the upgrade on an ongoing basis.  Option 2 funding also required the customer to pay upfront construction costs, but then the customer was reimbursed a portion of those costs following commercial operation.  Option 2 did not include an ongoing rate.  As a result, over time Option 1 funding could result in multiples of the actual cost that a customer might pay under Option 2.  (The third option--"self-fund"--allowed a transmission owner to pay upfront costs itself and then charge a usage rate.)

On March 22, 2011, FERC responded to a complaint about Option 1 funding by independent power producers, determining that the method was "unjust, unreasonable, and discriminatory."  FERC ordered MISO to remove Option 1 funding from its tariff.  That order is found here:  E.ON Climate & Renewables.

However, in the past couple of years, Ameren has successfully won the right to continue using Option 1 funding in interconnection agreements that were signed prior to FERC's decision in E.ON.  After FERC issued its decision in E.ON, certain customers attempted to obtain the benefit of that decision by having FERC alter their agreements where they had agreed to Option 1 funding.  But FERC denied the attempts, primarily on the basis that those prior agreements expressly provided for Option 1 funding and that it would not be in the public interest to unilaterally modify the contracts.  In other words, those customers who sought to benefit from the E.ON decision had express notice that Option 1 funding would apply and they failed to raise a timely dispute; FERC would not reset the contracts they had agreed to.  Those decisions are available here:  Rail Splitter (agreed to Option 1 funding by signing a Facilities Service Agreement) and Hoopeston (agreed to Option 1 funding in its interconnection agreement).

Now we come to the current dispute over Option 1 funding.  This docket focuses on an interconnection agreement that Ameren signed with White Oak Energy in 2007.  At that time, Option 1 funding existed under the MISO tariff, but White Oak's interconnection agreement said nothing expressly about Option 1 funding.  In addition, Ameren was not required to select the funding method until the network upgrades reached commercial operation.  At the time of signing its interconnection agreement, if White Oak had disputed the potential application of Option 1, FERC would have likely dismissed the dispute for being unripe.  It wasn't a real issue yet.  

Fast forward four years.  Ameren completed construction of White Oak's network upgrades in 2011 and notified White Oak at that time that Option 1 would apply.  White Oak disagreed repeatedly, leaving Ameren forced to file White Oak's Facilities Service Agreement unexecuted with FERC.  Under the proposed funding method, White Oak's network upgrades (actual cost $2,399,128) will cost $8,292,180 over 20 years under the ongoing rate.  You can see Ameren's application to FERC here:  White Oak FSA Application.

So why should White Oak receive a different result than the customers in Rail Splitter and Hoopeston?  White Oak should be treated differently because, until now, it had no prior opportunity to complain to FERC about this method for funding network upgrades that we know to be discriminatory.  Unlike the customers in Rail Splitter and Hoopeston, who waived their opportunity to complain and consequently needed FERC to undo contracts they'd agreed to, White Oak has never agreed to Option 1 funding--there is no contract to undo  As a result, White Oak should now be afforded the chance to argue against Option 1 funding on the merits (see E.ON), rather than being hung up by procedural technicalities and the Mobile-Sierra doctrine.

If FERC were to rule in White Oak's favor, then the decision would help to restrict the application of this discriminatory method of funding network upgrades to a limited group of interconnection customers (i.e., those who expressly agreed to Option 1 in a contract) and to insulate those who are just now receiving notice of Option 1 funding from the absurd results that accompany it.  But we'll need to wait and see if those at FERC who call balls and strikes see it the same way.   

 

 

Negotiating a Liquidated Damages Clause in Texas? Get Out Your Crystal Ball.

"Don't mess with Texas."  Apparently the slogan even applies to liquidated damages clauses.

This morning, the Supreme Court of Texas issued a decision in a drawn-out fight between wind developer FPL Energy and the power marketer TXU Portfolio Management.   The dispute originates from power purchase agreements (PPAs) in which FPL failed to deliver enough electricity and renewable energy credits (RECs) to cover its performance guaranty over a period of four years, in large part because of congestion and resulting curtailment orders by ERCOT.  TXU initially brought suit for the shortfall, and FPL countered by claiming that the shortfalls were due to curtailments by ERCOT, and that TXU caused those curtailments to occur by failing to ensure that transmission capacity would be available away from the project delivery point. In any event, FPL argued that the liquidated damages for the shortfall amounted to an unenforceable penalty.

At the time of negotiating the PPAs, TXU and FPL agreed by contract that a shortfall in RECs would trigger liquidated damages in the amount of $50 per REC.  There was no market for RECs at the time, and so the parties had settled on this damages amount by using the $50 per REC penalty that the Public Utility Commission of Texas could impose on utilities for not acquiring enough RECs.  (The parties also agreed to an alternative price of twice the market value of RECs as determined by the Public Utilities Commission of Texas, if any such determination occurred.)

But today the Supreme Court of Texas ruled that the parties' agreed-upon liquidated damages provision amounts to an unenforceable penalty.  Although the clause may have been a reasonable estimate of TXU's damages at the time of negotiation--particularly given that the clause mirrored the regulatory penalty for REC shortfalls--the provision failed to reflect actual damages at the time it was applied.  The parties' powers of divination had failed them!

In the court's words:  "When the liquidated damages provisions operate with no rational relationship to actual damages, thus rendering the provisions unreasonable in light of actual damages, they are unenforceable."  In other words, it does not matter that the liquidated provision in the PPA was a reasonable estimate of damages at the time it was negotiated.  Instead, what matters is whether the liquidated damages provision at the time it is applied reflects actual damages.  As a result, a provision that was once reasonable became invalidated when market values later created a significant difference between the past estimate and actual damages.

To put this in a broader context, not all states approach a liquidated damages provision in this way. In its decision, the Supreme Court of Texas applied the "second-look" doctrine to the liquidated damages clause (despite seemingly starting toward a different doctrine), meaning that the court considered whether the liquidated damages provision was reasonable at the time it was negotiated, and also whether it is reasonable at the time it is applied.  A "one-look" state considers only whether a liquidated damages clause was reasonable at the time it was negotiated.  If FPL and TXU had chosen in the PPA to apply the laws of a "one-look" state, then the result may have had many differences--tens of millions of differences.  

As to how FPL wound up in the shortfall position to begin with, FPL argued that TXU had failed in its contractual duty to provide transmission capacity to deliver electricity away from the delivery point.  That failure resulted in higher than expected congestion and resulting curtailment orders from ERCOT.  TXU countered that its transmission service obligations were limited to transmission for “Net Energy” - i.e. energy that was first delivered to the Delivery Point.  The court agreed with TXU, holding that TXU’s transmission obligations arose only when the FPL-generated electricity actually reached the Delivery Point.  The court reached this holding notwithstanding its recognition of FPL’s argument that transmission congestion and ERCOT's related curtailment orders had prevented electricity from reaching the delivery point in the first place.  

You may read the court's opinion here:  TXU v. FPL.

Co-Authored by Jennifer Martin and Jason Johns.

DOD Should Consider Adding Fast-Ramping Generation to its Procurement Planning

Intermittent resources create unique challenges for 21st Century Utilities, RTO's and System Operators. The now infamous "Duck Chart" highlights a key element of the problem -- central station thermal plants cannot ramp efficiently, leading to "worst of all" scenarios where the benefits of renewables are not fully utilized and central station plants operate inefficiently for extended periods.

By contrast, fast-ramping distributed generation creates a path to the opposite result. With fast-ramping support, central station plants remain at an efficient "steady state" while intermittent renewables operate at maximum output, providing emission-free generation with no variable fuel costs. These efficiencies result in substantial and quantifiable economic benefits.

The U.S. Defense Department (DOD) seeks to procure renewable energy at or below market prices, and is not considering fast ramping generation in its current procurement plans. Because there is no economic incentive for DOD to invest in such resources, and because markets for fast-ramping generation and ancillary services are largely non-existent, the current policy framework lacks a vehicle for attracting investment in fast-ramping distributed energy and related technologies. 

Manufacturers of fast-ramping generation equipment are studying issues relating to intermittent energy resources. Among other initiatives, they have developed economic models that demonstrate system-wide efficiencies produced by fast-ramping technologies. The models have been vetted by credible public and private sector organizations and found to be both accurate and insightful. 

With their policy expertise and purchasing power, the Department of Energy and DOD can play a role in developing policies and markets that allow such technologies to take hold and proliferate.  

Wisconsin Legislature Debates Increased Renewable Portfolio Standard

Democratic legislators in Wisconsin plan to unveil a plan this week that would require investor-owned utilities, municipal utilities, and rural electric cooperatives (“electric providers”) to increase their renewable electricity portfolios to 30% by 2030. Wisconsin’s current renewable portfolio mandates that electric providers obtain 10% of their retails sales from electricity generated from renewable resources by 2015.

In addition to the increased mandate, the bill would create for the first time a requirement that electric providers secure a certain amount of power from waste-to-energy digester projects. Meanwhile, an alternative proposal introduced by Republican legislators would allow nuclear power to qualify as an eligible renewable technology.

While the Democratic bill faces an uphill battle to become law, many commentators predict Wisconsin will eventually need to act on this issue as a result of the U.S. Environmental Protection Agency’s plans to regulate greenhouse gas emissions from coal-fired power plants.

Qualifying Facility Conversions - It's What All the Kids Are Talking About

Converting a qualifying facility's legacy PURPA interconnection agreement to a FERC-jurisdictional agreement can be an effective way to bypass the numbing headache that often accompanies taking a new power generation project through the interconnection queue.  One may even be able to throw in a repower and, voila!, you have a refreshed facility that can operate for decades more in broader bilateral power markets without having years of interconnection delay.  

But there are ins-and-outs to these conversions, and today FERC addressed the question of whether a qualifying facility owner may necessarily convert the capacity that's stated in its PURPA interconnection agreement.  For qualifying facility owners--it isn't the answer you wanted.  

See FERC's order by following this link:  CalWind Order.

DEADLINE For Generators on Bonneville Power's System

 For those companies owning generation on the Bonneville Power Administration system, mark your calendars for March 15, 2014.  That's the day by which you must submit your facility displacement costs for Bonneville's implementation of its Oversupply Management Protocol (aka Environmental Redispatch) that provides compensation for certain generator curtailments.  The failure to submit facility displacement costs will result in a displacement cost of $0.00 per MWh.  

So begin registering your facility with Bonneville now at https://oversupply.accionpower.com so that you are prepared for when Bonneville begins accepting displacement cost information on February 28.  

 

Raising the Bar For Interconnection In the Southwest Power Pool

Like other Independent System Operators have done before it, the Southwest Power Pool (SPP) is back at the drawing board in an effort to further refine its generator interconnection procedures and improve on queue reforms initially put in place in 2009.  And also like other ISOs that have continued to tinker with queue reform, SPP is looking to make the interconnection process more demanding so that only the "viable" projects get through.  

Among the various proposed changes, there are a few that generation developers should key in on.  

  • SPP proposes to allow later-queued customers pass by higher-queued customers in terms of queue priority, provided that the later-queued customer is the first to reach the Facilities Study phase.  Previously, customers who reached the DISIS queue could not lose their queue priority and be passed by.  But now priority goes to customers who reach the Facilities Study first.  This change, of course, will impact customers' cost responsibilities, as priority to unused transmission capacity will be subject to the race to the top.
  • To enter the Facilities Study phase (and lock in queue priority), customers must complete a financial milestone by providing security equal to $3,000 per megawatt of the generator size.  SPP has proposed removing other choices that customers previously used for entering this phase of the study process.  But watch out--customers who later withdraw from the queue may forfeit this deposit.
  • Prior to signing an interconnection agreement, an interconnection customer may extend its commercial operation date by no more than three years.  Anything longer will be considered a material modification and will result in a loss of queue position.
  • Under proposed revisions to the interconnection agreement, a customer would have three years following its designated Commercial Operation Date to complete its generating facility.  A customer who fails to do so will have its interconnection agreement terminated.  In addition, customers who fail to bring their full generation capacity online within that timeframe will lose rights to any capacity that remains unused at the three-year mark.  
  • Lastly, customers who sign an interconnection agreement must post 20% of the costs of their network upgrades within 30 days of execution.  This deposit may be non-refundable under certain circumstances.

Given the queue reforms that FERC has accepted in other regions, it's likely that much of what SPP has proposed will make it into the tariff. 

SPP has asked that these latest reforms be made effective March 1, 2014, and applicable to any customer who does not have an interconnection agreement with an earlier effective date.  For those customers currently negotiating an interconnection agreement:  the race is on.

California Public Utilities Commission Sets Agenda to Consider RPS Expansion

Assembly Bill (AB) 327 took effect in California at the first of the year, giving the California Public Utilities Commission (CPUC) authority to expand the State’s 33% Renewable Portfolio Standard (RPS). This week, the CPUC extended its RPS proceeding to determine, before February 2015, how to implement the new law. AB 327 provides that the CPUC may require the State’s investor-owned utilities to procure renewable energy in excess of 33%, but the law does not mandate an expansion of the RPS. As the utilities have almost filled their procurement needs to meet the 33% requirement, the market for utility-scale renewable projects in California will likely continue to shrink without an expanded RPS. The CPUC’s ruling left the scheduling of the work to implement AB 327 to the assigned ALJs and Commissioner. We will be alert for opportunities to participate in the CPUC’s further proceedings to implement AB 327. In the short term, there is an opportunity to comment on the CPUC’s consideration of the Renewable Auction Mechanism (RAM) program. Any comments are due January 30th. The fifth, and presently last-scheduled, RAM auction is to occur no later than June 2014. Expect a Proposed Decision from the CPUC on the fate of the RAM in 2Q 2014.

FERC Performs an About-Face in Idaho

With the holidays behind us and the cheer and reverie of the New Year trailing off, wind developers in Idaho may be realizing that the Federal Energy Regulatory Commission (FERC) left a lump of coal in their stockings on Christmas Eve.  On December 24, FERC agreed to dismiss an historic legal action that it had taken to enforce the Public Utility Regulatory Policies Act of 1978 (PURPA) against the Idaho Public Utilities Commission (IPUC) on behalf of Qualifying Facility (QF) wind developers who have been beaten up by numerous decisions coming out of the state agency over the past several years.  FERC had never before sought to enforce PURPA against a state agency, but the IPUC apparently found FERC’s tipping point. 

In exchange for its agreement to dismiss this first-of-its-kind action, FERC extracted a simple acknowledgement of questionable value from the IPUC:  “The Idaho PUC acknowledges that a legally enforceable obligation may be incurred prior to the formal memorialization of a contract to writing.”  And that is as far as their substantive agreement goes.  In other words, the IPUC acknowledges that a hypothetical situation may occur, without agreeing to the all-important question of when that situation does occur.  The agreement signals an apparent policy change at FERC, and it also leaves QF wind developers on their own, once again, to enforce PURPA in protracted litigation in federal court, i.e., without a viable option.  

For those keeping score, there was none in this dispute:  FERC threw in the towel before the first bell.  

SDG&E Issues Renewables RFO

On December 16, 2013, San Diego Gas & Electric Company (SDG&E) issued its 2013 Request for Offers ("RFO") seeking Eligible Renewable Resources. This solicitation will facilitate SDG&E’s compliance with California’s Renewables Portfolio Standard (“RPS”).

The solicitation seeks Eligible Renewable Resources from all types of renewable technologies providing both Renewable Energy Credits (“RECs”) and Energy (“Bundled Products”), and REC-only products. SDG&E is soliciting Category 1 and 2 products for a term of 15 years or less and with contractual deliveries beginning in 2020. The Commercial Operation Dates of these facilities may be as early as 2016 or as late as 2021. SDG&E is also soliciting Category 3 products generated in 2018 at the earliest, with a preference for those generated in 2020 and 2021.

SDG&E encourages respondents to carefully review submission documents and provide sufficient details in all required bid forms. One pre-bid conference will be held via webinar on January 15, 2014 from 9:30am-12pm PST. Webinar information will be posted on the RFO website once it is finalized. Any party interested in attending the webinar should register on the PowerAdvocate® site and must send the company name, attendees’ names, titles and contact information to renewablerfo@semprautilities.com. Please limit your participation to two representatives per organization.

Offers in response to the RFO are due January 29, 2014 via the PowerAdvocate® online platform. In order to submit a bid, applicants must register at www.poweradvocate.com. Please monitor the RFO website and PowerAdvocate® online platform for subsequent updates, notices and announcements.

Important RFO Dates

• Bidder’s Conference: January 15th
• RFO Closing Date: January 29th (bids are due by 12 NOON PST on January 29th)
• Shortlisted Respondents Notified: March 10th


For additional information and to download the required documents visit: http://www.sdge.com/renewable-portfolio-standard-rfo-december-2013

Questions/comments can be submitted to: renewablerfo@semprautilities.com
 

Roger Stark Moderates Army EITF Webinar re MATOC Renewable Energy Services Agreement

On November 20, I will be moderating a webinar to preview the roll-out of the U.S. Army's latest Renewable Energy Services Agreement (RESA).

The RESA is key to implementing the Army's commitment to purchase up to $7 billion in renewable energy.  As reported on this blog, the Army has selected several companies to bid for the multi-award task order contract (“MATOC”). To implement these awards, the Army’s Energy Initiative Task Force (“EITF”) has developed the RESA to serve as the Army’s “template” document for renewable energy transactions.

The webinar will include a discussion of both goals to be achieved and challenges to be confronted by the RESA document.  Presenters will include John Lushetsky, the Executive Director of the Army's Energy Initiative Task Force (EITF); Heidi Hansen, Counsel to the EITF; and Bob Eidson, Senior Technical Advisor to the Executive Director.

Details and Registration

California Air Resources Board Issues Draft Update to AB 32 Scoping Plan

This week the California Air Resources Board (ARB) released a draft of its AB 32 Climate Change Scoping Plan Update. The original Scoping Plan was adopted in 2008 and must be updated every five years. The Scoping Plan serves as a blueprint for achieving AB 32’s goal of reducing greenhouse gas (GHG) emissions to 1990 levels by 2020.

The draft Update summarizes programs implemented over the last five years under AB 32 and outlines actions necessary to continue California’s progress toward the 2020 emissions reduction goal. The draft Update shows that California is on track to meet the 2020 emissions reduction goal and inventories the progress made across different economic sectors and programs like cap and trade. With the Update, ARB continues its strategy of achieving AB 32 goals through a mix of emissions reduction measures, including regulatory programs, incentives, and market-based approaches.

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Long Island Power Authority Announces New And Expanded Clean Solar Initiative Feed-In Tariff Program

The Long Island Power Authority (LIPA) recently announced its Clean Solar Initiative Feed-In Tariff-II (FIT-II), a feed-in tariff program for solar projects between 100 kW and 2 MW in size and located in LIPA’s service territory. FIT-II is currently open for public comment, and will be effective only upon formal approval by the LIPA Board of Trustees.

FIT-II is capped at 100 MW, and follows the first version of the Clean Solar Initiative Feed-In Tariff (FIT-I). Unlike FIT-I, projects will not be selected for participation in FIT-II on a first-come, first-served basis. Instead, all applications submitted within the application period will be evaluated; those that pass a preliminary screening process of technical and administrative review will be eligible for further consideration under a Clearing Price Auction mechanism.

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President Obama Unveils Climate Action Plan

Today President Obama released his Climate Action Plan and highlighted the key components of the Plan at a speech at Georgetown University. The Plan has three primary goals: (i) cutting greenhouse gas (GHG) emissions in the U.S., (ii) preparing the United States for the effects of climate change, and (iii) leading international efforts to mitigate climate change. During his speech, President Obama listed three measures to address the first two goals: use more clean energy, waste less energy, and cut carbon emissions. The Plan includes some important new directives from the President, it incorporates some initiatives that are already underway and outlines some of the Administration’s intentions, without providing hard timelines or goals. 

The Climate Action Plan is limited to initiatives that the President can implement without Congressional approval.  Nevertheless, it has the potential to significantly affect a broad range of energy sector interests.  A summary of the Plan's key components follows. 

Using more clean energy:

  • The Interior Department is directed to support deployment of 10,000 MW of renewable energy on public lands by 2020. 
  • The Department of Defense (DoD) is directed to build 3,000 MW of renewable energy at military installations by 2025.
  • Federal agencies will aim to install 100 MW of rooftop solar on federally-subsidized housing by 2020.
  • The federal government commits to obtain 20% of its electricity from renewable sources by 2020.
  • The Red Rock Hydroelectric Plant, on the Des Moines River in Iowa, will be placed on the federal Infrastructure "Permitting Dashboard" for high-priority projects.
  • Federal agencies will streamline the siting, permitting, and review process for transmission projects.
  • The U.S. will seek a global agreement in the World Trade Organization modeled after the 2011 agreement among 21 Asia-Pacific Economic Cooperation economies to reduce tariffs to 5% or less by 2015 on 54 environmental goods, including solar panels and wind turbines.
  • The FY2014 budget will include $7.9 billion for clean energy research and development.
  • The Department of Agriculture’s Rural Energy for America program will provide renewable energy and energy efficiency grants and loan guarantees directly to agricultural producers and rural small business.
  • Natural gas will continue to be relied upon as a “transition fuel” while America works to develop an “even cleaner” energy economy.
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Upcoming Event: German-American Renewable Energies Business Breakfast Seminar - Portland, OR

Portland locals, please join our friends Germany Trade & Invest and the German American Chamber of Commerce, Inc. at the German-American Renewable Energies Business Breakfast Seminar on Tuesday, June 25 at the Heathman Hotel.

Over breakfast, German and American industry experts will give you insights on the current status, future trends and investment opportunities in the Oregon and German renewables market. You will also hear from local entrepreneurs who have successfully invested in Germany, particularly in Eastern Germany.

Germany is on the cutting edge of energy efficiency, and the German Federal Government will strengthen this position even further through the implementation of the Integrated Energy and Climate Program. Europe's largest market offers excellent investment opportunities especially in the segments of smart metering, insulation systems, insulated glazing, heating/cooling technologies, efficient home appliances, energy saving lamps, cogeneration systems, pumps, compressed air systems.

Discuss the newest policies with German and American energy experts and meet the representatives of the six Eastern German Federal States.

Click here for more information and registration.

Recent Seventh Circuit Decision Could Impact Minnesota's Coal Moratorium

 The United States Court of Appeals for the Seventh Circuit recently issued a decision in Illinois Commerce Commission, et al., v. Federal Energy Regulatory Commission (“FERC”), which has the potential to influence and provide direction for the federal district court currently considering the constitutionality of Minnesota’s Next Generation Energy Act (“NGEA”).  In Illinois Commerce Comm’n, the Seventh Circuit heard a challenge to FERC’s approval of the Midcontinent Independent System Operator, Inc.’s (“MISO’s”), Multi-Value Project (“MVP”) tariff for financing new high-voltage power lines. As noted here, the constitutionality of a Michigan statute was questioned by the Seventh Circuit. 

Michigan’s Clean, Renewable, and Efficient Energy Act prohibits utilities from using renewable energy generated outside of the state to satisfy the requirement that the utilities’ retail supply portfolios include at least ten percent renewable energy by 2015.  A group of petitioners argued that, as a result of this statutory provision, Michigan ratepayers would pay costs well in excess of any benefits they derive from MVPs, in violation of the long-standing cost causation principle.  In response, the Seventh Circuit stated that "Michigan cannot, without violating the commerce clause of Article I of the Constitution, discriminate against out-of-state renewable energy." 

This statement from the Seventh Circuit could implicate other statutes that treat power generated out-of-state differently than power generated in-state.  One such statute is the NGEA.  Passed in 2007, the NGEA mandates that (1) Minnesota's fossil fuel use be reduced by 15% by 2015, and (2) renewable energy sources account for 25% of the state's total energy use by 2025.  In order to achieve these goals, the NGEA prohibits any person (1) from constructing in Minnesota a “new large energy facility that would contribute to statewide power sector carbon dioxide emissions”, (2) “import[ing] or commit[ting] to import from outside the state power from a new large energy facility that would contribute to statewide power sector carbon dioxide emissions”, and (3) “enter[ing] into a long-term power purchase agreement that would increase statewide power sector carbon dioxide emissions.”  These prohibitions were recently challenged by the State of North Dakota and other complainants in the United States District Court, District of Minnesota. 

In North Dakota v. Swanson, North Dakota claimed that the NGEA violates the Commerce Clause by facially discriminating against and unduly burdening interstate commerce.  Although the case is still in the early stages, some commentators believe that the decision in Illinois Commerce Comm’n  “will have serious echoes” across the country that could jeopardize statutes like the NGEA that are currently facing challenges, both judicial and legislativeOthers predict that the Seventh Circuit's decision will have a minimal impact on the NGEA's validity because the court’s language was arguably dicta and the cases cited, such as Alliance for Clean Coal v. Miller and Wyoming v. Oklahoma, do not necessarily stand for the proposition that discrimination against out-of-state coal violates the Commerce Clause when states favor renewable energy over other types of electrical generation.  With the deadlines stretching into 2014, the federal judge in North Dakota v. Swanson will have plenty of time to consider the Illinois Commerce Comm’n case and its potential applicability to the NGEA.

Fourth White Paper Released by House Committee

The House Committee on Energy and Commerce released its fourth white paper on the Renewable Fuel Standard.  The white paper discusses the energy impacts of the RFS and the changes in US energy demand in the five years since the RFS passed.  The paper calls for comments regarding the impact of the RFS on demand, petroleum prices, and how the RFS could be improved to better meets its energy security goals.  The next House white paper will address fraud issues.  Comments on the RFS energy white paper are due by June 21st.

US Federal Social Price for Carbon Skyrockets

The Obama administration took another step forward with its greenhouse gas control program yesterday when it quietly posted its "Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866."  Executive Order 12866 was issued by President William Clinton on September 30, 1993, and established broad principles of regulatory process including risk assessment.  In the recent Obama Technical Update, the social cost of carbon for 2020 increased in value from a range of $7 to $81 per ton, to a revised range of $12 to $81.  The increased range will support more rigorous regulations with the first example being in the domain of microwave efficiency.  Businesses and industries in the energy sector will be well-served to evaluate the impact of the revised risk assessment on their activities.

CPUC Approves Standard Contract for New California Feed-In Tariff

The California Public Utilities Commission has adopted Decision 13-05-034, approving PG&E, SCE, and SDG&E’s joint standard contract for California’s expanded feed-in tariff (FiT) program. D.13-05-034 also revises several provisions of the FiT tariff and addresses two petitions to modify D.12-05-035, the Commission’s previous decision implementing the expanded FiT. The most recent legislation affecting the FiT, SB 1122 (2012), directing the utilities to procure 250 MW from bioenergy projects, is not addressed in D.13-05-034, but will be implemented in a later decision.

Barring any delays in finalizing the contract and tariff revisions ordered in D.13-05-034, the utilities will begin accepting Program Participation Requests for the new FiT on October 1, 2013 and the first bi-monthly FiT program period will commence November 1, 2013.

For details on changes to the FiT approved in D.13-05-034, and requests for modification rejected by the Commission, read on.

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California Public Utilities Commission Sets Fourth and Fifth Solicitations for the Renewable Auction Mechanism Program

On May 9, 2013, the California Public Utilities Commission adopted Resolution E-4582, scheduling the fourth Renewable Auction Mechanism (RAM) auction to close on June 28, 2013 and setting a fifth RAM auction for no later than June 27, 2014. The RAM program allows renewable energy developers to bid their 3 MW to 20 MW projects to California’s three largest utilities – PG&E, SCE, and SDG&E – for a standard contract. The final Resolution did not differ substantively from the Commission’s draft Resolution, issued in early April 2013 and detailed in a previous blog post.  Advice letters filed today with the CPUC provide the utilities' procurement targets for the fourth RAM auction.  SCE will solicit projects totaling 181 MW, PG&E is seeking a total of 82 MW, and SDG&E is looking to procure 47 MW in total.  The advice letters also breakdown the utilities' total procurement goals into the capacity sought in each of the three RAM product categories - baseload, peaking as-available, and non-peaking as-available.

Various parties commented on draft Resolution E-4582, attempting to influence the Commission's direction with the RAM program.  Commenting on the draft Resolution, the Division of Ratepayer Advocates requested that the fourth and fifth auctions be delayed so that RAM projects from these auctions would come online during the utilities’ third RPS compliance period (2017-2020). In their comments, Recurrent Energy, the Solar Energy Industries Association, and the Large Scale Solar Association proposed that the Commission hold the fifth RAM auction within six months of the fourth auction, rather than up to a year after the fourth auction, and hold three subsequent auctions on an annual basis thereafter. They did not propose an increase in the total capacity of the RAM program; the three additional auctions would solicit capacity to replace any previously executed contracts that fail or are terminated. The Commission did not amend the draft Resolution to incorporate these recommendations.

Update: Minnesota House Passes Aggressive Solar Standard

On May 7th, the Minnesota House of Representatives passed its omnibus energy bill by a vote of 70-63.  The bill includes a provision that requires investor-owned utilities to obtain 4 percent of their power from solar by 2025, with a goal of reaching 10 percent by 2030.  In contrast to the aggressive House bill, the Minnesota Senate’s omnibus energy bill contains a more modest requirement for 1 percent by 2025.  If signed into law, Minnesota would be the 17th state to enact a solar standard.  Unlike solar standards in other states, however, this standard is not a carve-out of the existing 25 percent by 2025 renewable energy standard; rather, it is an additional mandate.

In order to protect some industries, the House bill exempts any “iron mining extraction and processing facility” or “paper mill, wood products manufacturer, sawmill, or oriented strand board manufacturer” that would otherwise be subject to potential rate increases stemming from the standard.  The bill also exempts power cooperatives and municipal utilities from complying with the standard, which means that only the four investor-owned power companies serving Minnesota must comply: Xcel Energy, Minnesota Power, Otter Tail Power Co., and Interstate Power & Light.

The Minnesota House and Senate must complete any compromise bill by the May 20th deadline for votes.

RIN Futures Become a Reality

In a development that will increase liquidity and transparency in the RIN market, two major providers are making RIN future contracts available to be traded.  Both CME Group and the IntercontinentalExchange (ICE) will have RIN products available to be traded by mid May.  CME Group and ICE will enable over the counter trading (OTC) of D4 RINs, D5 RINs, and D6 RINs.  D6 RINs are the most common RINs, typically fulfilled by corn ethanol production.  D5 RINs are the most flexible premium RINs, representing advanced biofuel that may consist of biogas, advanced drop in fuels, or other fuel types that meet the 50% GHG reduction standard.  D4 RINs are biomass-based diesel RINs, fulfilled primarily by biodiesel and renewable diesel fuels.  The development of a futures market could provide a substantial boost to the development of advanced biofuel facilities by enabling their financing.  Many financial market participants have in the past regarded RIN revenue as too speculative to include in a plant's pro forma but are likely to be reassured by the presence of RINs in the OTC market.  We speculated in our recent white paper that the EPA's rulemaking on Quality Assurance Programs (QAPs) could facilitate the establishment of a RIN futures market.  See http://www.stoel.com/showarticle.aspx?Show=10180

Minnesota Set to Boost In-State Solar Industry

The Minnesota State Legislature is considering a bold move to assist Minnesota’s fledgling solar industry. A new provision in the House transportation omnibus bill requires that any solar array installed on a building, highway, road, bridge, or land owned or controlled by the Minnesota Department of Transportation, must consist entirely of panels manufactured in Minnesota.  After passing out of the House, the transportation omnibus bill will meet its Senate counterpart in a conference committee.

This development comes a short time after the Minnesota Senate added a provision to the energy omnibus bill that would create a solar energy standard alongside the existing renewable energy technology standard and a few years after the state legislature enacted the Minnesota Bonus Program.  The new solar energy standard would require that utilities generate or procure an increasing amount of solar electric generation capacity at a minimum percentage (not yet specified) by 2016, 2020, and 2025.  The Minnesota Bonus program provides Minnesota residents a financial incentive to install solar panels on their homes and businesses by requiring utilities to subsidize the solar power generated by the solar installations.

Under state law, the Minnesota State Legislature must finish its work by Monday, May 20th.

Draft California PUC Resolution Would Set Fourth RAM Auction for June 28, 2013, Authorize Fifth RAM Auction in 2014

The California Public Utilities Commission has issued a Draft Resolution to schedule the fourth Renewable Auction Mechanism (RAM) solicitation and authorize a fifth RAM auction to take place in 2014. Draft Resolution E-4582, issued April 9, 2013, would close bidding for the fourth RAM auction on June 28, 2013. The fifth RAM auction authorized by the Resolution would close no later than June 27, 2014. Under the Draft Resolution, Pacific Gas & Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) are directed to solicit two-thirds of their remaining RAM capacity allocation in the fourth auction. The remaining one-third of capacity, plus any unsubscribed capacity from previous auctions, would be solicited in the fifth auction. The Draft Resolution does not alter the total RAM procurement targets of the three utilities or other components of the program. However, the addition of the fifth auction provides RAM participants with an additional opportunity to bid their renewable energy projects to the utilities.

PG&E, SCE, and SDG&E are required under the current RAM Program to procure a combined 1,299 MW of renewable energy from 3 to 20 MW projects through four auctions taking place from 2011 to 2013. The third RAM solicitation closed December 21, 2012. The utilities will submit advice letters to the Commission in May 2013 with the results of the third auction. In previous submissions to the Commission, SCE stated that it sought to procure 186 MW in the fourth auction and SDG&E stated it planned to procure 44 MW in the fourth auction. Depending upon the success of its third auction, PG&E may have approximately 100 MW of remaining procurement capacity. Under the Draft Resolution, this remaining capacity will be solicited across the fourth and fifth auctions. 

Comments on the Draft Resolution are due to the CPUC April 29, 2013.  The Commission currently plans to vote on the Draft Resolution at its May 9, 2013 meeting.

President Obama Proposes $7.9 billion for Clean Energy Technology and a Permanent PTC

On April 10, President Obama fired the starting gun when he submitted to Congress his budget request for the 2014 fiscal year.  The budget contains numerous proposals that are intended to make the U.S. "the leader in the clean energy sector and bring about a clean energy economy with new companies and jobs."

According to the White House, the budget would boost funding for work on clean energy technology by 30% over 2012’s enacted level.  That amounts to $7.9 billion across all federal agencies, with the lion’s share going to the Department of Energy (“DOE”).  The budget earmarks a total of $6.2 billion for DOE projects, including:

  • $614 million to “increase the use and reduce the costs of clean renewable power from solar, wind, geothermal and water energy,”
  • $80 million to advance clean energy integration into the delivery grid, and
  • $282 million to develop the next generation of advanced biofuels.

Perhaps the biggest news to come out of the budget announcement was President Obama’s call for a permanent and refundable production tax credit (”PTC”).  The White House believes the permanent PTC would “provide a strong, consistent incentive to encourage investments in renewable energy technologies and to help meet our goal to double generation from wind, solar and geothermal sources by 2020.”  Whereas in the past renewable energy developers have been subject to Congress’ yearly vacillations, a permanent PTC would create a more stable environment for the development of wind, solar, and geothermal projects.

Although the budget proposal is an important first step, it’s important to remember that at this point, President Obama’s proposal is just that – a proposal.  The document must still jump numerous hurdles in Congress before it crosses the finish line and returns to the White House for his signature.

IRS Increases PTC Incentive

The IRS recently announced that the production tax credit (“PTC”) will be more valuable in 2013.  In the April 3, 2013 edition of the Federal Register, the IRS issued an important piece of guidance for those in the renewable energy field, stating that the PTC incentive would increase for the 2013 calendar year, from 2.2 to 2.3 cents per kWh for fully qualifying energy sources, while remaining at 1.1 cents per kWh for sources like open-loop biomass and incremental hydro.  The IRS last adjusted the PTC in 2010, when it increased the incentive to 2.2 cents per kWh.  Prior to 2010, the IRS raised the incentive from 2.0 cents per kWh to 2.1 cents per kWh in 2008. 

In addition to the increase, the IRS announced that because the 2013 reference price for electricity produced from wind (4.53 cents per kWh) did not exceed 8 cents when multiplied by the inflation adjustment factor (1.5063), the eventual phaseout of the credit would not begin in 2013.

While an increase in the PTC incentive will surely be greeted as good news by developers, many were hoping to have received guidance by the end of the first quarter on the new tax rules that were a part of the PTC extension.  Historically, a project’s qualification was determined by the date the project was placed in service.  Now, qualification is based on the date construction begins; that is, as long as construction begins before the end of the calendar year, the project is eligible for the PTC.  Guidance from the federal government is necessary on what suffices for beginning construction.  Until they hear otherwise, developers must operate under the assumption that they need shovels in the ground by December 31.

Minnesota RES Expansion Moves Forward

 The Minnesota State Legislature’s attempt to expand the amount of electricity that utility companies secure from renewable energy sources cleared a major hurdle recently, as H.F. 956 was included in the House omnibus energy bill.  H.F. 956 proposes to increase Minnesota’s renewable energy standard (“RES”) to 40% by 2030.  The current standard requires that Minnesota’s utilities secure 25% of their power from renewable sources by 2025 (30% for Xcel Energy in exchange for nuclear waste storage at Prairie Island).

Although the Senate companion bill, S.F. 901, does not include the same language, the bill includes a 40% by 2030 renewable energy transmission and integration study.  Such a study lays the foundation for an expanded RES, possibly as soon as the conference committee.

In addition to the RES expansion, the bills set forth requirements for the creation of a solar electricity standard and an expansion of the use of distributed generation.  The solar electricity standard contained in S.F. 901 would require utilities to generate or procure solar electric generation capacity at a minimum percentage (not yet specified) by 2016, 2020, and 2025.  Like the current RES, the solar electricity standard would set different values for Xcel Energy.  Notably, the solar energy procured for the solar electricity standard could not be used to satisfy the utilities’ obligations under the RES.  H.F. 956 seeks to expand the use of distributed generation throughout Minnesota by requiring the Minnesota Public Utilities Commission to initiate a proceeding to establish a generic standard for utility tariffs for interconnection and parallel operation of distributed generation projects.  Among other things, the tariff standards must encourage maximum penetration of distributed generation.

Despite the recent success, more hurdles remain for these bills.   The bills must pass additional legislative committees, the House and Senate floors, a conference committee, and secure the Governor’s signature.  The remaining seven weeks of the 2013 legislative session should provide some interesting developments.

Stoel Rives Opens Office in Washington, D.C.

We are pleased to announce that we have opened a satellite office in Washington, D.C. Our new address, effective immediately:

Stoel Rives LLP
1020 19th Street NW, Suite 375
Washington, DC 20036
Phone: (202) 398-1795 / Fax: (202) 621-6394

The new office is headed by firm partner Greg Jenner, a former Deputy Assistant Secretary of the U.S. Treasury for Tax Policy and Tax Counsel to the U.S. Senate Committee on Finance.

Click here to read the press release.

Women of Wind Energy's Ninth Annual Rudd Mayer Memorial Fellowships

Each year, Women of Wind Energy (WoWE) awards fellowships to women college students or recent graduates to attend the annual American Wind Energy Association WINDPOWER conference.

Previous awardees include engineers, lawyers, PhDs, MBAs, technicians, meteorologists, economists and more from schools like Stanford, Columbia Gorge Community College, James Madison, UC Boulder, Appalachian State, and MIT.

Applications for Women of Wind Energy's Ninth Annual Rudd Mayer Memorial Fellowships for 2013 are due Friday February 22 at 5pm Eastern

Find more information on WoWE's website here: http://www.womenofwindenergy.org/apply-for-windpower-fellowship.html.

 

Congress Passes Extension and Modification of Production Tax Credit

News reports have already alerted people to the fact that Congress has extended the Production Tax Credit ("PTC") for wind as part of its agreement to avoid the fiscal cliff. The bill - named the American Tax Relief Act of 2012 - extended the sunset date for wind through December 31, 2013. This extension gives wind parity with all other renewable resources covered by the PTC.

What hasn't been as widely reported, however, is that Congress also made a significant modification to the PTC as part of the same provision.

Previously, whether a facility qualified for the PTC depended on when the facility was placed in service for federal income tax purposes. That provision has now been changed so that a facility will qualify for the PTC if construction with respect to the facility begins on or before January 1, 2014. This change applies to all renewables (biomass, marine and hydrokinetic, landfill gas, trash, hydropower) to which the PTC applies (not just wind), with the exception of refined coal and Indian coal. In other words, there is no longer a placed in service deadline for purposes of the PTC if construction begins before January 1, 2014.

For those of you acquainted with the 1603 grant, this "begun construction" requirement will seem very familiar. However, caution is required. First, the 1603 grant was administered by Treasury Department whereas the PTC will be administered by the IRS. The Treasury Department was generally viewed as favorably disposed to 1603 applicants. Second, we do not yet know how the IRS will interpret the term "begun construction." There is no requirement that the IRS interpret it consistently with section 1603. We do know, however, that the IRS included a 10% safe harbor as part of the bonus depreciation regulations (Treas. Reg. 1.168(k)-1(b)(4)(iii)(B)(2)), so it is possible that they may provide a safe harbor for the PTC as well.

It is also important to note that, along with extension and modification of the PTC, the legislation extended for one year the ability of taxpayers to elect the ITC in lieu of the PTC.

The modification of the PTC will likely make 2013 an interesting year, particularly as developers attempt to meet the "begun construction" requirements (however that term is eventually defined). If the IRS gives developers a safe harbor of some sort, it will be essential that they avoid the last minute, year-end rush we experienced in 2011 as we worked to qualify projects (mostly solar) for the “begun construction” requirements of the 1603 grant. A key gating item may well be the extent to which utilities seek to procure wind and other renewable energy is Qs1-2, 2013.

We will keep you apprised of further developments and insights.

In the meantime, should you have any questions, please contact Kevin Pearson, Adam Kobos, Carl Lewis, Greg Jenner or any other Stoel Rives attorney.

DOE-Commissioned Study Endorses LNG Exports, Says U.S. Economy Will Benefit

A little off topic for our Renewable + Law Blog, but since the fate of renewables is often closely tied to developments in the market for natural gas, I thought this post by my colleage Erin Anderson would be of interest:

Liquefied natural gas (“LNG”) exports will benefit the U.S. economy according to a NERA Economic Consulting study commissioned by the U.S. Energy Department (“DOE”). Posted on Wednesday, December 5, the two-part study concluded that the economic benefits of LNG export will outweigh the impact of potentially higher natural gas prices. The DOE said it would take the report and public comments on the same into account in its review of 15 pending LNG export application dockets. Under federal law, grant export authorization to countries without a free trade agreement with the United States can be denied if inconsistent with the “public interest”. Economic factors are an element that must be evaluated in making the public interest determination.

The DOE study assessed a range of different assumptions about global markets, export volumes, pricing points and domestic production costs, and concluded that the US economy will experience a net positive effect after consideration of multiple scenarios. The study does not claim that there is a win-win for all socioeconomic stakeholder groups, however, noting that "[o]verall, both total labor compensation and income from investment are projected to decline, and income to owners of natural gas resources will increase."

The possibility of exporting volumes roughly equivalent to one-third of present U.S. natural gas production has generated opposition among natural gas customers, currently benefitting from a flush market of extraordinarily cheap gas resulting from hydraulic fracking. Some in the manufacturing sector fear that directing large quantities of domestic natural gas out of the US market will drive up domestic supply costs, negatively affecting manufacturing and jobs creation during the fragile economic recovery. The Industrial Energy Consumers of America issued a press release (PDF) on Wednesday challenging the report’s methodology. Dow Chemical has also taken a leading role in raising questions about the report.

Proponents of LNG exports have responded by noting that global LNG consumption will at some point decline as US costs increase beyond those of competing supplies, thus alleviating concerns that the US domestic market will be held hostage to an insatiable global market.

The Department of Energy will be accepting initial comments on the Macroeconomic Impacts of LNG Exports from the United States (PDF) study until January 24, 2012. See the Federal Register notice (PDF) for more details.

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Army Announces Forthcoming RFP for Biomass Energy

From my colleague Chad Marriott, who is attending the RETECH 2012 Conference in Washington, DC:

Today at ACORE's RETECH 2012 conference in Washington, D.C., John Lushetsky, Executive Director of the U.S. Army Energy Initiatives Task Force ("EITF") announced that the Army expects to issue a request for proposals within the next 90 days for a 15-28 MW biomass project to be located at Fort Drum in New York. The Army will be seeking a long-term power purchase agreement under the authority granted to it in 10 U.S.C. 2922a. The Army will issue the RFP through the Defense Logistics Agency-Energy.

PG&E Announces Energy Storage RFI

California's Pacific Gas and Electric Company (“PG&E”) announced today that it plans to issue an Energy Storage Request for Information (“RFI”) to obtain information on utility-scale, dispatchable, and operationally flexible storage resources through a solicitation of interest from technology providers, owners, and developers of energy storage resources.  PG&E said that it plans to issue the RFI and to ask for responses from RFI participants this year.     

PG&E explained that the RFI will help it to learn about different storage technologies and their costs, to understand which storage technologies could bid into a future RFO, and to identify and value the various attributes of those technologies. The company plans to open up its Energy Storage RFI website later this week--the new website will list the types of questions that PG&E plans to ask in the RFI.  PG&E invites feedback on its proposed questions in the form of comments or questions to EnergyStorage@pge.com.

Persons who want to to subscribe to PG&E's general RFO distribution list should go to www.pge.com/rfo to fill out theregistration form and submit the Excel form as an attachment to the Renewable RFO mailbox.  Registrants will receive notices about this energy storage RFI and other PG&E long-term procurement solicitations. 

Georgia Power Files for Advanced Solar Initiative

On September 26, 2012, Georgia Power filed with the Georgia Public Service Commission a proposal for the creation of the Georgia Power Advanced Solar Initiative, a program that would result in the procurement of up to 210 megawatts of solar generation through power purchase agreements. Of the 210 MWs, 180 will come from utility scale projects while 30 MW will come from distributed projects.

Utility Scale Projects.  The proposal calls for Georgia Power to issue RFPs in 2013, 2014, and 2015 for utility scale solar projects up to 20 MWs in size and to be located in Georgia.  The PPAs would have twenty year terms and with pricing not to exceed 12 cents per kWh. 

Distributed Projects.  Georgia Power will also enter PPAs with Small-Scale projects (up to 100 kW) and Medium-Scale projects (greater than 100kW and smaller than 1 MW).  In each of 2013, 2014 and 215, Georgia Power will enter 10 MW worth of PPAs with Small/Medium-Scale projects until anoverall cap of 30 MW is reached.

More information and a copy of Georgia Power's filing is available here.

TerraPass Issues California Renewable Energy RFI

TerraPass Inc., recently issued a Request for Information (RFI) on behalf of a client that is interested in ownership, investment and/or long-term bundled renewable energy offtake opportunities within PG&E territory.  The RFI seeks information from firms with renewable energy projects that are currently under development or construction in California and have projected online dates in 2014 or 2015. TerraPass' client will consider a project or portfolio of projects with expected generating capacity of up to 230 million kilowatt-hours per year.  

TerraPass' contact for this RFI is Erin Craig, who can be reached at 415-644-578.  We understand that the deadline for the RFI response is October 26.

Upcoming Event - Mission Critical: Clean Energy and the U.S. Military

On Thursday, October 11, our friends at Environmental Entrepreneurs (E2) are holding what promises to be a very interesting event on the important topic of clean energy and the military. Stoel Rives is pleased to be hosting this event on the 19th Floor of its offices in Portland, OR, 900 SW Fifth Avenue. 

Click here to register if you’d like to attend as a guest of E2. For those interested in Clean Energy and the Military, especially the Army’s pending $7 billion renewables RFP, please check out Chad Marriot’s postings on the subject.

What: Mission Critical: Clean Energy and the U.S. Military
When: Thursday, October 11, 2012 (5:00 PM - 7:00 PM PDT)

Where: Stoel Rives LLP, 900 SW Fifth Avenue, 19th Floor, Portland, OR 97204

The state of Oregon, on the forefront of advanced energy policy, has a new and powerful partner. The U.S. military has emerged as a formidable leader in the push for clean energy. The Department of Defense says that our current fuel mix is a national security liability, and that global warming is a threat multiplier which will heighten geopolitical instability, creating both military and humanitarian challenges beyond the armed services’ capacity to respond. As a result, DOD is setting aggressive objectives to reduce its fossil fuel dependence and invest in low carbon renewables and energy efficiency technologies. These commitments by the military are stimulating innovation and providing critical support for the emerging U.S. clean energy sector, with significant impacts for Oregon.

Join us to hear from Oregon First Lady Cylvia Hayes, Brigadier General Mike Caldwell (Oregon National Guard), and E2’s James Marvin (CDR, USN - retired and CEO of Federal Green Solutions) about the link between Oregon’s 10-Year Energy Plan and the military’s transition to clean energy, as well as the potential of this transformation to grow the U.S. economy.

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Seattle City Light Issues RFP for Renewable Energy

Seattle City Light recently issued a request for proposals f(RFP) or up to 150,000 megawatt-hours of renewable energy or renewable energy credits per year, starting in 2020.  The projects that generate the RECs or energy must qualify as eligible according to Washington State’s renewable portfolio standard. In addition, City Light will require a minimum output guarantee and credit assurances. The utility will also consider proposals for equity ownership.

In its RFP announcement, City Light said that it will consider a broad range of proposals, technologies, and contractual arrangements. A party submitting a proposal must be the owner of the eligible resource or renewable energy credits, or have written authorization from the owner to submit a proposal. City Light prefers baseload or dispatchable resources to complement existing supply resources that are predominately hydroelectric.
 

For more information on submitting a proposal, contact Robert W. Cromwell, Jr., director of power contracts and resource acquisition at robert.cromwell@seattle.gov, by phone at (206) 684-3856 or by FAX at (206) 386-4555.

 

PNWER Energy Storage Conference, Pivotal Leaders Event--Portland, October 8

The Pacific Northwest Economic Region (PNWER) Energy Storage Coaliation (ESC) will be holding an important energy storage conference at the Portland Convention Center on October 8, 2012.  ESC has worked with the Oregon and Washington public utility commissions to bring together a diverse mix of developers, utilities and regulators to share their perspectives on opportunities and barriers to deploying energy storage in the Pacific Northwest.  You can find the draft agenda for the event here and register for the conference here.

Following the PNWER event, Pivotal Leaders will hold an Energy Storage Panel from 4-6 PM at the Portland offices of Perkins Coie, 1120 NW Couch Avenue, 10th Floor.  I will be joinging the panel with Dave Curry of Demand Energy, Praveen Kathpal of AES Corporation, and Lee Kosla of SAFT .  Guests are welcome, but an RSVP is required.  Contact ashley@pivotal-leaders.com.  I hope to see you at both of these events.

For those interested in energy storage, I regularly follow the topic on Twitter, @BillHolmesStoel.  The PNWER Energy Storage Coalition can also be found on Twitter, @PNWERESC.  Finally, www.stationarystoragenews.com is an excellent energy storage news aggregator that offers daily news and a weekly newsletter on the topic.

White House Executive Order calls for 40 GW of new CHP capacity by 2020

Last week the White House issued an Executive Order calling for 40 GW of new CHP capacity by 2020:

http://www.whitehouse.gov/the-press-office/2012/08/30/executive-order-accelerating-investment-industrial-energy-efficiency

The Executive Order on Accelerating Investment in Industrial Energy Efficiency (also known as combined heat and power (CHP) or cogeneration) calls for federal agencies (including the Departments of Energy, Commerce and Agriculture), States, industrial companies and utilities to coordinate policies to encourage investment in CHP facilities with a goal of achieving 40,000 MW of new CHP generating capacity in the U.S. by 2020. Among other provisions, the Order calls for (i) set asides for CHP under emissions allowance trading program state implementation plans, grants, and loans and (ii) recognition of the emissions benefits of highly efficient energy generation technologies like CHP to provide compliance options under power and industrial sector regulations. By one estimate, this could create $40 billion to $80 billion in new capital investment in U.S. manufacturing facilities.

*Combined heat and power (CHP), also known as cogeneration, is an efficient, clean and reliable means of generating power and thermal energy (such as steam) from a single fuel source, including natural gas, coal, biogas and biomass.

City of Palo Alto Announces Renewables RFP

The City of Palo Alto, California, is seeking a minimum of 20 gigawatt-hours (GWh) annually, not to exceed 80 GWh/year, from eligible renewable resources. The City will not, however, consider proposals for the sale of Renewable Energy Certificates (RECs) alone . The City intends to negotiate and execute one or more power purchase agreements with one or more selected bidders, for terms of five (5) to thirty (30) years. The energy and RECs procured will be used to meet Pal Alto's City Council-imposed renewable energy supply target of 33% by 2015. 

The City will hold a pre-proposal conference at 10:00 am on Septemer 6, 2012.   The deadline for bid submission is 3:00 pm Wednesday, September 19, 2012.   Details of the RFP can be found here   The City's Contract Administrator is Carolynn Bissett, 650-329-2460.

California Issues 2012 Bioenergy Action Plan

The California Bioenergy Interagency Working Group has released its 2012 Bioenergy Action Plan, with the goal of facilitating the development of bioenergy in California on a variety of levels, including research and development support, streamlining and consolidating permitting, facilitating access to transmission, pipelines, and other distribution networks, and policies and laws to monetize the benefits of bioenergy. The Working Group is a broad coalition of state energy, environment, and resources agencies, including the California Public Utilities Commission, Energy Commission, Air Resources Board, Natural Resources Agency, Cal Fire, Cal Recycle, and the Department of Food and Agriculture, as well as the California Biomass Collaborative and the Central Valley Regional Water Quality Control Board. The 2012 Plan builds on the Working Group’s 2006 and 2011 Bioenergy Action Plans, providing a more detailed set of actions for the constituent agencies to undertake and incorporating more of Governor Brown’s policies for energy, waste reduction, and job creation.  Bioenergy has met some obstacles in California in recent times, including challenges by major and local environmental groups to biomass-fueled electrical generation contesting claims of greenhouse gas neutrality and the Energy Commission’s suspension, in most cases, of pipeline biomethane as an eligible renewable fuel for gas-fired facilities to help meet the state’s 33% renewable portfolio standard. A concerted focus by the state agencies on specific Action Plan items will undoubtedly help move bioenergy forward in California. Bioenergy advocates should also keep an eye on several bioenergy and biomethane bills still active during this last week of the California 2011-2012 Legislative Session, including A.B. 1900, A.B. 2196, and S.B. 1122.

ABA Law Journal Seeks Nominations for Blawg 100 Amici List

The American Bar Association Law Journal recently announced it is accepting nominations for Blawg 100 Amici, the Journal’s annual list of the 100 best legal blogs.

If you would like to submit a nomination for Renewable + Law Blog, the ABA has a handy online nomination form available. Submitting should take about 5 minutes. You can also submit nominations for your other favorite law blogs, and we encourage you to do so. The nomination deadline is September 7, 2012.

Thanks to all our readers who make regular use of Renewable + Law Blog! We enjoy sharing news and insight in all things energy, and we plan to keep those blog posts coming.

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Army Holds Pre-Proposal Conference in Huntsville on Renewable Energy Procurement

On August 22, 2012, the U.S. Army Engineering & Support Center in Huntsville, AL held a pre-proposal conference to discuss the final multi-award task order contract that was issued on August 7, 2012 (the “Final RFP” or “MATOC”).  My colleague, Lane Tucker, and I attended to hear the Army’s presentations and to engage directly with renewable energy developers, consultants, seasoned government contractors, large energy service contractors (ESCOs), and others. The conference provided attendees a great opportunity to explore the field of potential contractors and subcontractors and start (or continue) conversations about potential teaming arrangements that could result in both a MATOC award and one or more base task order awards. 

For those who could not attend, fear not; all of the presentation materials will soon be available on the Army EITF website and the Huntsville team will post all of the questions presented, along with the Army’s formal responses, to the ProjNet website. Also important is that Tonju Butler, the Procuring Contracting Officer, indicated that the deadline for questions on the Final RFP would be extended from today until September 7, 2012, so that individuals and teams can have additional time to formulate and posit questions that may be important to their proposals.  However, that change has not yet been posted to the FedBizOpps website as an amendment.  It is too early to tell whether this extension foreshadows an extension of the October 5, 2012 proposal deadline. Right now, the Army is holding firm to that date, so individuals and teams that intend to respond should plan accordingly. Keep an eye out for other amendments to the Final RFP, too. Conference attendees were assured that more would be forthcoming to clarify small technical issues and, hopefully, to flush out the structure for proposing prices. All amendments will be posted to the FedBizOpps website for the MATOC.

Here are a few takeaways and a short discussion about some important issues. Be sure to check the Q&A on the ProjNet website for any official responses from the Army on these topics. 

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Northwestern Energy Renewable Generation RFP

Northwestern Energy has issued an RFP seeking up to 45 MW of renewable generation that qualify under Montana's community renewable resource requirement.  The RFP process is being managed by Land Energy Consulting. 

The first conference call for the RFP was held on August 15, and a second is scheduled for September 12.  Proposals are due at 5:00 pm Mountain Tme on September 28.  Details and materials concerning the RFP can be found here.

Army RFP Pre-Proposal Conference Announced and Amendments Published

On August 14, 2012, the Army Engineering & Support Center published the details of the pre-proposal conference for the final request for proposals that was issued last week (the "Final RFP").  The conference will be held on August 22, 2012 at the Redstone Arsenal Sparkman Center, Bob Jones Auditorium, Building 5300, Martin Road, Huntsville, Alabama 22202.  Registration will be open through Friday August 17, and the number of attendees (both per company and total) is limited.  Registration and conference information can be found here.

In addition, amendments to the Final RFP were posted to the FedBizOpps website for the solicitation, here, including a new Section H.11 governing the substitution of team members.

My colleague Lane Tucker and I will be in Huntsville next week and look forward to seeing some of you there!

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Army Issues Final RFP for $7 Billion in Renewable Energy Contracts

On August 7, 2012, the U.S. Army Engineering and Support Center in Huntsville, Alabama issued its much-anticipated final solicitation for renewable and alternative energy utilizing power purchase agreements (PPAs) or other contractual equivalents (Solicitation Number W912DY-11-R-0036, the "Final RFP").  The draft RFP was issued on Friday February 24, 2012 and the Army has been in active discussion with industry ever since, engaging in meetings with industry representatives and responding to comments and questions at conferences across the country.  The package released today includes the Final RFP, a "frequently asked questions" form, an attachment regarding maximum unit price rates, and an amendment to the Final RFP which (1) corrected the effective date to August 7, 2012 and (2) extended the closing date and time for receipt of proposals to October 5, 2012 at 2:00 p.m. CST.  All solicitation materials can be found here.

As was the case in the draft RFP, it is the intent of the government to purchase only the energy produced by the projects and not to acquire any generation assets.  Each contractor will be responsible for developing, financing, designing, building, operating, owning and maintaining its project.  Generation facilities may be located on private land or on installations under the jurisdiction of the Department of Defense.  The government will contract to purchase the energy for up to 30 years under the procurement authority set out in 10 U.S.C. 2922a. 

This solicitation will result in multiple Indefinite Delivery/Indefinite Quantity ("ID/IQ") contracts awarded "to all qualified and responsible offerors, both large and small businesses, whose offers receive the required minimum acceptable evaluation ratings and whose price is reasonable and realistic."  Individual Task Orders will then be awarded against the ID/IQ contracts using fair opportunity and competitive source selection procedures set out in the federal acquisition regulations and the defense federal acquisition regulations.  The sum of all Task Orders awarded over the 10-year period for contracting authorized under the Final RFP cannot exceed $7 billion.  Task Orders will be reserved for small businesses in accordance with the same ordering procedures proposed in the draft RFP and reproduced in our original blog back in February.

The Final RFP states that a pre-proposal conference will be held prior to the October 5, 2012 submission deadline, but details are forthcoming.  The conference is tentatively scheduled to be held in Chicago, IL.  Comments on the Final RFP may be submitted through the ProjNet website and must be received no later than August 24, 2012.  The Army will not accept questions via email or telephone and individual meetings with firms will not be scheduled.

We are reviewing the Final RFP and will continue to provide updates as may be appropriate.

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UPDATE! Renewables Contracting with the U.S. Military

Below are a few important updates for those interested in opportunities to contract with the U.S. armed services for renewable energy:

NEW Solicitation for NAWS China Lake:  On July 26, 2012, the Department of the Navy published a Request for Information (RFI) for the development of large scale renewable energy generation at Naval Air Weapons Station (NAWS) China Lake, in California.  The project will be in support of President Obama's 1 GW goal for the Navy.  In particular, the Navy will consider opportunities to host the development of a project between 20 MW and 200 MW on the base.  Contracting authority would come under any of 10 U.S.C. 2667 (governing enhanced use leases), 10 U.S.C. 2916 (governing sales by the Navy of electricity from alternate energy and cogeneration facilities consistent with the Public Utilities Regulatory Policies Act (PURPA)), or 10 U.S.C. 2922a (governing 30-year power purchase agreements).  The Navy is clear in the RFI that it is "seeking information on a development that would generate energy for sale to the grid and/or for potential consumption at other [Navy] installations in the southwest.  The [Navy] has an Interagency Agreement with Western Area Power Administration (WAPA) and fulfills most of its electric demand in CA through Direct Access power.  There is a potential for other [Navy] facilities to consume energy from this development through this arrangement." 

The FedBizOpps Solicitation Number  is N6247312C3805 and the RFI can be accessed here.  While this is only a Request for Information, the the Navy is seeking analyses of the CAISO interconnection process, transmission access and capacity, an economic assessement of providing power to other Navy installations, the California RPS, and other aspects of the potential arrangement that would affect development at NAWS China Lake (all in 15 pages or less!).  Statements of Interest from potential developers are due 45 days after the July 26 posting date

El Paso Electric ("EPE") Extends Deadline for Fort Bliss Statements of Qualification ("SOQs"):  EPE has exteded the deadline for parties to file SOQs for a 20 MW solar photovoltaic project that is expected to be located within the Fort Bliss military reservation.  The deadline for submission is now 4:00 PM (MDT) on August 22, 2012.  Information on the solicitation can be found here.  Our original blog can be found here.

Army Corps of Engineers Expects to Release $7 Billion Solicitation THIS WEEK!  In a notice issued on July 26, 2012, the U.S. Army Engineering & Support Center in Huntsville, Alabama announced that it will post its much-anticipated final RFP within 15 days, and since it was not released last week, look for it by Friday August 10!  In the meantime, you can refresh your memory by reviewing the draft solicitation (W912DY-11-R-0036) here and reading our previous blogs on it, here and here

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Further update on Expiring Provisions

As I mentioned in my post yesterday, sometimes a chairman's mark will change just before the committee marks up legislation.  Chairman Baucus's did.  Here is a description of the now-included PTC/ITC proposal:

Description of Proposal

 The proposal extends and modifies the expiration dates for the renewable electricity production credit and the 30-percent investment credit in lieu of such production credit. The proposal extends the wind credits (production and investment) for one year, through December 31, 2013. In addition, the expiration date for all renewable power facilities (including wind facilities) is modified such that qualified facilities or property will be eligible for the renewable electricity production credit, or the investment credit in lieu of such credit, if the construction of such facilities or property begins before January 1, 2014.

The proposal also modifies the definition of municipal solid waste to exclude commonly
recycled paper that has been segregated from such waste for purposes of this credit.

 Effective Date

 The proposal is effective on the date of enactment.

 

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Possible Agreement on Extension of Tax Provisions, including PTC

Senators Max Baucus and Orrin Hatch, chairman and ranking member respectively, of the US Senate Finance Committee, have just announced that they have reached agreement on legislation to extend certain expiring tax provisions.  The bill will be marked up by the Finance Committee on August 2.

The details of the proposal have not been announced.  However, it is possible that the package could contain an extension of the Production Tax Credit ("PTC").

Even if the PTC is included in the Baucus-Hatch proposal, the legislation still must be passed by the Senate and House of Representatives.  The House (including the Ways & Means Committee) has not yet acted on expiring provisions.

We will update this blog as details are released.

U.S. Department of Interior Moves to Streamline Solar Development in the West

As my colleagues Kristen Castaños and Melissa Foster posted on the Stoel Rives California Environmental Law Blog, the U.S. Department of the Interior announced today that it will publish the Final Programmatic Environmental Impact Statement (“Solar PEIS”) for solar energy development in six southwestern states—Arizona, California, Colorado, Nevada, New Mexico, and Utah.  The Solar PEIS is a major step forward in the permitting of utility-scale solar energy on public lands in the West.   

The Solar PEIS will establish solar energy zones with access to existing or planned transmission and with the fewest resource conflicts and provide incentives for development within those zones.  The roadmap set forth in the Solar PEIS will make for faster, more streamlined permitting of large-scale solar projects on these public lands.  The focus of the Solar PEIS is on Bureau of Land Management (“BLM”) lands that are most suitable for solar energy development.  It identifies 17 Solar Energy Zones (“SEZs”), totaling about 285,000 acres of public lands, as priority areas for utility-scale solar development.  The Solar PEIS also notes the potential for additional zones through ongoing and future regional planning processes and allows for utility-scale solar development on approximately 19 million acres in variance areas lying outside of identified SEZs.

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El Paso Electric Seeks to Pre-Qualify Solar Developers for Project at U.S. Army's Fort Bliss

El Paso Electric (“EPE”) is seeking to pre-qualify interested parties capable of providing renewable energy services (including design, installation, commissioning, operation, maintenance, and ownership) of a 20 MW solar photovoltaic project that is expected to be located within the Fort Bliss military reservation in El Paso, Texas. EPE published a Request for Statement of Qualifications (“SOQ”), along with information letter, on the EPE website indicating that EPE expects to issue a request for proposals (“RFP”) at a later date to those parties that have pre-qualified. Through the RFP, EPE expects to negotiate a power purchase agreement (“PPA”) with a term of up to 25 years. On the back-end, EPE would expects to enter into a multi-year agreement for the term of the PPA with the U.S. Army to serve Fort Bliss. For those who have been paying close attention to the regulatory issues facing the military’s procurement of renewable energy, this arrangement may become more and more popular as a fix for state-law limitations relating to utility exclusive service territories.

SOQ responses are due no later than 4:00 p.m. MDT on August 8, 2012!

Stoel Rives San Diego Office Change of Address: Effective July 2, 2012

Our San Diego office has relocated to a larger space and is expanding the range of legal services we offer in Southern California.

Please make note of our new address, effective today, July 2, 2012:

Stoel Rives LLP
12255 El Camino Real, Suite 100
San Diego CA 92130

Phone numbers and email addresses remain the same:

Phone: (858) 794-4100 / Fax: (858) 794-4101

Elizabeth A. Cason
Morten A. Lund
John A. McKinsey
Brian J. Nese
Julia R. Pettit
David T. Quinby
S. Wayne Rosenbaum
Howard E. Susman
Ryan R. Waterman

The number of our San Diego lawyers has tripled in the last two years, signifying a major expansion in Southern California. While energy law has been the core focus of the office – with an international portfolio of clients engaged in renewable energy, thermal energy, repowering and transmission – we have added experienced attorneys to meet growing needs in capital transactions, project finance, environmental compliance and land use regulation.

This growth in San Diego – and in our Northern California offices − reflects Stoel Rives' commitment to tailoring our practice to provide better services to clients doing business in California.

Complementing our nationally ranked energy practice,* the firm's California offices also offer representation in labor and employment, state and federal environmental issues, land use, construction and real estate matters, plus broad experience in all forms of business litigation, including product liability, Prop 65 and related issues.

With 11 offices in seven states – including offices in San Francisco, Sacramento and Lake Tahoe – our integrated team of nearly 400 lawyers provides extensive experience and skill that we draw on to ensure our clients receive comprehensive advice and litigation services, tailored for their businesses.

*Nationally rated Tier 1 for Energy Law, 2011-2012, U.S. News – Best Lawyers® ''Best Law Firms'' survey, and nationally ranked in Projects: Renewables & Alternative Energy by Chambers USA, 2012.

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SDG&E to Host RAM Forum

On June 22, 2012, SDG&E will host a forum on the Renewable Auction Mechanism.  The forum will be held at the SDG&E Energy Innovation Center located at 4760 Clairemont Mesa Blvd, San Diego, CA 92117.   The forum begins at 10 AM and concludes at 12 PM.  The forum will also be available via webinar.  In person or webinar reservations can be made by sending an email by June 19, 2012 to ramsolicitation@semprautilities.com.

The forum will cover the following topics:
 

  1. Overview of the results of the November 2011 RAM (including feedback from the Independent Evaluator)
  2. Overview of the important changes between the November 2011 RAM and the May 2012 RAM
  3. Request for feedback from RAM participants and stakeholders on various topics, including: eligibility requirement, bid evaluation methodology (including Resource Adequacy value, and SDG&E process (website, email communication, Q&A, etc.)

Stoel attorney Brian Nese will be attending the forum.

 

 

 

DOE Releases Draft Guide for Private Financing of Large-Scale Renewable Energy Projects at Federal Facilities

The U.S. Department of Energy (“DOE”) has released a draft guidebook entitled “Federal Renewable Energy Guide: Developing Large-Scale Renewable Energy Projects at Federal Facilities Using Private Capital” for public comment. The guide was developed by the DOE’s Federal Energy Management Program in collaboration with the National Renewable Energy Laboratory and project developers “to ensure that Federal projects have key elements recognizable to private sector developers and financing groups.” Described as a “framework” document, the guide is the first step toward a Rosetta Stone of sorts- helping federal agencies, private financiers, and project proponents to coordinate the elements of development at federal facilities. The Federal Register notice can be found here. Comments on the draft are due no later than July 2, 2012.

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Project Financing and the U.S. Department of Defense

For those of you who are tracking the U.S. Department of Defense’s (“DOD”) efforts to procure electricity from renewable energy projects, here are some numbers to think about with respect to project financing: 

According to a Government Accountability Office report released last month, the four DOD services (Army, Navy, Air Force, Marines) are known to have used power purchase agreements (“PPAs”) to finance a total of 11 projects, including all those that were in design, under construction, or currently in operation in Fiscal Year 2011. The Army has negotiated two; the Navy has negotiated one; the Marine Corps has negotiated one; and the Air Force has negotiated seven. Because none of these projects was financed through up-front appropriations, we can expect the same will be true for contracts entered into by the Army pursuant to its recent draft RFP for $7 billion in wind, solar, biomass, and geothermal energy- all of which are anticipated to be long-term PPAs (NOTE: The Army has said repeatedly now that the final RFP should be released by June 30). Thus, the $7 billion number is not a projected appropriation amount as many were led to believe.  Rather, the $7 billion represents the amount the Army expects will be brought to the table through third-party financing arrangements in order to facilitate its total kWh procurement targets. That raises an interesting question: Since $7 billion will not be appropriated, how do we know how much the Army will spend per kWh for the power? 

At the ACORE-AEE 2nd U.S. Military and Renewable Energy Industry Forum on May 9, Kathleen Ahsing, Director of Planning and Development for the Army Energy Initiatives Task Force (“EITF”) was clear that the Army wants to procure renewable energy “at or below brown power prices” and keep the renewable energy certificates (“RECs”) associated with that power. For most developers, “brown power prices” means the wholesale price of electricity- right now pegged to the price of natural gas, a low number. However, in this case the Army’s (and, in general, the DOD’s) interpretation of “brown power prices” differs. Because individual bases are retail customers, “brown power prices” means their current retail price and the base’s electric bill represents the bottom line for savings. 

Before we get too excited, though, we need to remember that the DOD is given very favorable rates- especially in the West, where many may receive power from the Western Area Power Authority (WAPA) for less than 3 cents/kWh. Similarly, bases served by the Bonneville Power Authority (“BPA”) directly, or by a utility that is a full-requirements customer of BPA, get preferential rates, too, that may be under 5 cents/kWh. Those numbers may be tough to beat, especially if the Army retains the RECs and the developer is not able to rely on REC sales as a supplemental income stream. 

Where a base’s bottom line for savings is its own utility bill, certain technologies, like biomass, will have a distinct advantage on pricing. Where an on-site solar project could displace the “energy” component of the utility tariff, it would not replace the “demand” component. Because the base still would be subject to backup power rates, the Army would likely include the cost of the backup power in the total cost of energy. A biomass plant would be able to offset both the energy and demand charges, thus avoiding the “tack-on” charge faced by intermittent resources.

Hopefully I’ll have the opportunity to catch up with some of you later this week at the Infocast Defense Renewable Energy & Military Microgrids conference in Arlington, VA.

SCE and SDG&E Announce 2012 RAM 2 RFOs

On April 30, 2012, SCE announced the launch of its second Renewable Auction Mechanism (RAM) RFO (RAM 2). SCE's RAM program is open to all RPS eligible technologies not greater than 20 MW and interconnected within any of the service territories of SCE, Pacific Gas & Electric or San Diego Gas & Electric.  The RAM RFO will be conducted using the RFO website provided by Accion Group, the independent evaluator for the RAM 2 RFO. According to SCE, Interested parties should visit the RFO website for more information, to submit an Offer, or to ask a question.  On May 11, 2012, SCE will host a RAM Program Forum at the SCE office in Rosemead. More information can be found on the RFO website.   .

SDG&E  announced its RAM 2 RFO on May 1, and the details can be found here.  SDG&E notes that its RAM program is designed to procure a total of 155 MWs over the course of four solicitations.  The company's first RAM solicitation, held in November of 2011, resulted in the procurement of 15 MWs, leaving 140 MWs to procure over the course of the next three solicitations.  In the RAM 2 solicitation, SDG&E intends to procure 45 MWs pursuant to 10, 15 and 20-year RAM Power Purchase Agreements (PPAs) with independent power producers.  SDG&E plans to hold one pre-bid conference on May 7, 2012 from 1:00 PM to 5:00 PM in San Diego-- instructions for registering can be found on SDG&Es RAM 2 web page

PG&E announced yesterday that it planned to issue its RAM 2 RFO today.  Details can be found on PG&E's RAM 2 website. 

For a discussion of changes to the RAM process recently approved by the CPUC, see Allison Cook's recent blog on the topic. 

PG&E Announces 2012 RAM RFO

PG&E announced today that it expects to issue its Renewable Auction Mechanism (RAM) RFO on May 1, 2012. Offers under the RAM RFO will be due no later than 12:00 noon (PPT) on May 31, 2012.

PG&E will host a Bidders’ Conference at the company's headquarters on May 16, 2012, from 1:30 PM to 3:00 PM. The Bidder's Conference will also be available via Webinar. Attendees are required to register for the Bidders' Conference.

Following the Bidders’ Conference, PG&E will hold a Bidders’ Forum. The Forum will cover survey results and lessons learned from the first RAM RFO. It will also address the valuation of resource adequacy and proposals to address excess transmission costs.

For more information and program specifics, visit PG&E’s website.

The CPUC recently implemented some changes to the RAM program--see Allison Smith's recent blog entry for details.

CPUC Implements Changes to the California Renewable Auction Mechanism

The California Public Utilities Commission (CPUC) has adopted several changes to the state’s Renewable Auction Mechanism program (RAM), created in 2010. The RAM program operates as a reverse auction, offering a standard contract with the state’s three largest investor-owned utilities for energy from renewable distributed generation facilities of up to 20 megawatts (MW). The utilities will procure up to 1,000 MW of renewable energy under the program over two years. The first RAM auction took place in November 2011 and the second auction is schedule for next month. Resolution E-4489, adopted last Thursday, modifies the CPUC decision creating the RAM program, Decision 10-12-048, and Resolution E-4417, which served to implement details of the program. Resolution E-4489 approves changes to align the RAM with recent updates to Southern California Edison’s Solar Photovoltaic Program and incorporate a change requested by Pacific Gas & Electric Company.

 

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New Army Corps Nationwide Permits for Renewable Energy Facilities

Stoel Rives partner Aaron Courtney will speak about the New Army Corps Nationwide Permits for Renewable Energy Facilities during a one-hour expert analysis telebriefing on Wednesday, April 25.

Learning objectives include:

  • How the nationwide permit program works
  • The scope and limitations of the two new nationwide permits for renewable energy facilities
  • Other nationwide permits that remain available to authorize renewable energy facilities
  • How the general, regional, or state Clean Water Act could affect the use of the nationwide permits
  • Implications for the development of onshore and offshore renewable energy facilities

Click here for full details.

DOE Concludes 1603 a Big Job Creator

A surprise to no one involved in renewable energy, the DOE (via NREL) has just issued a report concluding 1603 created tens of thousands of new jobs.

See the report at http://www.nrel.gov/docs/fy12osti/52739.pdf

 

PG&E Announces 2012 PV PPA RFO

Pacific Gas & Electric Company (PG&E) announced yesterday that it had issued its 2012 Photovoltaic Program Power Purchase Agreement Request for Offers (“PV PPA RFO”).  PG&E seeks to procure PPAs for 50 MW of new photovoltaic resources to be located in PG&E’s service territory.  

Copies of the solicitation protocol and related information and materials are now available on PG&E’s website .  In its announcement, PG&E advises prospective bidders to "use the current versions of the documents when submitting an offer for this RFO." Offers are due by May 3.

PG&E will host a Participants’ Webinar on April 11 from 10:00 AM to 12:00 PM Pacific time.  To register for the Webinar, complete the Webinar Registration Form and return it to PVProgram@pge.com by April 6, 5:00 PM PPT. 

For information or questions about PG&E’s 2012 PV PPA RFO, please email PVProgram@pge.com.

 

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

 

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

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

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

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

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

Gov. Kitzhaber Names Margi Hoffman as Oregon's Energy Policy Advisor

Oregon Governor John Kitzhaber announced today that he has named Margi Hoffman to serve as his Energy Policy Advisor.  She will join the Governor's office on April 2.

Ms. Hoffman has served as Senior Vice President and Director of Oregon Operations with Strategies360, a strategic consulting firm, and has also worked closely with Renewable Northwest Project (RNP) .  The news release from the Governor's office can be found here.

Congratulations, Margi!

Upcoming Event: Energy Storage for the Grid: Watchful Waiting or the Perfect Storm?

I'll be moderating Energy Storage for the Grid: Watchful Waiting or the Perfect Storm? at the MIT Enterprise Forum Northwest's May 8, 2012 program at Seattle's Museum of History and Industry (MOHAI) , 2700 24th Ave East.  The event, which includes a networking reception, will be held from 5:00 to 8:30 pm. 

The evening's panelists will be:

  • Terry Oliver, Chief Technology Innovations Officer, Bonneville Power
    Administration
  • Alexander H. Slocum, Professor, Massachusetts Institute of Technology
  • Chris Wheaton, Chief Operating & Financial Officer, EnerG2
  • Nathan Adams, Manager of Development and Emerging Technologies, Puget Sound Energy

Among other topics, the panel will address:

  • The most promising energy storage strategies
  • How different storage methods could work together with the grid in the Northwest and nationally
  • How entrepreneurs, the changing energy marketplace, grid operators, and utilities are responding to the call to build the foundation for a clean energy economy 

For more information about this event, visit MITEF Northwest's web site

I hope to see you there!  In the meantime, for those who are following energy storage, I'm "tweeting" regularly on that topic as well as Department of Defense renewables procurement  at @BillHolmesStoel (#energystorage)

 

PG&E Announces Plans to Issue 2012 Solar PV RFO

Pacific Gas & Electric Company (PG&E) announced today that it expects to issue its 2012 Solar Photovoltaic PPA RFO (“PV PPA RFO”) in late March or April .  PG&E's goal in this second round of the RFO is to procure 50 MW of new PV generation. 

Two of the eligibility requirements of the PV PPA RFO are (1) that participants provide proof that an interconnection application has been filed, and (2) that participants must pursue Resource Adequacy for their projects.  If you need to file an application, note that the current Cluster 5 window closes March 31, 2012.  For program information, please visit PG&E’s 2012 PV PPA RFO website.  Among other things, PG&E notes on the RFO website that it has developed an interactive, Google-based map of its service territory as a tool to help renewable energy developers identify potential project sites (although the map is not a guarantee that generators can interconnect at any particular time and place).

PG&E plans to conduct a Participants’ Webinar to discuss the 2012 PV PPA RFO shortly after its issuance. Registration for this event will be posted on the 2012 PV PPA RFO website at a later date.

Don't Miss! Mission Critical: Clean Energy and the U.S. Military

Please join Stoel Rives partner, David Benson, host of "Mission Critical: Clean Energy and the U.S. Military," on March 15, 2012 in Seattle, WA. A new and formidable leader has emerged in the push for clean energy. The U.S. Department of Defense is setting aggressive objectives to reduce its fossil fuel dependence and invest in low carbon renewables and energy efficiency technologies. Leaders from the Army Air Force, Navy and Marines say our current fuel mix is a national security threat, making Americans vulnerable overseas and at home. Furthermore, the DOD warns that global warming is a threat multiplier which will heighten geopolitical instability and create both military and humanitarian challenges beyond the armed services' capacity to respond. In a time of Congressional gridlock, the U.S. military says we must face this issue now.

Join E2 and Climate Solutions to hear from Congressmen Adam Smith and Jay Inslee, Ray Smalling from Naval Station Everett and E2 member and Navy SEAL (ret) James Marvin about the role the military is playing to move America toward a clean energy economy, the impact these initiatives will have in the civilian economy, and the response from Congress.

Contact Ying Li at yli@nrdc.org with any questions. For more information, click here.

When:

Thursday, March 15, 2012
4:30 - 6:30 P.M.

Where:

Stoel Rives LLP
Union Square Boardroom (street level, behind escalators)
One Union Square
600 University Street
Seattle, WA
(
206) 624-0900
Click here for map.

Stoel Rives Offering 50% Registration Discount at Project Finance: The Tutorial

Stoel Rives partner Ed Einowski will serve as a faculty member and speaker at Infocast’s Project Finance: The Tutorial, taking place next month in New York City. 

This program, now in its 25th year, is truly a critical financial tool, as it provides insights into obtaining financing in today's market environment.  This is why Stoel Rives is pleased to offer a 50% registration discount to our friends and colleagues. Simply enter code 122015 during your registration to receive the discount.

 

The 2012 edition will provide up-to-the-minute information on how to best access today's capital and credit markets. Topics addressed will include:

  • structuring deals in a post-tax grant environment
  • maximizing performance through new technology
  • decreasing performance risk
  • putting together bankable projects in a tightening lending environment

Ed will present Commercial Issues and Risk Allocation in Project Documentation, on Thursday, March 22, from 1:00 to 1:45 p.m.  This presentation will review critical terms, provisions and negotiations involved in forming project agreements, such as:

  • construction and warranty issues
  • technology advancements
  • operation problems
  • transmission interconnection issues

Click here to learn more, or to register online.

BPA Seeks Comment on Draft Proposal to Split Environmental Redispatch Costs

The Bonneville Power Administration (“BPA”) made headlines this week with the release of its Draft Oversupply Management Protocol (the “Draft Oversupply Protocol”). BPA’s Draft Oversupply Protocol is intended to address concerns raised by BPA’s Environmental Redispatch (“ER”) policy of curtailing wind generation without compensation during periods of high water. Back in December, in response to a complaint filed against BPA by a group of owners of Pacific Northwest wind energy projects, the Federal Energy Regulatory Commission (“FERC”) issued an order holding that BPA’s ER policy was unduly discriminatory and preferential, in violation of Section 211A of the Federal Power Act (the “ER Order”). FERC directed BPA to file a revised Open Access Transmission Tariff (“OATT”) by March 6, 2012 addressing the comparability concerns raised in the proceeding in a manner that would provide for transmission service that is not unduly discriminatory or preferential. Click here to read our Energy Law Alert on the ER Order

BPA and several other parties filed requests for rehearing of the ER Order. FERC’s procedural rules provide that if FERC does not act on a rehearing request within 30 days of the filing, the request for rehearing is deemed denied. Earlier this week, FERC issued an order (the “Rehearing Order”) granting rehearing in order to give itself more time to consider the matters raised in the requests for rehearing.  Notwithstanding the Rehearing Order, BPA must still submit its compliance filing on the initial ER Order no later than March 6.

 

In preparation for its March 6 compliance filing, BPA released for comment its Draft Oversupply Protocol.  In a nutshell, BPA proposes to provide approximately 50 percent compensation to operating wind generators in order to continue its ER policy of (i) curtailing wind generators during periods of high water, and (ii) using the wind generators’ reserved transmission capacity to deliver federal hydropower.

 

Under BPA’s Draft Oversupply Protocol, BPA would compensate wind generators for the costs of displacing wind curtailed during ER events. The displacement costs include the production tax credits and renewable energy credits the generators would have earned had their generation not been curtailed. However, for wind projects that reach commercial operation before March 6, 2012, approximately 50 percent of the displacement costs would be recovered from the wind generators through a new rate. BPA would allocate the other 50 percent of the costs to the users of the Federal Base System. Wind generators with a commercial operation date after March 6, 2012 have the choice of (i) avoiding the new rate by being redispatched without compensation or (ii) receiving partial compensation for the ER curtailments and sharing in the costs.  BPA proposes to conduct a rate case to determine how it will recover the displacement costs (i.e. what percentage of the costs it will collect from the wind generators and what percentage of the costs it will collect from users of the Federal Base System).

 

BPA is accepting comments on the proposal until noon on February 21, and will host a workshop on the proposal on February 14, from 9 am to noon. Click here for information on the workshop and how to submit comments.  

Update: California Energy Commission Postpones Action on Proposed Decision Allowing PV Projects to Opt-In to CEC Permitting Process

In a previous blog, we reported on a proposed decision pending consideration by the California Energy Commission (CEC), which would allow solar photovoltaic project developers to opt-in to the CEC's permitting process.  The CEC has announced that its decision on this matter has been postponed to an as-yet undetermined date.

Upcoming Energy Conference Highlights

Through industry presentations and publications as well as through our blog, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.

Visit our website for the latest calendar of events. Upcoming highlights include:

PV Due Diligence Requirements
January 23-26 – San Diego, CA
This conference will focus on the core areas of due diligence for PV projects—mostly utility-scale, but also distributed-scale—and provide a "blueprint" for their execution. It covers aspects of solar project development not tackled by instructional programs, which focus strictly on financing issues. On January 23, Stoel Rives attorney, Howard Susman will present, "Project Contractual Relationships."

Next Generation Bio-Based Chemicals Summit
January 23-26 – Phoenix, AZ
This summit is focused on sustainably sourced chemicals — and the platforms, resources, business models and tools required to deliver them. Sam Webb will moderate the Plant/Biomass Panel Discussion, CJ Voss will moderate the Plenary Keynote Session, Consumer Goods Brand Owner/Automotive OEM Panel, and David Quinby will serve as Summit Chair. Stoel Rives is proud to be the Platinum Sponsor of this event.

EUEC 2012
January 30-February 1 – Phoenix, AZ
Over 2,000 delegates including environmental business leaders, energy executives and government policymakers gather to share presentations and discuss alternate energy solutions to secure our independence from foreign oil while protecting our environment. Kristen Castaños will present, "Utility-Scale Solar Projects in California - The Keys to Development Permits in Desert Areas and on Farmland," and Allison Smith will present, "Strategies for Complying with Current GHG Regulations in California."

Municipal Solid Waste to Biofuels Summit
February 7-8 – Chicago, IL
Stoel Rives attorney Kevin Johnson is headed to the Windy City for this forum, designed specifically to facilitate business meetings with investors, biofuels developers, waste management executives, and local and state officials. Hear Kevin Johnson present “The Legal Perspective: Counseling Municipalities in Renewable Energy Strategy.”

Wind Power Finance & Investment Summit
February 8-10 – San Diego, CA
Join Stoel Rives attorneys Ed Einowski, Duff Bryant, Greg Jenner, Howard Susman and Alexandra Mertens at one of the best deal-making and networking events in the wind industry. This annual summit brings together leading project developers, lenders, investors, financiers and other key players to discuss the latest finance and investment developments, and share information about upcoming projects opportunities. Stoel Rives is a proud Platinum Sponsor of this event. Stoel Rives is pleased to offer a 15% registration discount with code 120131.

2012 Wind, Solar and Storage
February 14-16 – Austin, TX
Stoel Rives Partners Bill Holmes and Greg Jenner will serve as members of the esteemed faculty for this CLE program, presented by the University of Texas School of Law and the Oil, Gas and Energy Resources Law Section of the Texas State Bar.  Greg Jenner will moderate the discussion panel, “A Primer on Economics, Tax Credits and PPAs for Wind and Solar Projects.” Bill Holmes will moderate the discussion panel, “Integration, Reliability, Operational and regulatory Issues for Renewables.”

Utah Energy Development Summit
February 15 – Salt Lake City, UT
Join Stoel Rives attorney Julia Pettit for the premier energy event for Utah and the Greater Rocky Mountain area. With a speech from Utah Governor Gary Herbert highlighting energy priorities in his administration, as well as keynotes from national-level energy leaders, this will be an event not to miss. Stoel Rives is a proud sponsor of this event.

National Ethanol Conference
February 22-24 – Orlando, FL
Stoel Rives is proud to be a sponsor for this conference delivering timely information on marketing, legislative and regulatory issues facing the ethanol industry. With numerous networking opportunities, more business meetings are conducted and contacts made at this conference than any other ethanol conference. Stoel Rives attorneys Graham Noyes and Kevin Prohaska will be in attendance.

Solar Power Finance & Investment Summit
February 27-March 1 – San Diego, CA
This summit brings together utility-scale, commercial and residential solar project developers, investors, lenders, equipment suppliers, construction contractors and other key players to share their perspectives on the latest developments in the solar project finance and investment market. David Benson will Chair the Solar Power Executive Briefing. Julia Pettit will moderate, "The Buying and Selling of Distributed Solar Projects,” and Morten Lund will moderate, "Financing 2-20 MW Scale Projects.” Stoel Rives attorneys Greg Jenner and Howard Susman and Ed Einowski will also be in attendance. Stoel Rives is a Platinum Sponsor at this event. Stoel Rives is pleased to offer a 15% registration discount with code 120221.

AWEA Wind Power Project Siting Workshop
February 28-March 1 – Las Vegas, NV
This two-day siting seminar delves into key siting topics and explores issues related to wildlife interactions, sound and visual impacts, radar issues, cultural resources and stakeholder interests. Stoel Rives attorneys Aaron Courtney and Tim McMahan both members of AWEA’s Siting Committee, will be in attendance, and Aaron Courtney present, “Managing Regulatory Risk on Your Site.

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CPUC Adopts Decision Implementing RPS Portfolio Content Categories

A legal update from our colleagues Seth Hilton and Allison Smith:

On December 15, 2011, the California Public Utilities Commission adopted Decision 11-12-052, implementing Portfolio Content Categories for the 33% Renewables Portfolio Standard (RPS) Program in California. The Decision implements portions of Senate Bill (S.B.) x1-2, which created the 33% RPS Program. S.B. x1-2 established three categories of RPS-eligible electricity, applicable to RPS contracts executed after June 1, 2010:

  • Category One includes electricity from RPS-eligible resources that have their first point of interconnection with a California balancing authority, RPS-eligible resources with a dynamic transfer arrangement with a California balancing authority, and RPS-eligible resources scheduling their electricity directly into a California balancing authority without substituting electricity from another source.

     
  • Category Two includes firmed and shaped RPS-eligible electricity.

     
  • Category Three includes transactions that do not meet the criteria of Category One or Two, including unbundled renewable energy credit (REC) transactions.
     

Click here to read the entire update on the Portfolio Content Categories and this decision.
 

Proposed Decision Would Allow Solar PV Projects to Opt-In to California Energy Commission Permitting Process

Next Wednesday, the California Energy Commission will consider adoption of a Proposed Decision that would “expand” the Commission’s jurisdiction over the permitting of energy facilities in California.  The Proposed Decision arises from a motion by Solar Trust of America asking the Energy Commission to find that photovoltaic electrical generating facilities may voluntarily submit to the Commission’s exclusive permitting jurisdiction.  For thirty-five years, the Commission has acted as the “one-stop shop” for the permitting of thermal energy facilities greater than 50 megawatts capacity in California, including gas-fired, geothermal and solar-thermal power plants.  However non-thermal facilities (e.g. wind and solar PV) and projects under 50 megawatts were excluded from CEC jurisdiction. The Proposed Decision provides an interpretation of an existing statutory “opt in” provision, which would allow solar photovoltaic projects (and logically, by extension, other non-thermal projects of less than 50 megawatt) to opt in to the Energy Commission’s permitting process and avoid local permitting jurisdiction.  The Commission’s jurisdiction over a proposed energy facility generally dispenses with the need to obtain most other local, regional, and state permits, though it does not eliminate the obligation to comply with applicable local, regional, and state laws and regulations.  Solar Trust’s motion to open up the Commission’s state-level permitting process for the first time to strictly non-thermal projects has been of interest to a variety of sectors and numerous parties participated in the briefing leading to the Proposed Decision.  The Proposed Commission Decision Affirming that Warren-Alquist Act Section 25502.3 Applies to Photovoltaic Electrical Generating Facilities is available for public comment preceding the December 14 hearing.

PIRP Changes Off the Agenda for December CAISO Board Meeting

On November 30, the California Independent System Operator Corporation ("CAISO") announced that it would not push for changes to the Participating Intermittent Resources Program ("PIRP") at the December 15-16 Board of Governors meeting.  The announcement came as welcome news to intermittent renewables advocates as the CAISO and stakholders have spent the past year negotiating issues set out in one Straw Proposal, five Revised Straw Proposals, and a Draft Final Proposal on changes to PIRP eligibility requirements and cost allocation, bid cost recovery ("BCR"), and a lowering of the energy bid floor.  Instead of making changes to PIRP now, the CAISO will revisit the discussions in the second quarter of 2012- when it is scheduled to begin a stakeholder process to review decremental bidding options for participating intermittent resources in the Renewable Integration- Market and Product Review, Phase 2 initiative.  Changes to the BCR netting methodology and the incremental lowering of the energy bid floor are still scheduled for review by the CAISO Board this month.

Upcoming Energy Conference Highlights

Through industry presentations and publications as well as through our blog, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.

Visit our website for the latest calendar of events. Upcoming highlights include:

Distributed Solar Summit 2011
November 30-December 2 – San Diego, CA
This event is a unique opportunity for the entire distributed solar community to connect and discuss successful strategies for funding distributed solar projects. Stoel Rives attorneys Morten Lund and Brian Nese will moderate discussion panels covering “The California Market – Market Environment and Business Opportunities,” “Asset and Portfolio Capital Providers' Appetite for Investing in Distributed Solar,” and “EPC/Installers Views on Contracting Relationships.” As a sponsor, Stoel Rives is offering a 15% registration discount with code 118926.

Siting & Permitting Renewable Energy Projects in the West
December 7-9 – San Diego, CA
On December 8 hear Tim McMahan co-present “Impact of the Endangered Species Act, NEPA and Other Environmental Legislation on Current and Planned Projects,” and Tim Taylor participate in the discussion panel “Strategies for Working Successfully with the Regulators to Get Projects Permitted and Developed.” Wayne Rosenbaum will chair the Pre-Conference Workshop on December 7.

Hydropower’s Evolving Role in Western Power Grid Reliability
December 12-13 – Sacramento, CA
Join Stoel Rives attorneys Chad Marriott, Bill Holmes and Barbara Brenner for one of the year's most important hydroelectric power events. On December 13, Bill Holmes will present "Storage: How Changing Policies and Technologies Influence Hydropower Utilization," and Chad Marriott will present "Recognizing the Role of Small Hydro in the West."

US-China Wind 2011: Building Strategic Cooperation
December 13-15 – San Francisco, CA
Join Stoel Rives’ Mike Mangelson, William Clydesdale, David Benson, and Ed Einowski as they examine the factors driving developments of the US and Chinese wind power markets. Mike Mangelson will serve as the pre-summit chair, at which time William Clydesdale will present “Negotiating the Joint Venture Agreement.” During the main summit, chaired by Ed Einowski, David Benson will present “Alternative Financing Structures.” As the Platinum Sponsor of this event, Stoel Rives is offering a 15% registration discount with code 116011.

2012 Pacific West Biomass Conference & Trade Show
January 16-18 – San Francisco, CA
This event focuses on biomass utilization in the western US, and brings together area producers of biomass-derived electricity, heat, and power with waste generators, utility executives, equipment manufacturers, and more. On January 16, Lee N. Smith will moderate the discussion panel "Capitalizing on Energy Rich Waste Streams and Technical Approaches for their More Varied Conversion," and Greg Jenner will serve as a panelist for "Capitalization Strategies in Challenging Financial Environment." Stoel Rives is a proud sponsor of this event.

Projects & Money 2012
January 18-20 – New Orleans, LA
Stoel Rives is proud to be a Gold Sponsor for this one-stop meeting center for project professionals working to kick off their project finance plans. Stoel Rives attorney David Benson will be in attendance, and Stoel Rives attorney Julia Pettit will moderate the discussion panel "Buying and Selling Project Assets (Project M&A)" on January 19. Stoel Rives is pleased to offer a 10% registration discount with code 120366.

Wind & Solar Integration Summit
January 18-20 – Scottsdale, AZ
Stoel Rives attorneys Stephen Hall and Bill Holmes come together with policy makers, transmission owners and operators, and renewable energy developers to network and exchange valuable information about operational changes and their impact on distributed solar and grid-scale wind energy. Bill Holmes will serve as Summit Chair, and Stephen Hall will present "Approaches to Handling Environmental Redispatch and Curtailment.”

PV Project Due Diligence Requirements
January 23-24 – San Diego, CA
Hear Stoel Rives attorney Howard Susman present "Project Contractual Relationships" on Monday, January 23 as he covers such issues as PPAs, financing, siting and permitting, and more.

Next Generation Bio-Based Chemicals Summit
January 23-26 – San Diego, CA
Join Stoel Rives attorneys David Quinby, Christopher Voss and Jere Webb for this innovative biotech/biofuels event with a comprehensive, in-depth focus on sustainably sourced chemicals — and the platforms, resources, business models and tools required to deliver them. Stoel Rives is a Platinum Sponsor for this event.

EUEC 2012
January 30-February 1 – Phoenix, AZ
See over 600 professional presentations on 12 specialized tracks, and browse over 200 exhibits. Allison Smith will present "Strategies for Complying with Current GHG Regulations in California,” and Kristen Castaños will present "Utility-Scale Solar Projects in California - The Keys to Development Permits in Desert Areas and on Farmland."

Wind Power Finance & Investment Summit
February 8-10 – San Diego, CA
Join Ed Einowski and members of the Stoel Rives Wind team as they participate in one of the best deal-making and networking events in the wind industry. Stoel Rives is proud to be a Platinum Sponsor for this event.

Solar Power Finance & Investment Summit
February 27-March 1 – San Diego, CA
Join Stoel Rives attorneys Howard Susman, Julia Pettit, David Benson, Morten Lund and Greg Jenner to learn about putting together solar power project deals. Hear investors discuss their future plans and what they seek when getting involved in deals in 2012 and beyond. David Benson will Chair, Julia Pettit will moderate, “The Buying and Selling of Distributed Solar Projects,” and Morten Lund will moderate, “Financing 2-20 MW Scale Projects.” Stoel Rives is proud to be a Platinum Sponsor at this event.

Energy Law Alert: BIA Proposes Regulations for Surface Leases of Trust Land for Energy and Other Uses

A legal update from our colleagues Michael O'Connell and Stephen Kelly:

The Bureau of Indian Affairs (BIA) on November 29, 2011 published proposed regulations for leasing tribal and individual Indian trust land for business and residential uses. The comment period runs through January 30, 2012. It will take the BIA some time to review and respond to comments before issuing final regulations. The Federal Register notice for the proposed new regulations runs 44 pages. See 76 Fed. Reg. 73,784 (Nov. 29, 2011).

The BIA's proposed regulations apply to surface leases of trust land. Subsurface leases and mineral development agreements are governed by different regulations and statutes, as are rights-of-way and contracts or agreements that encumber tribal land.

Revised Subpart D of the proposed regulations covers leases for biomass, waste-to-energy, and other commercial and business uses. Subpart E establishes procedures for Wind and Solar Resource Leases and short-term (three years, with an option for one renewal term of three years) Wind Energy Evaluation Leases (WEELs) for purposes of installing instrumentation and related infrastructure, such as met towers, to evaluate wind resources for electricity generation. No similar provision is included for solar energy evaluation leases on the theory that physical possession of land is not required to evaluate a solar resource. WEELs take the place of short-term BIA permits that were included in an earlier version of the draft regulations.

Click here to continue reading this alert.

Upcoming Energy Conference Highlights

Through industry presentations and publications as well as through our blog, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.

 

Visit our website for the latest calendar of events. Upcoming highlights include:

 

Southeast Biomass Conference & Trade Show
November 1-3 – Atlanta, GA
Join Stoel Rives attorneys Lee Smith, Greg Jenner, Joe Thompson, and Tim Taylor in Atlanta for this BBI conference. Stoel Rives is a proud sponsor of this event. Our attorneys will participate in discussion panels covering Environmental Compliance, Biomass Procurement and Supply Chain Management, and Federal Incentives.

 

WoWE Leadership Forum
November 2 – Carlsbad, CA
Stoel Rives and the Women of Wind Energy (WoWE) are pleased to announce the second installment of this special Forum. Stoel Rives attorneys Elizabeth Cason, Dina Dubson and Julia Pettit, member of the 2011 planning committee, will be in attendance.

 

AWEA Wind Energy Fall Symposium
November 2-4 – Carlsbad, CA
Join Stoel Rives attorneys Julia Pettit, Howard Susman and Wayne Rosenbaum at this exclusive event designed for professionals in every segment of the wind industry.

 

Solar Power Project Development
November 9 – San Diego, CA
Join Stoel Rives attorney Brian Nese in San Diego where he will co-present the Solar Status and Update session.

 

Green Energy M&A Outlook for 2012
November 15-16 – Santa Clara CA
Stoel Rives is proud to be a Platinum Sponsor at this event. Attorneys Duff Bryant, Ed Einowski and Julia Pettit will moderate discussion panels covering the Corporate M&A Landscape, Renewable Developers’ Perspectives, and Wind M&A Deals. Duff Bryant and Ed Einowski will serve as Summit Co-Chairs. We are pleased to offer a 15% registration discount with code 119631.

 

CalWEA 11th Annual Meeting
November 16-17 – Carlsbad, CA
Join Howard Susman, Wayne Rosenbaum, Randy Faccinto, Brian Nese, and Elizabeth Cason as they gather with other members of the California Wind Energy Association. Stoel Rives is proud to be a breakfast sponsor at this event.

 

Utah Renewable Energy Business Summit
November 16-17 – Salt Lake City, UT
Join Stoel Rives attorney Julia Pettit for this two-day event presented by the Governor’s Office of Economic Development.

 

Distributed Solar Summit 2011
November 30-December 2 – San Diego, CA
Hear discussions moderated by Stoel Rives attorneys Morten Lund and Brian Nese covering The California Market Environment and Business Opportunities, Asset and Portfolio Capital Providers' Appetite for Investing in Distributed Solar, and EPC/Installers Views on Contracting Relationships.

 

Siting & Permitting Renewable Energy Projects in the West
December 7-9 – San Diego, CA
Tim McMahan will co-present Impact of the Endangered Species Act, NEPA and Other Environmental Legislation on Current and Planned Projects and Tim Taylor will participate in the discussion panel Strategies for Working Successfully with the Regulators to Get Projects Permitted and Developed.

 

US-China Wind 2011: Building Strategic Cooperation
December 13-15 – San Francisco, CA
Visit with Mike Mangelson, William Clydesdale, David Benson, and Ed Einowski in San Francisco for the 2nd Annual US-China Wind Summit. Stoel Rives is proud to be a Platinum Sponsor at this Infocast event, and we are pleased to offer a 15% discount on registration with code 116011.

 

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To see the full calendar of events, click here.

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

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

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

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

New Resources for Electric Energy Storage

For those who like to pay close attention to developments in the energy storage industry, take a look at Stationary Electricity Storage, which collects and presents articles about storage industry news, noteworthy projects, and other topics.  It's well organized (with articles filtered by category, storage provider, organization and location), offers a free daily newsletter and looks like a good way to stay on top of developments in this expanding sector.  (Thanks to Greg DelSesto for introducing me to this new site.)

On a related note, I'll be chairing Infocast's Developing Grid Storage Projects in Dallas from October 5 through October 6.  Stoel Rives partner John Thompson will be speaking on "Intellectual Property Protection for Grid Storage," and Dave Hattery, a partner in our Seattle office, will be speaking on "Negotiating the Terms and Navigating the Risk of a Procurement Contract and Other Financial Documents."  The conference features an impressive list of speakers who are very active in the energy storage industry, and I hope to see you there!

Upcoming Energy Conference Highlights

Through industry presentations and publications as well as through our blog, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.

Visit our website for the latest calendar of events. Upcoming highlights include:

Utah Solar Tour 2011
September 24 – Salt Lake City, UT
Join Stoel Rives attorney Julia Pettit for the Utah Solar Energy Association’s annual Solar Tour. This year’s tour features sites with geothermal heat pumps, small wind, passive solar design, solar shingles, and many energy efficiency design techniques. Stoel Rives is proud to be a Gold sponsor at this event.

In-Depth Tax Planning for Renewable Energy Projects
September 26 – Chicago, IL
Stoel Rives attorneys Greg Jenner, Adam Kobos, Carl Lewis and Kevin Pearson will serve as faculty for this course which will outline tax issues involved in developing renewable energy projects and negotiating tax equity incentives.

REFF West
September 26-27 – San Francisco, CA
Join Duff Bryant, Julia Pettit, John McKinsey and over 400 senior executives and investors as they discuss opportunities for private equity and venture capital in clean tech energy companies. Review in detail the latest technologies moving the industry forward, and examine prospects for rapid renewable growth across the West Coast. Be sure to visit Stoel Rives in the exhibit hall!

National Hydropower Association Pumped Storage Workshop
October 3 – Bellevue, WA
Join Stoel Rives attorneys Bill Holmes, David Benson, Cherise Oram, and Michael O’Connell for this workshop intended for industry professionals with an interest in the development of new pumped storage projects. Bill Holmes will join the discussion panel What Would Energy Storage Asset/Revenue Modeling Look Like? from 4:00-5:00 p.m.

Independent Energy Producers Association Annual Meeting
October 3-5 – South Lake Tahoe, CA
John McKinsey and Seth Hilton will be in attendance at The IEP 30th Annual Meeting, featuring speakers from CPUC, CARB, CEC, and FERC. Stoel Rives is a proud sponsor at this event.

Developing Grid Storage Projects
October 5-6 – Dallas, TX
John Thompson, David Hattery and Bill Holmes are headed to Dallas to explore market opportunities, models, technologies and barriers to energy storage. Bill Holmes will Chair the conference, and instruct the pre-conference workshop, Developing the Business Case for Grid Storage on October 5. Other Stoel Rives presentations on October 5 include John Thompson, presenting Intellectual Property Protection for Grid Storage, and David Hattery, presenting Negotiating the Terms and Navigating the Risk of a Procurement Contract and Other Financial Documents.

Biogas USA West 2011
October 11-12 – San Francisco, CA
Visit with David Benson and Lee Smith, who will join the discussion panel Project Development Optimization on October 11. Be sure to attend the post-conference event reception, proudly hosted by Stoel Rives.

Solar Power International
October 17-20 – Dallas, TX
Stoel Rives attorneys David Benson, Kristen Castaños, Bill Clydesdale, David Hattery, Bill Holmes, Greg Jenner, Morten Lund, Jennifer Martin, Julia Pettit, David Quinby and Howard Susman are headed to Dallas! Julia Pettit will join the Financing Strategies for Utility-Scale Projects discussion panel, and Bill Holmes will moderate the discussion panel, Energy Storage Market and Policy Developments. Visit Stoel Rives at booth #3043 in the exhibit hall!

GEA Geothermal Energy Expo & GRC Annual Meeting
October 23-26 – San Diego, CA
Stoel Rives attorneys John McKinsey and Erin Anderson will be in attendance at the Geothermal Energy Association Energy Expo, co-located with the Geothermal Resources Council Annual Meeting. Erin Anderson will present during the pre-meeting workshop, held on Friday, October 21 from 8 a.m. – 5 p.m. While you’re there be sure to visit Stoel Rives in the exhibit hall!

CALIFORNIA RPS: Meeting the Mandate
October 24-25 – Los Angeles, CA
On Monday, October 24, Seth Hilton will present, In-State vs. Out-of-State Renewable Resources to Satisfy RPS Requirements from 10:30-11:15 a.m.

Green Energy M&A Outlook for 2012
November 15-16, 2011 – Santa Clara, CA
Stoel Rives’ Duff Bryant and Ed Einowski, will serve as Summit Co-Chairs, and on Tuesday, November 15, Julia Pettit will moderate the discussion panel, The Green Corporate M&A Landscape, from 8:45 - 9:45 a.m. Stoel Rives is proud to be a Platinum Sponsor of this event.

To see the full calendar of events, click here.

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Great River Energy Issues Request for Proposals

On August 15, 2011, Great River Energy (GRE) issued a request for proposals (RFP) for community-based energy development (C-BED) renewable energy resources.  Eligible energy technologies include: wind, solar, hydroelectric of less than 100 megawatts, biomass, municipal solid waste, landfill gas and anaerobic digesters, and hydrogen produced from any of the previous resources.

In announcing the RFP, GRE noted that it already has enough renewable resources in its energy portfolio to meet Minnesota's Renewable Energy Standard.  Minnesota's RES requires electric utilities to supply an increasing percentage of their energy sales from renewable energy sources, reaching 25 percent by 2025. Nevertheless, GRE issued the RFP to "evaluate if additional C-BED renewable resources can provide value to our member cooperatives in the future," according to Jon Brekke, Great River Energy vice president of member services.  GRE plans to evaluate proposals based on their impact to wholesale power rates and other factors.

Proposals are due before 4pm Central Prevailing Time on Sept. 9, 2011.  GRE plans to notify short listed bidders by September 30 and has targeted November 1, 2011 as the execution date for a power purchase agreement (PPA).  GRE is clearly looking for bargains from developers who can take advantage of the Section 1603 cash grant, a program that expires on December 31, 2011, and who can place a project in service by December 31, 2012.  Since projects seeking the cash grant will need to "begin construction" (as that concept is defined in Section 1603) by December 31, 2011, the November 1 target execution date will likely be critical for developers seeking to arrange project financing before year end.

GRE is interested in entering into a PPA rather than a build-transfer or other ownership arrangement.  GRE's form of PPA can be found here.   The RFP itself can be found here.  For more information about the RFP, contact Mark Rathbun at 763-445-6104 or 2011cbedrenewablerfp@grenergy.com.

Joint Agency Effort to deploy $510 Million to Support Drop-In Aviation and Marine Biofuels

Yesterday, President Obama announced that the U.S. Departments of Agriculture (“USDA”), Energy (“DOE”), and Navy (“USN”, and together with the USDA and DOE, the “Agencies”) will invest up to $510 million over the course of the next three years to support advanced drop-in aviation and marine biofuels to power military and commercial transportation. This is a follow up to President Obama’s Blueprint for a Secure Energy Future (the “Blueprint”).  In the Blueprint, the President expressed a desire to begin construction on at least four commercial-scale cellulosic or advanced bio-refineries over the next two years and challenged the Agencies to work together to spur the development of competitively priced substitutes for diesel and jet fuel.

The USDA, DOE and USN responded to the Blueprint by signing a Memorandum of Understanding  (the “MOU”). The MOU outlines a plan for the Agencies to partner with the private sector to construct or retrofit several drop-in biofuel plants and refineries. The agencies have stated goals of limiting our nation’s dependence on foreign oil for national, providing tactical and strategic advantages for our military and creating economic opportunities in rural communities. We expect that the USDA will take the lead on addressing feedstocks, the DOE will take the lead on technology, and the USN will be the initial primary consumer of the advanced biofuels.

 

Each of the Agencies have committed to spending $170 million over the next three years and an Executive Steering Group (the “ESG”) will be established to coordinate the programs. It is expected that the ESG will work with the Agencies to develop and release solicitations to industry beginning in December 2011. The solicitations will be issued in accordance with the Defense Production Act (50 U.S.C. App. 2061 et seq), the Commodity Credit Corporation Charter Act (15 U.S.C. 714 et seq), the Economy Act (31 U.S.C. 1535) and other appropriate authorities. Consequently, rights in inventions made as a consequence of, or in direct relation, of these solicitations will be administered in accordance with the applicable Agency’s governing laws and policies.

Section 1603 Cash Grants for Renewable Energy Projects TeleBriefing

With the end of 2011 drawing near, many renewable energy developers are seeking to qualify their projects for the Section 1603 cash grant.  Developers continue to try to understand the complexities surrounding the grant requirements, especially the determination of when projects are considered to have met the “beginning construction” requirement.

On August 24, I'll moderate a Law Seminars International (LSI) Telebriefing on Section 1603, featuring Stoel Rives partner Greg Jenner and  Victoria McDowell, the Compliance Program Manager, Section 1603 Program, U.S. Department of the Treasury. 

The TeleBriefing will take place from 10 AM – 11 AM Pacific Time/ 1 PM -- 2 PM Eastern Time.  During the briefing, attendees will learn how to meet the “beginning construction” test and receive clarification from the Treasury Department on project requirements.  We'll also discuss the fate of projects that fail to qualify for the cash grant.

 

Registration is available online through Law Seminars International.

 

The Bureau of Land Management, Tribal Cultural Resources and Renewable Energy Development

My collegue Michael O'Connell issued the legal alert below on a recent significant Interior Board of Land Appeals decision concerning the intersection of tribal cultural resources and a BLM geothermal lease application:

The Interior Board of Land Appeals (IBLA or Board) decision, Earth Power Resources, 181 IBLA 94 (May 12, 2011), deals with BLM action on a geothermal lease application in Nevada. Citing National Historic Preservation Act (NHPA) section 304, 16 U.S.C. § 470w-3, BLM withheld from a geothermal lease applicant an ethnographic study of Ruby Valley that identified a tribal traditional cultural property (TCP) important to an Indian Tribe and disapproved the lease application in order to protect the TCP. The Board overturned BLM’s decision and remanded the case for further action.

Continue Reading...

CPUC Seeks Comments in AB 2514 Electric Storage System (ESS) Docket R.10-12-007

California’s AB 2514 directs the California Public Utility Commission (CPUC) to determine appropriate targets, if any, for load-serving entities to procure viable and cost-effective energy storage systems. If the CPUC decides that targets are appropriate, it is supposed to set dates for achieving those targets.

As a follow up to an AB 2514 workshop held on June 28, 2011, Administrative Law Judge Amy C. Yip-Kikugawa issued a ruling asking for comments on the presentations made at the workshop by the California Energy Commission, the California Independent System Operator, Southern California Edison, the California Energy Storage Alliance, AES Energy Storage, Beacon Power Corporation and KS Engineers, all of which were attached to the ruling. The ruling asks the parties to comment on whether they agree or disagree with the presentations.

In addition, the ruling seeks comments from parties on the following questions:

  1. Which barrier(s), either identified by the presenters or the CPUC, do you believe present the greatest impediment to more widespread usage of energy storage and development of ESS in California?
  2.  

  3. Are there other barriers that were not identified during theworkshop? Please explain how these other barriers impede theusage or development of energy storage and whether they needto be resolved at the Commission or other forums.
  4.  

  5. To whatextent can the Commission assist in removing these barriers?In your opinion, are there certain barriers that need to beresolved first, and therefore have higher priority?

The deadline for comments is August 29, 2011, and reply comments will be due September 16, 2011. Your can find a copy of the ruling and attachments here.

EPRI Project to Develop Functional Requirements for Customer Energy Storage System (CESS) Launched - Public Webcast July 22

The Electric Power Research Institute (EPRI) is developing a new report to define functional requirements for customer energy storage systems (CESS). The project is engaging energy storage stakeholders to collaborate on the development of the functional requirements through a public process.

EPRI's effort is designed to create an understanding between electric utilities and their storage needs, the manufacturers and suppliers of customer energy storage systems, and customers of the systems.

 

A webcast open to all stakeholders will take place on Friday, July 22, 1:30 PM – 3 PM ET. During that webcast, attendees will be asked to help refine the draft document, and provide comments. Registration is required at https://www2.gotomeeting.com/register/855889739.

This new EPRI report will builld on last year’s efforts to develop functional requirements for utility systems that support Distributed Energy Storage Systems (DESS), substation grid support and renewable energy integration.

 

Questions, comments and any feedback can be directed to cess@ttcorp.com. A copy of the CESS functional requirement document will be circulated among registrants a couple of days before the webcast.

 

Thanks to Emanuel Wagner, EPRI's Project Coordinator at Technology Transition Corporation, for the tip about this webcast.

Upcoming Energy Conference Highlights

 

Through industry presentations and publications, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.

Visit our website for the latest calendar of events. Upcoming highlights include:

Compressed Air Energy Storage (CAES): Lessons Learned from Natural Gas Tolling
July 21 – WEBINAR
Stoel Rives Partners Bill Holmes, Ed Einowski and Marcus Wood will serve as the exclusive faculty this 90-minute webinar, part of the “Law of Renewable Energy Series” presented by Stoel Rives and EUCI.

Renewable Energy in the Pacific Northwest
August 4-5 – Seattle, WA
Join partners Steve Hall, Tim McMahan (conference co-chair) and Michael O'Connell for sessions on "Getting Renewable Power to Market," “Working with Tribes: Lessons from Case Studies in Their Roles as Developers and Commercial Partners,” and “Best Practices for Engaging with Leasing and Permitting Agencies,” among others.

GEA National Geothermal Summit
August 16-17 – Reno, NV
Attorneys John McKinsey, Jennie Bricker, Tami Boeck, Michael O'Connell and Allison Smith are heading to Reno, Nevada for the first annual National Geothermal Summit, presented by the Geothermal Energy Association. Stoel Rives is proud to be a Gold Sponsor at this event.

Renewable Energy in the Midwest States: New Policy, Business and Legal Developments
August 25-26 – Minneapolis, MN
Join Minneapolis-based partners Mark Hanson and Greg Jenner for sessions on "Special Legal Issues for Biofuels Development," and "Commercialization and Financing Structures: What Will Future Deals Look Like?"

National Hydropower Association Alaska Regional Meeting
August 30-31 – Girdwood, AK
Greg Jenner will speak on tax incentives for development of renewable energy, development alternatives, and DOE funding.

Utility Scale Solar Summit 2011
September 13-15 – San Diego, CA
Stoel Rives is proud to be a Platinum Sponsor at this Infocast event, and serve as Chair of the “Solar Project Development Briefing.” Join attorneys Howard Susman, Morten Lund, Greg Jenner, Ed Einowski, Jennifer Martin, David Quinby and Seth Hilton in sunny San Diego. We are pleased to offer a 15% registration discount, use code 115321.

RETECH 2011
September 20-22 – Washington, DC
Visit Stoel partners Bill Holmes, Ed Einowski and Graham Noyes at booth #819 in the Exhibit Hall. We’ll also be participating in sessions covering wind and energy storage topics.

You’ll see Stoel Rives sponsoring and/or speaking at Turbines, Towers & Vessels in Rhode Island, Northwest & Intermountain Power Producers Coalition (NIPPC) Annual Meeting in Washington, Transmission West Summit in San Diego, ACORE’s REFF West in San Francisco, CanWEA Annual Conference in Vancouver, Solar Power International in Dallas, and many more this fall.

To see the full calendar of events, click here.

To join the Stoel Rives mailing list and ensure direct delivery of future alerts, click here to subscribe. To unsubscribe, send an email to unsubscribe@stoel.com.

 

 

Recent RFPs for Renewable Energy

Several requests for proposals ("RFPs") have been issued recently with July deadlines.  Here's a brief summary of each:

  • Progress Energy Carolinas is seeking proposals for energy and renewable energy certificates from newly constructed or existing wind projects of at least 5 MW to comply with North Carolina's renewable energy portfolio standard.  Projects do not have to be located in North Carolina.  The deadline for proposals is currently set at 5:00 p.m. EST, July 25.  The utility anticipates shortlisting in August and executing final contracts in late October.  More information can be found here.
  • Tucson Electric Power and UniSource Energy Services are seeking up to 50 MW of Arizona-based wind generation.  There will be a bidder teleconference at 1:30 p.m. PST on Monday July 18.  Bids are currently due by 4:00 p.m. PPT on August 25 and the utilities expect to make a decision by September 30.  Information about the joint request for proposals can be found here
  • The City of Roseville, California, through its electric department, Roseville Electric, seeks to procure eligible renewable energy resources from renewable electrical generation facilities as defined by California's SBX1-2.  Targeted procurement is outlined on the request for offer document.  The deadline to submit questions is July 22.  Responses are currently due July 26 and the City anticipates shortlisting on or about September 30.  More information is available here.
  • National Grid has issued a second request for proposals for renewable energy in Rhode Island.  The Narragansett Electric Company d/b/a National  Grid is seeking proposals for capacity, energy, and renewable energy credits under 10-15 year contracts.  A bidders conference will be held on July 15 in Rhode Island.  Notices of Intent to Bid are currently due by 5:00 p.m. EPT on July 20, and proposals will be due by 5:00 p.m. EPT on August 4.  Details can be found here.

 

Washington UTC Invites Comments on Distributed Energy Study

The Washington State House of Representatives Technology, Energy, and Communication Committee (TEC Committee) has asked the Washington Utilities and Transportation Commission (Commission) to provide to the State Legislature background information and detailed discussion of options to encourage the development of cost-effective distributed energy in areas served by investor-owned utilities, as well as the opportunities and challenges facing investor-owned utilities and their ratepayers in developing distributed energy in Washington.

The Commission is currently in the process of gathering information and reviewing existing literature concerning distributed energy. The Commission also seeks the perspective of investor-owned utilities, persons involved in developing distributed energy in the state, and others to better inform their efforts in this study. Attached here is the set of questions upon which the Commission seeks input.  This list includes questions that are both general and energy source-specific (e.g., solar, wind, hydro, etc.). The Commission provides an opportunity for interested persons to provide comments on these topics and questions by Friday, July 15, 2011.

The Commission also invites interested persons to a work session scheduled for Monday, July 25, 2011, in Room 206 of the Commission's headquarters, Richard Hemstad Building, 1300 S. Evergreen Park Drive S.W., Olympia, Washington.

For additional information, see the UTC Rulemaking Website (click on "UTC invites comments on a study of the potential for distributed energy in Washington State") and UTC Docket UE-110667.

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PSU's Hatfield School of Government Offers "Summer Series on the New Energy Economy"

This summer, the Center for Public Service at the Hatfield School of Government at Portland State University will be offering a series of short, 2-3 day classes under an umbrella called the "Summer Series on the New Energy Economy."  These are non-credit courses, specifically designed for energy industry leaders, a wide range of professionals, and other community members with an interest in learning more about key energy topics.The series is being coordinated by Jeff Hammarlund, one of PSU’s adjunct faculty, who in recent years has taught a series of popular classes on various aspects of the Smart Grid.

The summer series will kick off with the first class on July 11-12. Entitled  "Dissolving Complex Problems in the New Energy Economy," this course will bring a systems science focus to core energy structure, regulation, and policy questions. Other classes, which will run in July, August, and September, include

     * Green Inc: Business Models for the New Energy Economy (July 13-15);

     * Comprehending the Climate Conundrum (July 25-27);

     * Riding the Waves of Change: Project Management and the New Energy Economy (August 10-12); and

     * The Smart Grid and Sustainable Energy Systems (September 14-16);

Additional information and registration instructions can be found here. If you have specific questions, contact Christine Hanolsy at PSU at 503-725-5114 or hanolsy@pdx.edu.

 

Stoel Rives Partners to Present Wind Project Development Case Study at Chinese Wind Conference in Beijing

Stoel Rives Partners Alan Merkle, Ed Einowski and Michael Mangelson will participate in the upcoming Workshop on Investment in U.S. Wind Energy by Chinese Companies, held in Beijing, China on June 30, 2011.

The opportunities for mutually beneficial cooperation between U.S. and China wind power industries have become increasingly profitable.  Now more than ever it’s important for key players on both sides to understand and evaluate where their best prospects lie, as many basic business assumptions can become lost in translation. 

This workshop, organized by the Chinese Wind Energy Association (CWEA), the U.S.-China Energy Cooperation Program (ECP) Wind Power Working Group (WPWG), and the National Energy Administration (NEA), gathers wind experts from across the U.S. and China to discuss the globalization of the Chinese wind energy industry, strategies for undertaking M&A transactions in the U.S., and a variety of case studies based on wind energy development projects.

Stoel Rives attorneys prepared their own case study, which will be presented during the workshop by Alan Merkle.  Case Study: Development of a Wind Project in California, is based on a hypothetical 200 MW wind development project in Southern California. The case study covers the legal framework for a project of this scale, including real estate, permitting, transmission and interconnection, power purchase agreement, renewable energy credits, turbine supply and balance of plant agreements, and financing. It is available as a PDF for download in English and Chinese.

Ed Einowski will provide workshop attendees with a presentation titled Setting the Stage for Investing In U.S. Renewable Energy Projects: The Business and Legal Environments. The PowerPoint presentation is available as a PDF for download in English and Chinese.

The Stoel Rives Law of Wind Energy (now in its 6th edition) is also available for download in both English and Chinese editions here.

Renewable Energy Law Alert: EPA Releases Draft 2012 Renewable Fuel Standards

The U.S. Environmental Protection Agency (“EPA”) has released a series of proposed rules relating to the Renewable Fuel Standard (“RFS”). Originally enacted by Congress in the Energy Policy Act of 2005 and expanded by the Energy Independence Act of 2007, the RFS represents the country’s most comprehensive and effective policy in the energy security and greenhouse gas (“GHG”) sectors. The current RFS, often referred to as RFS2, contains four categories of fuel made from renewable biomass. EPA has the authority to set the mandate levels for these renewable fuels. U.S. petroleum refiners and importers are obligated parties under the program and must prove compliance by purchasing a sufficient quantity of these fuels. The EPA proposed an overall standard for 2012 for renewable fuel of 9.21% or 15.2 billion gallons of fuel and also proposed significant regulatory changes to the program.

 

Click here to continue reading this alert.

If you have any questions about the content of this alert, please contact:

Graham Noyes
(206) 386-7615
jgnoyes@stoel.com

Marty Banks
(801) 578-6975
mkbanks@stoel.com

Kevin Prohaska
(612) 373-8805
krprohaska@stoel.com

Sara Bergan
(503) 294-9336
sebergan@stoel.com

Coming Very Soon: CPUC Energy Storage Workshop

On Tuesday, June 28, 2011, the CPUC will hold an “Electric Energy Storage Workshop” as part of its R10-12-007 proceeding for AB 2514, which defines the process by which the CPUC will consider electric energy storage standards for California’s investor owned utilities. The workshop will be held at in the Golden Gate Room at CPUC’s headquarters from 9:30 am to 4:00 pm.

According to a draft agenda circulated by the CPUC, the theme of the workshop will be addressing barriers to entry facing Electric Energy Storage (EES). The workshops goals are to identify actions that the CPUC should consider, as well as whether and how it should participate in other forums.

The morning will feature presentations from several different perspectives, with each presentation to be followed by Q&A:

 

  • Presentation from UC Berkeley and California Energy Commission (CEC) team on “2020 Vision Project”
  •  

  • Presentation from CAISO about recent storage-related activities at the Independent System Operator, including findings from recent studies.
  •  

  • Presentation from Southern California Edison (SCE) discussing a white paper entitled Moving Energy Storage from Concept to Reality.
  •  

  • Presentation from California Energy Storage Alliance about developer’s perspectives

The afternoon will feature a facilitated presentation about a staff straw proposal concerning potential CPUC actions. The CPUC will allow parties to provide post-workshop comments on both the presentations and the staff straw proposal.

The CPUC is willing to accommodate short presentations (five minutes or less) or share prepared material pertinent to the workshop. Any party who wishes to do so may contact Michael Colvin at michael.colvin@cpuc.ca.gov. For reference (or inspiration), a series of energy storage presentations made to the CPUC as part of its 2011 IEPR process can be found here.

Stoel Rives attorneys Seth Hilton and Janet Jacobs will be attending the workshop.

FERC Seeks Comments on Ancillary Markets and Energy Storage

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

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

 

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

 

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

 

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

 

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

Envision Solar Emphasizes Growing Intellectual Property Portfolio

 

Posted on behalf of Stoel Rives Partner, Aaron Barker.

Envision Solar International, Inc. recently announced that it has filed for a U.S. patent application for the company’s multi-axis Envision Trak™ solar tracking systems, which are designed to increase energy output by approximately 20 percent over a standard fixed PV array. Envision Solar emphasized that it is “pursuing an aggressive technology and product development program” and that the “company’s intellectual property portfolio is growing.”

Because most patent applications are not published until 18 months after filing, details of the new patent application are not available. However, Envision Solar states that the company’s new patent application advances its “previously patented Solar Tree® products into Envision Solar’s next generation—ultra-high output solar parking array technologies.”

U.S. Patent No. 7,705,277 is Envision Solar’s previous patent covering sun tracking solar panels. The patent is related to maximizing solar energy utilization by moving a solar panel to track movement of the sun from sunrise to sunset. An example claim and drawing from U.S. Patent No. 7,705,277 are shown below.

 

Claim from U.S. Pat. No. 7,705,277

1. An apparatus for moving an energy converting unit to maximize solar energy utilization which comprises:

    at least one solar panel having a substantially flat surface with a plurality of the energy converting units mounted thereon;

    a mount for supporting the solar panel with the flat surface thereof inclined relative to a terrestrial horizon at a fixed angle "α" wherein the mount includes a pole anchored in the ground;

    a means for rotating the panel on the mount about a central axis, wherein the central axis is aligned with the pole and is substantially perpendicular to a horizontal plane defined by the terrestrial horizon; and

    a controller for controlling rotation of the panel through successive one-directional cycles in accordance with a programmed schedule to maximize generation of solar energy.

 

According to Envision Solar, the company’s new patent application describes a “Device for Continuously Reorienting a Solar Panel.” The company also hints that the new patent application covers “a hybrid, multi-axis design, [that] provides a highly functional solution which allows the entire Solar Tree® canopy to track the sun, while not restricting traffic flow in drive aisles of parking lots.”

We look forward to the publication of Envision Solar’s new patent application.

Energy Storage Industry Expresses Optimism at Energy Storage Association Annual Meeting

This week I attended the 21st Annual Meeting of the Energy Storage Association in San Jose, California. The meeting broke its attendance record by attracting over 420 attendees, including representatives from electric energy storage (“EES”) technology companies, utilities, venture capital funds, consultancies and government agencies. Key note speakers included Dr. Imre Gyuk of the U.S. Department of Energy, Assemblywoman Nancy Skinner of the California Assembly, Fan Wong of Pacific Gas & Electric, and Vinod Khosla of Khosla Ventures. Over 50 other distinguished speakers presented lectures and materials on various topics including flow battery applications, advanced storage technologies, smart grid interface, lithium ion battery applications, economics and policy, and venture capital markets. 

The record attendance at the meeting and reports of successful pilot projects were strong indicators that the EES industry has matured over the past years. The general sense at the meeting was that the EES industry is poised to emerge from the product development stage and move into the commercialization and deployment stage. In order to successfully make that leap, the EES industry must first overcome several hurdles.

Prospective EES customers, including utility representatives, contended that, except for pumped hydro, EES applications are not yet cost competitive and that EES systems must achieve significant price reductions before they can be competitive. Various utility representatives encouraged the EES industry to continue to bring down costs with the goal of becoming cost competitive with gas peaker plants. 

Project developers and technology companies acknowledged this reality, but stressed that when comparing EES applications to gas peakers, it is imperative that the market recognize the broad range of combined value streams and utility benefits that EES applications offer. These benefits include:

  • Ancillary services and frequency regulation
  • Reactive power, voltage, and power quality
  • Renewable integration and smoothing
  • Multiple hour peak shifting
  • Demand response
  • Islanding
  • Deferred T/D upgrades
  • Minimizing spinning reserves

In addition to these benefits, various speakers emphasized the siting and permitting advantages EES enjoys over gas plants. From a land use perspective, EES applications are relatively low impact. Many EES projects can obtain required permits based on a negative declaration and thereby avoid the lengthy siting proceedings that can drag on for years for some thermal generation projects. These siting and permitting advantages that EES applications enjoy translate into reduced costs and quicker development timelines and give EES a distinct advantage over gas peakers. 

The future of EES will in part hinge on the development of supportive federal and state regulations. Accordingly, ongoing proceedings at the Federal Energy Regulatory Commission and the California Public Utilities Commission are critical to the future of EES.

Further, EES system providers will face challenges in structuring transactions to finance and build EES projects. Consultants and legal advisors, including Stoel Rives attorneys, are currently wrestling with various options to solve these challenges.

The EES industry will meet again in San Diego for Infocast’s Storage Week  on July 11-14, and several Stoel Rives attorneys will be presenting and attending.

CEC Moves Forward on Implementation of 33% RPS

On June 3, the California Energy Commission (“CEC”) issued a Notice of Intent to Implement 33 Percent Renewables Portfolio Standard (“RPS”). The new 33% RPS was signed into law by Governor Brown on April 12, 2011. The legislation for the first time expanded the RPS to publicly-owned utilities (“POU”), and tasked the CEC with, among other things, monitoring POU compliance with, and developing regulations to enforce, the new 33% RPS.

The Notice also encourages all regulated entities, including POUs, to participate in the California Public Utilities Commission (“CPUC”) proceeding addressing the new RPS, Rulemaking 11-05-005, “so that, where appropriate, the [CEC] and CPUC may coordinate program development.” 

The Notice states that the CEC will implement the new RPS through two processes: (1) amending the RPS Eligibility Guidebook through the existing amendment process so that it conforms with the new legislation, and (2) initiating a rulemaking proceeding to address POU compliance. Although the new RPS legislation set a target date of July 1, 2011 for the CEC to adopt regulations for POU compliance, pending legislation (Senate Bill 23) may extend that deadline to July 1, 2012. 

 

On June 6, the CEC also noticed a staff workshop for June 17, 2011 to introduce the scope and a tentative schedule for the rulemaking proceeding concerning POU compliance, and to solicit comments from interested stakeholders. Written comments may also be submitted to the CEC by July 1, 2011.

Washington UTC Issues Important Policy to Determine Eligibility of Renewable Energy Resources Under State EIA

For those interested in qualifying energy projects as “eligible renewable resources” under the Washington Energy Independence Act (EIA), the Washington Utilities and Transportation Commission (WUTC) issued on June 7, 2011 an important new policy statement that provides processes by which utilities and developers may obtain either a non-binding or binding opinion regarding the eligibility of those resources.  Most importantly, these determinations may be obtained while projects are still in development, thereby easing the way for financing, formation of partnerships, and investments in research and development.

First, the Commission Staff has joined with staff of the Department of Commerce to establish an informal technical working group to provide non-binding technical analysis for guidance as to whether their proposed technology or resource is an “eligible renewable resource” under the EIA.  Because the opinions of the Commission Staff are not binding on the Commission, and the Auditor, not Commerce, determines compliance for COUs, the technical working group will only provide technical analysis, not a binding legal opinion.

Second, for those entities that seek a more formal, binding opinion on the eligibility of their proposed project, there is an option under the Washington Administrative Procedure Act.  Under the Act, any person may petition the Commission for a declaratory order with respect to the applicability to specified circumstances of a statute or rule enforceable by the Commission, such as RCW 19.285 or WAC 480-109-007.  Persons with standing to file such petitions may include investor-owned utilities and entities that propose to sell projects, project output, or RECs from projects to investor-owned utilities.

For more information, see the full policy statement from the WUTC website or contact any of the Seattle-based Stoel Rives energy attorneys listed below:

David Hattery at (206) 386-7528 or dphattery@stoel.com

Graham Noyes at (206) 386-7615 or jgnoyes@stoel.com

Hania Younis at (206) 386-7519 or hyounis@stoel.com

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

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

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

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

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

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

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

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

Stoel Rives' Mark Hanson and Loren Hulse to speak at Metabolic Design and Algae World Summit 2011

Stoel Rives Partners Mark Hanson and Loren Hulse will be at San Diego’s Biotech Beach on May 23 for Metabolic Design 2011.  This event is co-located with the 3rd Annual Algae World Summit.

Metabolic Design 2011 brings together research leaders, technology developers and R&D directors to share strategic insights and management practices.  Learn about the availability of potentially untapped opportunities in new markets, and open up new collaborative possibilities.

The Algae World Summit  will provide a comprehensive strategic survey, analysis and showcasing of the critical innovations, and emerging solutions for each set of challenges along the length of the production cycle.

This event will provide the essential platform for algae developers, vendors, scientists, investors, distributors and end-users to share the most cutting edge research results and breakthrough strategies, in search of the creative synergy that will advance the algae products industry into the future. 

Click here for a detailed agenda an exclusive Stoel Rives registration discount!

Stoel Rives' Mark Hanson and Greg Jenner to speak at Renewable Energy in the Midwest

Join Stoel Rives Partners Mark Hanson and Greg Jenner in Minneapolis, for Renewable Energy in the Midwest States: New Policy, Business and Legal Developments.  Here they will meet with leading renewable energy professionals, innovators and regulators to address opportunities and challenges for developers  and entrepreneurs in the Midwest renewable market and the developing Smart Grid sector.

Both Mark and Greg will present on Friday, August 26, and will discuss environmental issues and updates of federal and state programs, as well as ways to move renewable projects forward with less government support.

For full conference details, click here.

Southern California Edison Begins Process to Reform CREST Power Purchase Agreement

Citing changes in market conditions, Southern California Edison (SCE) announced last week that it is beginning the process of reforming the standard Power Purchase Agreement (PPA) it uses for its California Renewable Energy Small Tariff (CREST) program. CREST is SCE’s feed-in tariff program for eligible renewable energy projects under 1.5 MW. The PPA for each of these projects is a standard, non-negotiable PPA under either a full buy/sell or excess power purchase program for a term of 10, 15, or 20 years. Of the 247.7 MW allocated to SCE by the California Public Utilities Commission (CPUC) for CREST, SCE states that it has 214.1 MW either under contract or in the queue.

In its press release, SCE states that it will publish the proposed pro forma PPA on its website on June 2. It also states that the proposed “CREST PPA is based on SCE’s pro forma Solar Photovoltaic Program PPA for projects less than 5 MWs, and has been modified to make it applicable to all technology types and to be in compliance with the requirements of the CREST Tariff and CPUC Decision (‘D.’) 07-07-27.” Comments on the proposed PPA will be due by June 22, with the submission of the new PPA to the CPUC planned for August 2011.

Stoel Rives Energy Regulation Report

FERC Clarifies Qualifying Facility Restrictions in Sale/Resale Transactions

On May 19, the Federal Energy Regulatory Commission ("FERC") issued an order in Idaho Wind Partners I, LLC, a docket in which wind farm owners in Idaho petitioned FERC for approval of a unique transaction that would both provide eligible Renewable Energy Credits ("RECs") to a utility in California and leave the wind farm owners in a position to make a Qualifying Facility ("QF") "put" sale at avoided cost rates on the interconnecting utility.

FERC confirmed that so long as the third party is a QF, the size, affiliation, or relative physical location of the third party has no effect on the QF status of the power being sold and repurchased. Consequently, any power that the Idaho wind farms sell to a QF and then buy back may subsequently be sold to an electric utility at avoided cost rates.

Read more on the Qualifying Facility Restrictions

SunZia Transmission Obtains Approval of Ownership Structure, Anchor Tenant Proposal

On May 20, FERC granted SunZia Transmission's ("SunZia") petition for FERC's approval of the ownership structure and transmission service plans for the SunZia Southwest Transmission Project (the "Project"). SunZia had requested that each of its investor-owners be allocated ownership rights representing 100 percent of its respective pro rata investment in the Project, and that certain of the investor-owners be able to allocate up to 50 percent of their pro rata shares of transmission capacity to anchor tenants through long-term negotiated transmission contracts. In May 2010, FERC rejected SunZia's request to allocate 100 percent of the Project's transmission capacity (as opposed to ownership rights) among the owners according to their pro rata investment in the Project's capacity and ruled that the owners do not have exclusive rights to the Project's capacity equal to their share of investment in the Project.

Read more on the Approval of SunZia Ownership Structure and Anchor Tenant Proposal

Midwest ISO Releases Group 5 Re-Study System Impact Study

On May 19, the Midwest ISO released the long-anticipated Minnesota Group 5 Re-Study Generator Interconnection System Impact Study, which Re-Study was ordered by FERC as the result of a cost allocation dispute between a wind developer (Community Wind) and the Midwest ISO with respect to the Brookings County-Twin Cities transmission line.

Read more on Midwest ISO's Group 5 Re-Study Generator Interconnection System Impact Study

A Big Day for Transmission Rate Incentives: Multiple Applications Approved, and FERC Seeks Comments on Its Policies

FERC's May 19 open meeting turned out to be positive for transmission developers, as FERC approved transmission rate incentives (or related settlements) for five transmission projects located from the Atlantic coast to the desert Southwest. FERC also issued a Notice of Inquiry on its implementation of Section 219 of the Federal Power Act, and is seeking comments on how it should modify its policies and regulations to promote increased transmission investment.

Read more on each of FERC's Approved Transmission Rate Incentives

Stoel Rives' Bill Holmes and David Benson to Speak at Storage Week 2011

Please plan to join me and my colleagues - Bill Holmes, David Benson, John Thompson, and Morten Lund - at Storage Week 2011. Stoel Rives is proud to be a Platinum Sponsor at this premier event.

Storage Week kicks off on July 11 with four in-depth market and technical tutorials to provide you with all the background details necessary to maximize your experience at the two-day main event. Network with every key group playing a role in rewriting the rules of power markets, from policy strategists, state regulators, and grid operators, to utility planners and IPPs, vendors and more. This event lines up block-buster case studies, key project developers, investors, engineering firms and consultants covering bulk storage development, as well as distributed storage business models.

Click here for a detailed agenda, registration information, and our exclusive 15% off discount code!

UPDATE: California Utilities Issue 2011 RFOs for Renewables

Following up on my blog Thursday, all three of California's major investor-owned utilities, Pacific Gas & Electric ("PG&E"), San Diego Gas & Electric ("SDG&E"), and Southern California Edison ("SCE") have issued their 2011 requests for offers ("RFO") and requests for proposals ("RFP") for eligible renewable resources, triggering their timelines for new contract proposals.

Information on PG&E's RFO, issued Wednesday May 11, can be found here.  PG&E will hold a bidders conference on May 19.  According to the current schedule, offers must be received by noon on June 15.

Information on SDG&E's RFO, issued Thursday May 12, can be found here.  SDG&E will hold a pre-bidders conference in San Diego on June 2, and another one in El Centro on June 6.  According to the current schedule, offers must be received by noon on July 12.

Information on SCE's RFP, issued Friday May 13, can be found here.  SCE will hold a proposal conference on May 26.  According to the current schedule, offers must be received by 1:00 p.m. on June 27.

 

 

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CEC Holds Workshop on Energy Storage for 2011 IEPR

The 2011 IEPR Committee Workshop on Energy Storage for Renewable Integration was held Thursday, April 28th at the California Energy Commission (CEC) offices in Sacramento.  The Workshop was presented in a three panel format, with each panel addressing specific topics, including (1) the need for energy storage in light of California’s renewable portfolio standard, greenhouse gas goals, smart grid and demand response, (2) the costs, benefits and revenues from energy storage applications, and (3) utility perspectives on energy storage. The full agenda, which describes the topics and the questions addressed at the Workshop, can be found here.

The CEC is not planning any further workshops on energy storage, but it will be making recommendations about the topic in its 2011 Integrated Energy Policy Report (IEPR). We understand that the CEC is seeking input on energy storage from all arenas, including developers and owners of gas-fired peaker plants.  Among other things, the CEC wants to understand the economic and environmental benefits and impacts of peakers (i.e., facilities that have the ability to ramp up in ten minutes, generate for a full hour, then be taken off line) compared to the cost and benefits of various energy storage technologies.  The CEC will use the information it gathers to determine if it makes sense economically to recommend a lower or a higher target for energy storage in its 2011 IEPR. 

 

 

The CEC’s report will be taken into account by the California Public Utility Commission (CPUC), which is conducting a separate proceeding under AB 2514 to determine appropriate energy storage targets for California’s investor-owned utilities. You can find our previous descriptions of the AB 2514 process here , here and here.  A report on last year's CPUC staff whitepaper describing energy storage technologies and their potential use in the California market can be found here

 

Parties who want to weigh in on energy storage in California must submit their comments to the CEC by 5 p.m. on May 16, 2011.   The comments must include the docket number “11-IEP-1N” and indicate “Energy Storage for Renewable Integration” in the subject line or first paragraph of the comments.  All filings in the IEPR proceeding are now accomplished electronically and can be submitted in either Microsoft Word format or as a PDF by e-mail to docket@energy.state.ca.us

 

Thanks to Kimberly Hellwig in our Sacramento office for her help in preparing this Blog!

 

BLM Notices Interim and Proposed Rules Protecting Renewable Energy Development From Mining Claims

Stoel Rives attorney Heath Curtiss, one of the
co-authors of "Federal Land Issues with Siting
and Permitting" in our Law of Wind, describes
a Bureau of Land Management ("BLM") plan to
protect certain land suitable for renewables
development from the location of mining claims :

As many of our clients with right-of-way (“ROW”) applications pending before BLM know, mining claims located prior to a final ROW grant can prove difficult obstacles to clear in the context of project permitting, finance, and development.  Unfortunately for renewables developers, mining claims are easy to locate, and difficult to invalidate.  This gives mining claimants leverage vis-à-vis other public land developers.  As one might expect, with the recent uptick in renewable ROW applications, we’ve also seen an increase in mining claims.  According to BLM, over the last two years, 437 new mining claims were located within wind energy ROW application areas on BLM lands, and another 216 new mining claims were located within solar energy ROW application areas.

In an effort to address such conflicts, on April 25, 2011, BLM published notice of an Interim Rule effective immediately, and a nearly identical proposed rule, that gives BLM the ability to segregate lands included within wind and solar ROW applications, or lands that BLM identifies for potential wind and solar ROWs.  Once segregated, such lands would no longer be subject to appropriation under the appropriations laws, including location under the General Mining Law of 1872.  Segregation would not, however, explicitly restrict leasing under the Mineral Leasing Act of 1920, or sales under the Materials Act of 1947, presumably because those acts already give BLM significantly more discretion to balance competing uses.  Likewise, neither the interim nor proposed rule purport to affect existing mining claims.

The foregoing segregation would take effect once BLM publishes notice in the Federal Register, and would terminate on the earliest of (i) a decision to grant or deny the ROW application, (ii) automatically at the end of the segregation period, not to exceed 2 years from the date of publication, or (iii) upon publication of a notice of termination.

BLM is accepting comments on the interim and proposed rules until June 27, 2011.

 

 

 

California Public Utilities Commission Holds Prehearing Conference on Energy Storage Procurement Targets

As we’ve previously discussed, California’s AB 2514 requires the CPUC and municipal utilities in California to open proceedings by March 1, 2012 to determine appropriate targets, if any, for the procurement of viable and cost-effective energy storage systems by load-serving entities. Over a year before that deadline, the CPUC opened Rulemaking 10-12-007 in December of last year to both implement AB 2514 and “on [the CPUC’s] own motion to initiate policy for California utilities to consider the procurement of viable and cost effective storage systems.” In early March, the CPUC held an initial workshop on the scope of the rulemaking proceeding.

On April 21, the Commission held a prehearing conference to determine the scope and schedule for the proceeding. Stoel Rives partner Seth Hilton attended the conference. Among the issues discussed at the prehearing conference, led by Administrative Law Judge Yip-Kikugawa, was whether to conduct the proceeding in phases (e.g., first examining how storage might be applied, and then in a subsequent proceeding setting what the mandate will be for storage procurement), the issues to be covered in each phase , and whether evidentiary hearings would be necessary. 

According to ALJ Yip-Kikugawa, a scoping memo should issue in the next two to three weeks. The scoping memo will set out the issues to be considered in the proceeding and a schedule for their resolution. 

We'll be posting further information on Renewable + Law Blog when the scoping memo comes out, so stay tuned for further developments.

LexisNexis Selects Renewable + Law Blog to its Top 50 Environmental Law Blogs List

Having first reported to our readers in February that LexisNexis had nominated the Stoel Rives Renewable + Law Blog for its Top 50 Environmental Law & Climate Change Blogs for 2011 award, we are pleased to announce we made the list of winners! In publishing its Top 50 list, LexisNexis declared that our Renewable + Law bloggers’ “avowed passion for solar energy, wind energy, biofuels, ocean and hydrokinetic energy, biomass, waste-to-energy, geothermal and other clean technologies is evident in the care they take with this blog-the posts are frequent, the topics are interesting and cutting edge, and the writing is top notch.”

 

Thanks again to all our readers who make regular use of Renewable + Law Blog and those who wrote in to support us for this award. We're honored and inspired, and we plan to keep those Blogs and letters coming.

 

RFI for Substation-Size Li-ion Energy Storage System Demonstration Project

Electric Power Research Institute (EPRI) and Technology Transition Corporation recently issued a request for information (RFI) to prepare for multiple demonstrations and the market introduction of 1MW / 2MWh lithium ion battery energy storage systems (ESS) for electric utility grid management solutions.  EPRI and TTC have assembled a utility team for this project, and they encourage manufacturers of Li-ion systems and energy storage system integrators to respond to the RFI. The utility team will evaluate the responses to determine which ESS suppliers should be invited to a 2-day utility-manufacturer workshop to be held in June 2011 to discuss the project’s technical specification and demonstration plans.  The responses to the RFI will also influence the forthcoming Request for Proposals and the technical specification for approximately three demonstrations scheduled for 2012.

To be considered for participation in the proposed ESS project, including receipt of the resulting RFP in Q3 2011, responses must be received electronically, by 8 pm (20:00) Eastern Time, Monday, May 2, at storagespec@ttcorp.com.  A detailed description of the RFI process and the RFI response form can be found on the Technology Transition Corporation's website, here

Thanks to Emanuel Wagner, Project Coordinator for TTC, for bringing this RFI to my attention.  According to Emanuel, this would be the first Li-ion storage project of this size in the US, if not the world.  

Petition for Review Filed in TXU v. FPL Curtailment Case

On April 11, 2011, FPL Energy, LLC, et al., filed with the Texas Supreme Court a petition for review of the Texas Court of Appeals’ decision FPL Energy, LLC, v. TXU Portfolio Management Company, L.P. The case illustrates the significant economic impact that curtailment can have on variable energy resources. For a detailed description of the case and its implications, see our Renewable + Law Blog entry on the Court of Appeals’ decision here.

The petition for review focuses on the question of whether the Court of Appeals was correct in enforcing the liquidated damages provisions contained in three wind energy power purchase agreements. The pertinent provisions in each PPA required the petitioners to pay $50 for every MWh that the plants fell short of achieving the their minimum REC output guarantees—the Court of Appeals’ holding meant that the petitioners owed TXU roughly $29 million in shortfall damages for a four year period of curtailment imposed by the transmission provider (ERCOT), on top of the pain of losing the contract price and the production tax credit on each MWh of energy curtailed.

Continue Reading...

Budget Compromise Looks OK for Projects in DOE Loan Guarantee Pipeline

The current version of the budget compromise provides relatively good news for projects seeking DOE loan guarantees. During the past several months, renewable energy projects in the DOE’s Loan Guarantee pipeline have been exposed to substantial uncertainty as a result of the budget crisis in DC. The developers of these projects have previously invested substantial resources to apply to the program which would become wasted effort if the program funds evaporate as the projects wait for DOE approval. The Loan Guarantee Program Office led by Jonathan Silver was clearly aware of this issue and prudently allowed all open solicitations to expire in early 2011 without issuing any new ones. The renewable energy project developers’ concern has been that the budget deal would involve a substantial claw back of previously appropriated funds that have not yet been committed to projects. 

The battle is not yet resolved but the current compromise is encouraging for these projects. There is a claw back of $18.183 billion in uncommitted funds but these were funds appropriated under provisions that required that the Credit Subsidy Cost to be paid by developers. The Credit Subsidy Cost was the bane of the Loan Guarantee Program as it essentially required the program applicant to cover the present value risk that the project would default on the loan. The Stimulus Bill solved this problem and greatly increased the attractiveness of the Loan Guarantee Program by appropriating funds to cover the Credit Subsidy Cost. Similarly, the current budget compromise appropriates an additional $1.183 billion in funds and allows these funds to be utilized to cover Credit Subsidy Costs. Thus, while the provision claws back funds, these are funds that were not attractive due to program limitations whereas new funds are appropriated to the preferred program. In addition, the proposed legislation imposes an Office of Management and Budget certification of compliance requirement as a control on the program.

The current bill is HR 1473 and is likely to be voted on later this week and thus is still subject to amendments. To obtain the latest details and access to the bill, see the Open Congress site at http://www.opencongress.org/bill/112-h1473/show 

Governor Brown Signs Bill Increasing California's Renewable Portfolio Standard to 33%

A Legal News Alert from Seth Hilton and the Stoel Rives Renewable Energy Law Group:

California’s Governor Jerry Brown signed Senate Bill ("SB") X1-2 on Tuesday requiring California's electric utilities to procure 33% of their energy from renewable resources by 2020.  Upon signing the bill, Governor Brown stated the "bill will bring many important benefits to California, including stimulating investment in green technologies in the state, creating tens of thousands of new jobs, improving air quality, promoting energy independence and reducing greenhouse gas emissions."

Details concerning the implementation of the new legislation will have to be worked out at various California regulatory agencies, including the California Public Utilities Commission and the California Energy Commission. The legislation will likely spawn numerous regulatory proceedings as the various regulatory agencies struggle to come to grips with the new RPS mandate.

For more information about SBX1-2, please see our earlier blog post and detailed Renewable Energy Law Alert, dated March 29, 2011.

Upcoming Electric Energy Storage (EES) Workshops

California’s AB 2514 requires the CPUC and municipal utilities in California to open proceedings by March 1, 2012 to determine appropriate targets, if any, for the procurement of viable and cost-effective energy storage systems by load-serving entities. By October 1, 2013, the CPUC must (1) determine whether a procurement target for energy storage is appropriate and, if so, (2) adopt a procurement target for each load-serving entity under its jurisdiction to be achieved by December 31, 2015 and a second target to be achieved by December 31, 2020. Municipal utilities have an additional year to meet these requirements.

In December of last year, the CPUC opened Rulemaking 10-12-007 both to implement AB 2514 and “on [the CPUC’s] own motion to initiate policy for California utilities to consider the procurement of viable and cost-effective energy storage systems.” Order Instituting Rulemaking (“OIR”) at 1, R.10-12-007. 

On March 9, 2011, a workshop was held to address the scope of the rulemaking proceeding. The workshop included discussions of current and emerging energy storage technologies, the goals and applications of energy storage, existing barriers to storage implementation, and whether a unified storage policy would work or whether the policy should be written to address specific barriers to entry. The workshop also considered how the CPUC could and should work with other agencies addressing energy storage or related issues, including the California Energy Commission, the California Independent System Operator, and the Federal Energy Regulatory Commission. You can find Seth Hilton’s report about the March 9 workshop here.

The CPUC has scheduled a pre-hearing conference in the rulemaking proceeding for April 21, 2011The conference will be held before ALJ Amy C. Yip-Kikugawa, beginning at 10 am, in the Commission Courtroom, State Office Building, 505 Van Ness Avenue, San Francisco, California. Stoel Rives partner Seth Hilton will attend the conference.

In addition, as part of its 2011 Integrated Energy Policy Report (IEPR) Schedule, the California Energy Commission has scheduled a committee workshop on energy storage for renewable integration, which will begin at 9:30 on April 28 in Hearing Room A, CALIFORNIA ENERGY COMMISSION, 1516 Ninth Street, First Floor, Sacramento, California. Stoel Rives attorneys are planning to attend the workshop.

California Public Utility Commission to Reopen Rule 21 Working Group

A report from Stoel Rives attorney Jake Storms (Sacramento):

The California Public Utility Commission (“CPUC”) recently announced that it will reopen the Rule 21 Working Group. Rule 21 governs the interconnection of distributed generation to a utility’s distribution system.

Each of the three largest investor-owned utilities—Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric—have a version of Rule 21 in their electric tariffs, which are subject to approval by the CPUC. The last Rule 21 workshop was held in 2008. The CPUC stated that, given the substantial changes in the technical and regulatory landscape in the past several years, Rule 21 is in need of reconsideration and has set forth a list of issues it believes should be addressed by the new Working Group. These include:

• The need for transparency in processing, queue information, and customer application information

• The need for review and potential reconsideration of technical screens within Rule 21 to ensure that the appropriate issues are being studied

• The need for articulation of cost-allocation methodology when network upgrades are required

• The need for review of utility tariffs for consistency with each other and with state law

• The need for additional standard interconnection agreements to accommodate the different types of distributed generation projects anticipated to come online

The first meeting of the Rule 21 Working Group will be Friday, April 29, 2011 from 10:00 a.m. to 3:00 p.m. at the Auditorium of the CPUC located at 500 Van Ness Avenue, San Francisco, CA.

Non-Profit Groups Challenge Colorado's RES and Question Public Policy Favoring Wind Energy

          Stoel Rives partner Bev Pearman reviewed the complaint filed Monday in American Tradition Institute, et al., v. Colorado and prepared this analysis:

          On April 4, 2011, the American Tradition Institute (“ATI”), the American Tradition Partnership (“ATP”), and Rod Lueck filed suit in the U.S. District Court for the District of Colorado arguing that Colorado is unconstitutionally discriminating against out-of-state renewable energy producers. ATI is a nonprofit organization “dedicated to the advancement of rational, free-market solutions to America’s land, energy, and environmental challenges,” and ATP is a lobbying organization “dedicated to fighting environmental extremism and promoting responsible development and management of land, water, and natural resources in the Rocky Mountain West and across the United States.” Rod Lueck is a member of ATI and ATP. 

Colorado’s renewable energy standard (“RES”) states that by 2020 the state’s two major investor-owned utilities must get 30 percent of electricity sold from recycled or renewable resources. Renewable energy resources are “solar, wind, geothermal, biomass, new hydroelectricity with a nameplate rating of ten megawatts or less, and hydroelectricity in existence on January 1, 2005, with a nameplate rating of thirty megawatts or less.” “Fossil and nuclear fuels and their derivatives” are not “eligible energy resources” for complying with the RES.   Additionally, each kilowatt of electricity generated in Colorado from certain recycled or renewable sources is given an enhanced value of one and one-quarter kilowatt-hours for purposes of meeting the mandated standards.

   

Plaintiffs raise both a sweeping Commerce Clause claim and a more focused Commerce Clause claim. The sweeping claim is that the statutory scheme is unconstitutional because it discriminates against non-renewable generation resources, both in-state and out-of-state, with plaintiffs alleging that such non-renewable generation is “legal, safer, less costly, less polluting and more reliable than renewable generation.  A more focused claim is that the statutory preference given to in-state renewable electricity establishes a “market-bias against otherwise qualifying renewable sources located outside of Colorado and an inflated cost of complying with the RES requirements.”

 

Plaintiffs’ Commerce Clause claim is grounded in a U.S. Court of Appeals for the Tenth Circuit’s decision in KT&G Corp. v. Attorney General of the State of Oklahoma, 535 F.3d 1114, 1143 (10th Cir. 2008), which says a state may violate the dormant Commerce Clause by:

 

·         Discriminating against interstate commerce in favor of intrastate commerce, unless “the discrimination is demonstrably justified by a valid factor unrelated to economic protectionism;” or

 

·         Imposing “a burden on interstate commerce incommensurate with the local benefits secured;” or

 

·         Creating mandates with the “practical effect of extraterritorial control of commerce occurring entirely outside the boundaries of the state in question.”

 

We expect that Colorado will vigorously defend the RES as being constitutional because its interest in promoting renewable energy generation is an important policy choice. Plaintiffs are attacking that position head-on, however, by challenging the policy of favoring renewable resources, particularly wind energy. They allege that wind energy is not reliable, causes more pollution due to the cycling of coal and natural gas plants during times when wind generation is not possible, and drives up utility costs for consumers. They do not attack other forms of renewable energy as vociferously, but still argue that any scheme favoring renewable resources over other energy sources burdens interstate commerce and violates the Commerce Clause. 

      

The more focused claim (based on the preference given in-state renewable resources) is similar to a Commerce Clause challenge was brought nearly a year ago in Massachusetts by TransCanada Power Marketing, Ltd. (“TransCanada”).  The Massachusetts suit did not challenge the policy of promoting renewable energy over non-renewable energy sources. It instead focused on renewable energy mandates and incentives favoring in-state generation. We do not know what arguments Massachusetts would have raised in defense of its program because the case was stayed after the state suspended the regulation underlying the statute in question. It issued emergency regulations, which were later adopted as final regulations, but the statute that establishes the challenged policy has not been amended. On April 1, 2011, the Alliance to Protect Nantucket Sound, an advocacy group that is leading the opposition to the Cape Wind project, filed a motion to intervene in that proceeding. It argued that TransCanada does not represent the interests of Massachusetts ratepayers. Their economic interests are allegedly harmed because the program at issue discourages utilities from entering long-term contracts with out-of-state generators, which has the effect of reducing out-of-state competition and increasing the cost of renewable energy for ratepayers.

      

The outcome of both of these cases could have far-reaching effects on other state’s RESs and renewable portfolio goals (RPGs). If the plaintiffs are successful with their claims, then the states with RESs and RPGs may have to modify their standards so they are not discriminating against out-of-state renewable energy generators. As we have noted before, the RESs with regional preferences may not be as much at risk. A key question that the courts have yet to answer are whether the RESs and RPGs create protectionist barriers to interstate trade. Check here for regular updates as these groundbreaking cases moves forward.

Legislature Passes SBX1-2 to Increase California RPS to 33%

Legal News Alert from Stoel Rives Renewable Energy Law Group

The California Legislature has passed Senate Bill (“SB”) X1-2, which requires California’s electric utilities to increase their renewable generation to 33% by 2020. Passage of the legislation is the culmination of years of effort to increase California’s Renewable Portfolio Standard (“RPS”) from its current 20%. In 2009, the Legislature passed SB 14, which also would have increased California’s RPS to 33%, but the bill was vetoed by Governor Schwarzenegger on the ground that it imposed too many restrictions on the use of out-of-state generation to meet California’s RPS requirement. Governor Schwarzenegger then issued an executive order directing the California Air Resources Board to develop its own 33% Renewable Energy Standard under the Board’s authority pursuant to Assembly Bill 32, the Global Warming Solutions Act of 2006. Last year, the Legislature again tried to pass another 33% RPS bill, SB 722, but the session expired before the legislation could reach a final vote. Two bills were introduced in this session: SB 23 and SBX1-2. SBX1-2 was identical to SB 23, but it was introduced in special session in an attempt to speed passage of the legislation. SBX1-2 now goes to Governor Brown for signature, and he is expected to sign the legislation into law.

For more background and information on the decision and its implications, click here.

Renewable Energy Projects: Keys to Drafting Power Purchase Agreements

Renewable Energy Projects: Keys to Drafting Power Purchase Agreements
Thursday, March 31, 2011
1:00 – 2:00 p.m. (Eastern)

Join Stoel Rives Partner, Bill Holmes, as he presents this exclusive, 60-minute webinar on Thursday, March 31.

The power purchase agreement (PPA) is the most critical component of a renewable energy project, and essential to project finance. Knowing how to properly draft and negotiate PPAs will not only alleviate tension between buyer and seller, but will protect your client by equitably allocating future risks that can arise in this ever-changing business and legal environment. This webinar also features a live Q&A session, where you can get expert answers to your specific PPA questions.

Key highlights and learning objectives:

• How to draft and negotiate PPAs: critical terms and provisions for the buyer and seller
• Keys to allocating risks of RPS compliance, curtailment, change of law, and more
• Strategies to proactively address common disputes between developers and purchasers
• Key considerations for drafting dispute resolution clauses for PPAs

This crucial webinar is not to be missed. Click here to register.
 

All Party Meeting Concerning California's 2011 RPS Procurement

My partner Seth Hilton attended last Friday's all-party meeting on California's 2011 RPS procurement and prepared the following update:

On February 11, 2011, California Public Utilities Commission (CPUC) Administrative Law Judge Burton Mattson issued a Proposed Decision (PD) conditionally accepting the 2011 Renewables Portfolio Standard (RPS) Procurement Plans for Southern California Edison (SCE), Pacific Gas and Electric Company (PG&E), and San Diego Gas and Electric Company (SDG&E). If adopted, the Decision would set a schedule for the utilities’ 2011 RPS solicitation. The PD was on the agenda for the CPUC’s March 24, 2011 business meeting, but was held at Commissioner Florio’s request until the April 14 meeting.

On March 25, Commissioner Florio held a well-attended all-party meeting on the PD. Among the issues raised by Commissioner Florio was where California’s investor-owned utilities stood relative to the current RPS procurement targets and the targets contained in pending legislation (SBX1-2), and whether a 2011 RPS solicitation was necessary.

 

All three investor-owned utilities—PG&E, SCE and SDG&E—stated that holding a 2011 RPS solicitation would be prudent. PG&E stated that it was on track to meet the current 20% RPS this year and through 2013. However, future compliance, especially with the higher procurement targets under SBX1-2, is dependent on several large projects that are scheduled to come online in the next few years. Any delay or failure of those projects would require PG&E to procure additional resources to get to the 2016 target under SBX1-2, and therefore holding a solicitation this year made sense. 

 

According to SCE, a 2011 solicitation would be prudent for a number of reasons, not only to assist SCE to reach the goals in SBX1-2. SCE noted that a solicitation would be beneficial for current contract administration by setting the price for any replacement power and that annual RPS solicitations were important for maintaining a vigorous RPS market. 

 

SDG&E stated that it too was not done with procurement and would need further procurement to comply with the 2016 goal under SBX1-2. 

 

Other parties also advocated in favor of a 2011 solicitation, with TURN noting that there may be some bargains available to the utilities due to the fact that no RPS solicitation was held last year and that competition would be fairly robust for RPS contracts. 

 

The Division of Ratepayer Advocates was one of the few dissenters (along with CARE), arguing that because a new cost containment mechanism would apply under SBX1-2, the CPUC should consider waiting until it had addressed cost containment before commencing a new RPS solicitation. 

 

The parties also discussed various issues to be resolved by the PD, including how economic curtailment should be handled in the pro forma RPS contract, congestion adders and integration cost adders. As currently drafted, the PD would require all three utilities to amend their pro forma agreements to use the economic curtailment provisions proposed by PG&E, which would allow utilities to economically curtail projects up to five percent of the project’s expected annual generation, for which PG&E would pay the project the full contract price but would not reimburse the project for any lost production tax credits. The California Wind Energy Association noted that although it supported PG&E’s proposal, the proposal should be amended to make it clear that the cap applies to any economic curtailment caused by the utility, even if the curtailment was in fact ordered by the California Independent System Operator, and to provide for the payment of any lost production tax credits as well.

 

As for congestion adders, the PD would require the utilities to consider congestion costs when evaluating projects and order the utilities to release congestion cost information in their 2012 and future plans, so that project developers will be fully informed when making siting decisions.

 

Finally, the PD declined to allow the use of integration cost adders when evaluating bids, despite both SCE’s and SDG&E’s requests that they be permitted to do so. 

 

If you have any further questions on this all-party meeting or any other California energy regulatory issue, please contact:

Seth Hilton at (916) 319-4749 or sdhilton@stoel.com

Bill Holmes at (503) 294-9207 or whholmes@stoel.com

Jennifer Martin at (503) 294-9852 or jhmartin@stoel.com

A Unique RFP for Energy Storage

Santa Fe-based Chamisa Energy Corporation recently announced a request for proposals for up to 250MW of nameplate wind generation resources to be used to provide energy to a 135 MW or larger compressed air energy storage (CAES) facility under development in Swisher County in the Texas panhandle.  The proposed CAES facility would compress air and store it in solution-mined underground caverns.  To convert the stored potential energy back into electricity, the stored air would be released and mixed with a small amount of natural gas to drive a turbine.  The RFP describes CAES as a "bulk electric storage technology used to complement wind energy generation so that wind energy becomes a fully dispatchable resource suitable for peaking, intermediate, baseload or tolling resource." 

The energy would be provided to the facility pursuant to a power purchase agreement (PPA).  Chamisa invites wind plants located either in the Southwest Power Power (SPP) or the Electric Reliability Council of Texas (ERCOT) to respond. Chamisa will consider proposals that supply wind energy for seven years, but prefers a minimum term of 15 years.  The target date for delivering electricity to the Storage Facility is the second quarter of 2014. 

Chamisa notes that it is not aware of completed or pending PPAs between WGR and CAES facilities, and thus anticipates that the successful proposal "will be creative in its approach to the RFP."  Although the RFP isn't explicit on the point, Chamisa's plan may be to purchase energy from a wind generator or wind generators pursuant to the PPA, store the energy, and then sell the electricity and ancillary services from the facility to a third-party off-taker.  If Chamisa can take the bulk of the energy into CAES primarily in off peak hours and then sell the stored energy during on-peak hours, might in theory be able to profit on the arbitrage between the two price points, although past efforts to get grid-scale storage to pencil out on that basis have had limited success.  Alternatively, the facility may be able to profit by using the stored energy to provide ancillary services, grid congestion relief, grid stability and support for grid expansion.

In principle, the CAES facility could also be used in a tolling arrangement by which a utility or a seller of wind energy hires the CAES facility for storage, pays a reservation and storage charge to Chamisa, and then dispatches the stored energy at will--in other words, the third-party offtaker could be the same party as the generator delivering the wind energy to the facility (e.g., a utility that is buying wind energy that it wants to shift from off-peak hours to on-peak hours).  Under this structure, the party tolling electricity would retain title to the electicity being stored and could arbitrage or otherwise deploy the stored energy into the market as it saw fit.  However, a tolling transaction of that type isn't clearly called for by the RFP (although it doesn't appear to be precluded).

Regardless, Chamisa's RFP will be worth monitoring to see whether an independent storage developer can create a workable market structure for its storage assets in order to facilitate financing.  The outcome of this effort will be of great interest to developers of solar and wind resources, as well as to developers of pumped storage and other grid-scale storage solutions.

The deadline for written or email questions is March 31, 2011, and proposals are due no later than 5pm Mountain Standard Time on May 16, 2011.  If submitted by mail, proposal(s) must be postmarked May 16th.  E-mail submission is preferred.  You can access Chamisa's RFP by clicking here.

 

California Court Enjoins Implementation of Cap-and-Trade

Legal News Alert from Stoel Rives Environmental Law Group

 

March 23, 2011

San Francisco Superior Court has issued a final decision in Association of Irritated Residents v. California Air Resources Board.  For the moment, the California Air Resources Board (CARB) is enjoined from further rulemaking to implement the California Global Warming Solutions Act (A.B. 32), including for the cap-and-trade program.  The Court upheld the validity of CARB’s Scoping Plan for implementation of A.B. 32, saving CARB from having to revise the Plan.  But, the Court found flaws with CARB’s environmental review of the Scoping Plan under the California Environmental Quality Act (CEQA), in particular its analysis of alternatives to the Plan’s recommended greenhouse gas (GHG) reduction measures, such as cap and trade.  CARB is enjoined from further rulemaking until the agency has come into compliance with CEQA by amending its environmental review of the Scoping Plan. 

For entities facing regulation under A.B. 32, this decision has important implications.  Scoping Plan GHG reduction measures that have already made their way through the rulemaking process appear unaffected.  But CARB’s cap-and-trade program never made it out of the formal rulemaking process. While the Board members of CARB approved the cap-and-trade program in December 2010, it left it to the Executive Officer to take final action to adopt the proposed regulation (or bring it back to the Board) after more details were finalized.  CARB had a packed schedule this year to finalize cap and trade prior to its January 1, 2012 start date.  Under the Court’s final decision, these activities will have to be shelved if they fall within the rubric of further rulemaking or implementation.  Regulated entities may thus have a temporary reprieve from the onset of cap and trade in 2012.  But continued uncertainty over the details of CARB’s planned GHG regulation of stationary sources is a less than ideal situation for regulated sources.

For more background and information on the decision and its implications, click here.

If you currently subscribe to Stoel Rives legal updates, click here to update your contact information and preferences. To join the Stoel Rives mailing list and ensure direct delivery of future alerts, click here to subscribe. To unsubscribe, send an email to unsubscribe@stoel.com.

California Court Enjoins Implementation of Cap-and-Trade

Legal News Alert from Stoel Rives Environmental Law Group

 

March 23, 2011

San Francisco Superior Court has issued a final decision in Association of Irritated Residents v. California Air Resources Board.  For the moment, the California Air Resources Board (CARB) is enjoined from further rulemaking to implement the California Global Warming Solutions Act (A.B. 32), including for the cap-and-trade program.  The Court upheld the validity of CARB’s Scoping Plan for implementation of A.B. 32, saving CARB from having to revise the Plan.  But, the Court found flaws with CARB’s environmental review of the Scoping Plan under the California Environmental Quality Act (CEQA), in particular its analysis of alternatives to the Plan’s recommended greenhouse gas (GHG) reduction measures, such as cap and trade.  CARB is enjoined from further rulemaking until the agency has come into compliance with CEQA by amending its environmental review of the Scoping Plan. 

For entities facing regulation under A.B. 32, this decision has important implications.  Scoping Plan GHG reduction measures that have already made their way through the rulemaking process appear unaffected.  But CARB’s cap-and-trade program never made it out of the formal rulemaking process. While the Board members of CARB approved the cap-and-trade program in December 2010, it left it to the Executive Officer to take final action to adopt the proposed regulation (or bring it back to the Board) after more details were finalized.  CARB had a packed schedule this year to finalize cap and trade prior to its January 1, 2012 start date.  Under the Court’s final decision, these activities will have to be shelved if they fall within the rubric of further rulemaking or implementation.  Regulated entities may thus have a temporary reprieve from the onset of cap and trade in 2012.  But continued uncertainty over the details of CARB’s planned GHG regulation of stationary sources is a less than ideal situation for regulated sources.

For more background and information on the decision and its implications, click here.

If you currently subscribe to Stoel Rives legal updates, click here to update your contact information and preferences. To join the Stoel Rives mailing list and ensure direct delivery of future alerts, click here to subscribe. To unsubscribe, send an email to unsubscribe@stoel.com.

COMMISSIONER FLORIO NOTICES ALL-PARTY MEETING CONCERNING 2011 RENEWABLE PORTFOLIO STANDARD PROCUREMENT

 

On February 11, 2011, California Public Utilities Commission (CPUC) Administrative Law Judge Burton Mattson issued a Proposed Decision conditionally accepting the 2011 Renewables Portfolio Standard (RPS) Procurement Plans for Southern California Edison, Pacific Gas and Electric Company, and San Diego Gas and Electric Company.  If adopted, the Decision would set a schedule for the utilities’ 2011 RPS solicitation.  The Decision was on the agenda for the CPUC’s March 24, 2011 business meeting, but was held at Commissioner Florio’s request until the April 14 meeting.

 

On March 17, 2011, Commissioner Florio noticed an all-party meeting on the Proposed Decision for March 25, 2011.  Yesterday, Commission Florio circulated an agenda for the meeting.  Among the issues raised by the agenda is whether an RPS solicitation in 2011 is necessary and prudent.

 

Stoel Rives’ Partner Seth Hilton will be present at the all-party meeting, and will provide an update afterwards. 

FERC Seeks Comments on Regulatory Reforms for Merchant Transmission and Generator Interconnection Capacity

 

The Federal Energy Regulatory Commission ("FERC") is seeking comments from energy industry participants on regulatory reforms that address how FERC should regulate merchant transmission development and generator interconnection (or lead) lines. Specifically, FERC desires comments on how it should balance the requirements of open access transmission and the needs of project developers.

Merchant transmission and generator interconnection issues have caused a surge of contested FERC proceedings in recent years. In 2009, merchant transmission developers, for instance, were granted the ability to place transmission capacity with anchor tenants prior to making capacity available through an open season. The anchor tenant model was a significant shift in merchant transmission regulation, but, to date, merchant transmission developers have struggled to maintain meaningful anchor tenant arrangements. As a result, more recent filings at FERC have pushed the boundaries of the anchor tenant model, and FERC now seeks to determine through public comment how its open access policies could be further changed to incentivize merchant transmission development.

Generator interconnection lines have also been a popular subject at FERC of late—specifically whether and how interconnection line owners should be granted priority rights to interconnection capacity. This issue is particularly relevant for renewable energy developers who are planning to build generation projects in phases and will rely on having interconnection capacity available to serve later phases when they come online. To maintain priority over competing interconnection requests, FERC has asked generation developers to show they have established milestones for developing the generation phases that seek priority (and to demonstrate progress toward meeting those milestones). Such filings are generally confidential, and thus interconnection line owners from the outside looking in have not been given much insight into what is required to establish priority. FERC's precedent on the issue has also created dissimilar treatment of interconnection owners who are affiliated with open access transmission providers.

On March 15, 2011, FERC staff held a technical conference where the invited speakers shared a wide range of opinions on these issues. With respect to merchant transmission, speakers supported (i) creating a new section to the Open Access Transmission Tariff ("OATT") that would specify the rules for developing merchant transmission and the ancillary services obligations of those developers, (ii) placing AC merchant lines under existing incumbent transmission provider OATTs, (iii) allowing more incentives for anchor tenants, and (iv) having FERC back away from regulating these projects in their early stages. Those who spoke about priority to interconnection capacity shared opinions that included (x) requiring interconnection developers to give public notice of their development intentions and allow others to bid on capacity (a "speak now or forever hold your peace" approach), (y) requiring all interconnection owners to develop and maintain an "OATT light"—a pared down version of the full OATT, and (z) advocating for less regulation of interconnection lines altogether. FERC staff also questioned whether and how FERC should regulate transmission service over interconnection facilities that are shared or jointly owned (e.g., through a Joint Ownership Agreement, Shared Facilities Agreement, or Common Facilities Agreement) directly by generation developers, or indirectly through an affiliate that owns and operates an interconnection line.

Written comments on these issues are due to FERC no later than April 21, 2011.

 

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Idaho Legislature Considering Moratorium on Wind Development

Two bills were introduced in the Idaho legislature last week, both of which could significantly impact the wind industry in Idaho.  The first, H250, extends a sales or use tax rebate available to purchasers of qualifying machinery and equipment used in generating electricity from renewable resources.  The rebate is currently set to expire as of July 1, 2011.   Under the proposed legislation, the rebate would be extended for such purchases but only if the purchaser achieves commercial operation by December 31, 2014. 

 

The second bill, H265, would impose a moratorium on the construction of new wind projects in Idaho for two years and directs the Interim Energy Committee to meet during that time and report on various wind related issues, including the impact of wind on power rates and the ability of utilities to integrate wind into their systems.  The relevant moratorium language is excerpted below.  Although initial reports of the bill stated that it would not apply to wind projects that are already under construction or have permits, that is not how the legislation is written.  As proposed, it prohibits municipalities, counties and state agencies from "granting approval or issuing any new licenses or permits for the construction or operation of wind turbines that exceed one hundred (100) feet in height and have a nameplate capacity that exceeds one hundred (100) kilowatts."  A plain reading of this language means that a fully developed and "almost" fully permitted project with wind turbines already delivered on-site could be subject to the moratorium because of the inability to obtain building or other ministerial permits, which some Idaho counties require as each individual turbine is constructed. 

 

We'll continue to monitor closely as the future of Idaho's wind industry is debated by the legislature.

 

61-1802.  MORATORIUM ON CONSTRUCTION OF CERTAIN INDUSTRIAL WIND FARMS AND WIND TURBINES FOR A TIME CERTAIN.  (1)  From the effective date of this act until July 1, 2013, municipalities, counties and state agencies are prohibited from granting approval or issuing any new licenses or permits for the construction or operation of wind turbines that exceed one hundred (100) feet in height and have a nameplate capacity that exceeds one hundred (100) kilowatts.  Projects that have been approved and for which the statute of limitations for legal proceedings of the state of Idaho against the project expire without any legal action against the project shall be allowed to be constructed.  Projects for which legal proceedings are pending shall not be allowed to be constructed until the legal proceedings are complete and a court of competent jurisdiction finds that construction may proceed.

 

California Public Utilities Commission Holds Workshop on Energy Storage Legislation

On Wednesday, March 9, the California Public Utilities Commission (“CPUC”) held a workshop on its implementation of California’s recent energy storage bill, Assembly Bill (AB) 2514, signed by Governor Schwarzenegger on September 29, 2010.

AB 2514 requires the CPUC and municipal utilities in California to open proceedings by March 1, 2012 to determine appropriate targets, if any, for the procurement of viable and cost-effective energy storage systems by load-serving entities. By October 1, 2013, the CPUC must (1) determine whether a procurement target for energy storage is appropriate and, if so, (2) adopt a procurement target for each load-serving entity under its jurisdiction to be achieved by December 31, 2015 and a second target to be achieved by December 31, 2020. Municipal utilities have an additional year to meet these requirements.

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Upcoming Energy Conference Highlights

Through industry presentations and publications as well as through our blog, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.

Visit our website for the latest calendar of events. Upcoming highlights include:

Renewable Energy World Conference & Expo North America 2011
March 8-10, 2011 – Tampa, FL
Featuring speakers Bill Holmes, Greg Jenner, David Benson and Ramona Monroe. Visit us at booth #726 in the Exhibit Hall.

Tax Equity Financing for Renewables
March 16 - Webinar
This webinar, part of EUCI's Law of Renewable Energy Series, is instructed exclusively by Stoel Rives Partners Gary Barnum, Greg Jenner, Kevin Pearson, and Moderated by Ed Einowski. It will provide a refresher on the 1603 grant, the PTC and the ITC, and discuss the requirements and complexities of bonus depreciation, and the opportunities to utilize New Market Tax Credits.

Biomass for Power, Fuels and Chemicals
March 21-22 – Minneapolis, MN
Visit with Mark Hanson, Jennifer Martin, Bill Holmes, and John Eustermann, who will cover topics from PPAs and feedstock agreements to project due diligence and case studies.

Solar Power Finance & Investment Summit
March 22-24 – San Diego, CA
Join speakers Morten Lund and Howard Susman along with Julia Pettit, David Quinby, Brian Nese, Jennifer Martin, Kristen Castaños, Greg Jenner and David Benson in sunny San Diego – save 15% on conference registration with code 111561

Solar EPC and Long-Term Component Supply
March 28 – Webinar
Stoel Rives Partners Ed Einowski, David Hattery and Morten Lund will serve as the exclusive instructors for this webinar, part of the Law of Renewable Energy Series presented by EUCI.

National Hydropower Association's Annual Conference
April 4-6 – Washington, DC
Cherise Oram will discuss how best to navigate the Endangered Species Act at the Federal Energy Regulatory Commission licensing, relicensing and mid-license stages as she presents, "Working Toward Successful ESA Outcomes."

Oregon nears decision on sage-grouse rules that will impact energy siting

The Oregon Department of Fish and Wildlife (“ODFW”) posted the final draft rules and draft conservation strategy related to the greater sage-grouse. After years of negotiation and numerous public meetings on the ODFW’s approach, the final drafts are open for public comment. On April 22 they will be presented to the Fish and Wildlife Commission for consideration for adoption.

In March of last year the US Fish and Wildlife Service (“USFWS”) determined that protection of the greater sage-grouse was warranted under the federal Endangered Species Act (“ESA”) but was precluded from listing by the USFWS’s need to take action on species facing more immediate or severe threats. The species is now a candidate for listing, but it is uncertain if or when a formal ESA listing may occur. Oregon, through ODFW’s approach to sage-grouse conservation, joins other western states (e.g., Wyoming) in taking preventative state action, at least in part, to preclude the need for an eventual federal listing.

 

Both the USFWS determination and the ODFW’s conservation strategy identify energy, and renewable energy development specifically, as posing threats to the specie. The ODFW’s conservation strategy points out that there is great potential for geo-thermal, solar and wind energy in most sage-grouse regions in Oregon, but the same windswept ridges that make for great wind facility siting, for example, may also be important sources of accessible winter forage for sage-grouse.

 

Among other things, the draft rule would formally adopt the ODFW’s Core Area Approach to Conservation and directs the ODFW to maintain maps of sage-grouse core areas. The rule stops short of directly equating sage-grouse core areas with habitat categories under the Fish and Wildlife Habitat Mitigation Policy. By referencing the ODFW’s conservation strategy, the rule instead outlines micro-siting guidance for development projects (e.g. a wind facility) proposed in identified core areas. As part of the siting process, the ODFW recommends that sage-grouse habitat in core areas be classified as “irreplaceable, essential habitat” and impacts on such Habitat Category I areas avoided.  In past iterations of the core area maps, much of eastern Oregon, and southeastern Oregon in particular, was identified as being home to sage-grouse core areas.

Washington State Legislature introduces another bill putting pressure on State RPS

The second of two bills that would drastically impact the Washington State Renewable Portfolio Standard (RPS) was recently introduced in the Washington State Legislature.  HB 1890 would cut in half the amount of energy utilities are required to obtain from new renewable resources, and also allow them to offset renewable energy requirements with energy from fresh water sources and sources that predate March 31, 1999.

Currently, electric utilities in Washington that serve more than 25,000 customers are required to obtain the following percentages of their electricity from new renewable resources:

  • At least 3% by January 1, 2012
  • At least 9% by January 1, 2015
  • At least 15% by January 1, 2020

This has been the case since the passage of the Washington Energy Independence Act (EIA) in 2006. HB 1890 would cut these percentages in half -- requiring eligible utilities to acquire only 1.5% of their energy from renewable sources by 2012, only 4.5% by 2015, and only 7.5% by 2020. 

In addition, the EIA treats as eligible only incremental electricity produced as a result of efficiency improvements completed after March 31, 1999 and excludes energy from fresh water resources.  HB 1890, however, would count as eligible all electricity from an existing generation facility powered by a fresh water renewable resource that commenced operation before March 31, 1999.  In other words, fresh water energy resources that have been operating since before March 31, 1999 -- and are unchanged and unimproved since that time -- would count toward the RPS. 

For more information on this bill including its full text, see the Washington State Legislature website.

Washington HB 1890 is sponsored by Rep. Brad Klippert (R-8th Dist.), Rep. Jan Angel (R-26th Dist.), Rep. Dan Kristiansen (R-39th Dist.), Rep. Shelley Short (R-7th Dist.), Rep. Larry Haler (R-8th Dist.), Rep. Barbara Bailey (R-10th Dist.), and Rep. Jim McCune (R-2nd Dist.).  It was introduced and referred to the Environment Committee on February 8, 2011. 

Another bill that would essentially wipe out the Washington State RPS altogether was introduced earlier this session.  The blog post on that bill, SB 5563, is available here.

Boiler Hazardous Air Pollutant Emission Rules Released By EPA

On February 23, 2011, the U.S. Environmental Protection Agency (EPA) released final rules regulating hazardous air pollutant (HAP) emissions from boilers at major sources of HAPs (Boiler MACT) and boilers at minor or area sources of HAPs (Boiler GACT), for Commercial and Industrial Solid Waste Incinerators (CISWI) and for defining what constitutes a solid waste when burned. EPA also released a notice that it plans to reconsider key aspects of these rules. These rules impose significant burdens on certain classes of boilers and risk forcing many companies to stop using valuable fuels. EPA estimates that the Boiler MACT rule will impact 13,555 boilers and process heaters and that the Boiler GACT rule will impact 187,000 boilers and process heaters. For details on the Boiler MACT, Boiler GACT and CISWI rules, click here.

For more information about these rules and how they might affect you contact one of the following Stoel Rives Attorneys:

California
John McKinsey at (916) 319-4746 or jamckinsey@stoel.com
Allison Smith at (916) 319-4759 or acsmith@stoel.com

Idaho
John Eustermann at (208) 387-4218 or jmeustermann@stoel.com

Minnesota
Kevin Johnson at (612) 373-8803 or kdjohnson@stoel.com

Oregon
Tom Wood at (503) 294-9396 or trwood@stoel.com

Washington
David Benson at (206) 386-7584 or dlbenson@stoel.com

FERC and Feed-in Tariffs: Opportunities and Challenges in California and Other States Webinar - March 2, 2011

Seth Hilton, Jason Johns, and Morten Lund will be presenters at the following webinar on Wednesday:

FERC and Feed-in Tariffs: Opportunities and Challenges in California and Other States
Wednesday, March 2 at 11:00 a.m. CST/ 9:00 a.m. PST.

After prolonged consideration by the California Public Utilities Commission, California recently adopted a reverse auction mechanism for renewable energy projects 20 megawatts or smaller. That program initially arose from the California Public Utilities Commission's efforts to expand an existing feed-in tariff program and was structured as a reverse auction mechanism to avoid potential conflicts with Federal Energy Regulatory Commission (FERC) jurisdiction. This webinar will explore feed-in tariffs and similar programs, such as California's Renewable Auction Mechanism. It will also address the Federal Energy Regulatory Commission's decision in October concerning the California Public Utilities Commission's proposed feed-in tariff for combined heat and power generators, as well as the implications of that decision for feed-in tariff design.

Learning Outcomes

  • Discuss feed-in tariff policies, including benefits and drawbacks
  • Analyze FERC's decision on California's feed-in tariff for combined heat and power generators
  • Recognize the implications of FERC's decision on feed-in tariff design
  • Examine California's Renewable Auction Mechanism and feed-in tariff
  • Compare California's feed-in tariff with those in other states while examining feed-in tariff success in other states

Tradable Renewable Energy Credits in California Webinar - March 1, 2011

My partner Seth Hilton will be presenting on Tuesday March 1st on Tradable Renewable Energy Credits in California.

Tradable Renewable Energy Credits in California
Tuesday, March 1 at 12:00 p.m. CST/ 10:00 a.m. PST

In January, 2011, the California Public Utilities Commission lifted its moratorium on the use of Tradable Renewable Energy Credits for compliance with California's 20% Renewable Portfolio Standard (RPS). However, the CPUC imposed a cap on the use of TRECs, limiting the amount that California's three largest investor-owned utilities and their energy service providers can use to reach RPS.

In addition, The California Air Resources Board adopted regulations to implement a 33% Renewable Energy Standard last year, and intends to harmonize its RES with the limits on TRECs adopted by the CPUC.

Join a panel of esteemed energy experts, including Stoel Rives Partner Seth Hilton, for an engaging discussion of where California is headed with a 33% RPS, the use of TRECs, and how regulated TRECs will affect the REC market.

Energy-Related Tax Proposals in President's 2012 Budget

The Obama Administration last week released its proposed budget for 2012, which includes a number of tax proposals that could have a direct impact on the financing of renewable energy projects. Some of the more significant proposals include extension of the grant in lieu of tax credits, an additional allotment of qualified advanced energy manufacturing project credits, replacement of the deduction for energy-efficient commercial buildings with a tax credit, and an extension of the new markets tax credit.

For a more thorough discussion of these and other proposals, click here .

Please contact one of the attorneys listed below if you have questions.

Chris Heuer at (503) 294-9206 or ckheuer@stoel.com
Greg Jenner at (612) 373-8857 or gfjenner@stoel.com
Adam Kobos at (503) 294-9246 or ackobos@stoel.com
Carl Lewis at (206) 386-7688 or cslewis@stoel.com
Kevin Pearson at (503) 294-9622 or ktpearson@stoel.com

IRS Circular 230 notice: Any tax advice contained herein was not intended or written to be used, and cannot be used, by you or any other person (i) in promoting, marketing or recommending any transaction, plan or arrangement or (ii) for the purpose of avoiding penalties that may be imposed under federal tax law.

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Washington Senate Bill has potential for eliminating state renewable energy requirements

Currently, electric utilities in Washington that serve more than 25,000 customers are required to obtain the following percentages of their electricity from new renewable resources:

  • At least 3% by January 1, 2012
  • At least 9% by January 1, 2015
  • At least 15% by January 1, 2020

This has been the case since the passage of the Washington Energy Independence Act in 2006. The current Legislature has introduced a bill which, if passed, would essentially wipe out these RPS requirements. SB 5563 -- which was introduced in the Washington State Legislature on January 31, 2011 -- plainly states its intention of “temporarily suspending provisions of the energy independence act during periods of economic downturn.” If SB 5563 passes, qualifying utilities would be deemed to have met the 2012 target and, from 2015, the target for any year in which the the Washington unemployment rate goes above six percent. Furthermore, utilities would be deemed to have met their renewable target not only for that year but for four subsequent years, regardless of the unemployment rate during the look back period.

A historical look at Washington’s unemployment rate shows that a look back period for four years would be able to eliminate the RPS standards in even the most prosperous economic times. For example, Washington state’s unemployment rate[1] for the past 20 years was below 6% during only five calendar years (1998, 1999, 2000, 2006, 2007) and never for more than three consecutive years. That means if SB 5563 had been in effect for the past two decades -- decades that included some of the most robust economic times this generation has known -- at no time would utilities have been required to meet the renewable energy requirements of the EIA. Given where the U.S. economy currently stands, it’s highly unlikely SB 5563 would play out any differently for the next 20 years, much less between now and 2020.

For more information on this bill including its full text, see the Washington State Legislature website.

Washington SB 5563 is sponsored by Sen. Jerome Delvin (R-8th Dist.), Sen. Mark Schoesler (R-9th Dist.), Sen. Mike Hewitt (R-16th Dist.), Sen. Jim Honeyford (R-15th Dist.), and Sen. Tim Sheldon (D-35th Dist.) and was referred to the Environment, Water & Energy Committee on January 31, 2011.

[1]  Not seasonally adjusted.

New Jersey Adopts Rules for Offshore Wind Energy Approval

In a long-awaited announcement, last week the New Jersey Board of Public Utilities adopted rules to codify the State’s Offshore Wind Economic Development Act. The new rules provide the process for an applicant to submit project information and to propose a pricing method and structure for Offshore Renewable Energy Credits (ORECs) for the Board’s consideration. If approved, each retail provider of electricity in New Jersey will be required to buy Board mandated levels of ORECs in proportion to retail sales.

The application process requires detailed disclosures concerning the proposer’s business information, its collective project experience, and key employees. A proposal must describe the proposed technology, the anticipated schedule for completion, the financial details of the project including a specified cost-benefit analysis, and documentation that the project has applied for all applicable State and federal grants, rebates, tax credits and other incentive programs. In addition, the applicant must describe its anticipated operations and maintenance plan, its decommissioning plan and must provide segregated decommissioning funds. Upon receipt of completion of application, the Board shall approve, conditionally approve, or deny the application within 180 days. Perhaps the most complex aspect of the required application is the cost-benefit analysis. The rules suggest the use of one of four listed input-output models, but will allow applicant to us any model that successfully calculates the economic benefit that the proposed project will bring to the State of New Jersey. The Board will assess the net economic benefit, with a “particular emphasis” on in-state manufacturing employment, as well as the net environmental benefit of the project in terms of anticipated reductions in carbon dioxide and air emissions. The rules also allow the Board to perform its own net benefit analysis, which may result in additional conditions of approval.

Separately, even before the Board issued its rules, Fishermen’s Energy of New Jersey, LLC filed an application for the first phase of its proposed 300MW project offshore Atlantic City.

LexisNexis Nominates Renewable + Law Blog for Top 50 Environmental Law Blogs of 2011 Award

We recently learned that LexisNexis has nominated the Stoel Rives Renewable + Law Blog for its Top 50 Environmental Law & Climate Change Blogs for 2011 award. In the nomination, LexisNexis praised Renewable + Law Blog for its “passion for solar energy, wind energy, biofuels, ocean and hydrokinetic energy, biomass, waste-to-energy, geothermal and other clean technologies,” adding that “the posts are frequent, the topics are interesting and cutting edge, and the writing is top notch.”

If you would like to support our nomination, LexisNexis has a comment period until February 14. To do so, you will need to logon to LexisNexis’ free web center account. Once you're registered and logged in, scroll to the bottom of the LexisNexis nomination page, fill in your name, type your comment in the box and press "Add."

Thanks to all our readers who make regular use of Renewable + Law Blog and those who nominated us for this award. We're very honored and inspired, and we plan to keep those Blogs and letters coming.

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National Offshore Wind Strategy Announced

On Monday February 7, 2011, the DOE issued an ambitious plan to spur development of offshore wind facilities in federal and state waters off the eastern seaboard. The report identifies the key challenges to widespread development are reducing both the cost and the timeline of project development. It estimates that the current cost of offshore facilities must be cut by more than half from the current installed capital cost of $4,250 per kW in order to achieve the report’s goal of 54 GW of offshore power by 2030.

In an effort to drive this massive effort forward, the DOE offers $50.5 million in grants for the development of tools and hardware in wind turbine factories, market studies and research on electrical infrastructure and funding for research into next-generation wind-turbine drive trains. Perhaps more importantly, the report designates four “Wind Energy Areas” for expedited approval evaluation and possible lease offerings by the end of 2011 or in early 2012. The report promises that this “Smart from the Start” program will accelerate the leasing process by cutting the current approval timeline of 7 to 10 year in half.

Most notably, the National Offshore Wind Strategy presents the eastern United States with tremendous potential to generate significant economic activity through the installation of facilities that will produce clean, renewable energy. The industry will benefit from the program outlined in this report, particularly if it is followed by an extension of tax credits applicable to these types of renewable energy projects.

Click here for the complete National Offshore Wind Strategy: Creating an Offshore Wind Industry in the United States.

Click here for more information on the Smart from the Start Initiative.

Click here for a map of the mid-Atlantic WEA’s.

More information is available at: http://www.boemre.gov/offshore/RenewableEnergy/index.htm andwww.windandwater.energy.gov.

Will California's Best Management Practices and Guidance Manual help streamline renewable energy permitting in the California deserts?

The California Renewable Energy Action Team's (REAT) final Best Management Practices and Guidance Manual for Desert Renewable Energy Projects is now available. The Manual was adopted by the California Energy Commission on December 15, 2010. The final version posted online last week includes the minor additions from the December 15 meeting.

The REAT is made up of the California Energy Commission, California Department of Fish and Game, U.S. Fish and Wildlife Service, and the U.S. Department of Interior Bureau of Land Management. The REAT has the task of helping accelerate the permitting of renewable energy facilities in the California Mojave and Colorado Deserts, while minimizing environmental impacts and conserving natural resources in these areas. This will facilitate California’s larger goals of generating 33% of the state’s electricity from renewable sources by 2020. For more background information on the REAT and Executive Order S-14-08, creating the Team, see our previous legal alert

 

The REAT is preparing a Desert Renewable Energy Conservation Plan for the California Mojave and Colorado Deserts ecological areas. The Best Management Practices and Guidance Manual provides interim guidance to facilitate renewable energy during preparation of the comprehensive Conservation Plan. The Manual is designed to provide guidance to renewable energy developers on designing and siting renewable energy projects in these desert areas. The Manual’s stated goals also include assisting agencies in reviewing and permitting renewable energy projects and accelerating environmental review of renewable energy projects, though there is less practical material on these goals.

 

The Manual mainly details actions that should be taken prior to filing an application for a renewable energy project to streamline the permitting process. Many of the recommendations, though, are what savvy developers would strive for in any project:  start coordinating early with agencies with long permitting lead times and provide them with complete materials so the process is not delayed, design and site your project to lessen environmental impacts and make sure it is not in conflict with local requirements, plans, or zoning, and complete your long-lead items in the environmental review process, like season-specific surveys, early. In fact, the Manual states “if the majority of the actions are not addressed it is likely that environmental review and decision-making will take additional time.” While it isn’t groundbreaking advice, it is useful for developers new to California or to serve as a checklist. The Manual, disappointingly (but perhaps not surprisingly) doesn’t provide agencies with any new means to shortcut the laborious permitting process. The main pre-filing recommendations are:

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Bill Holmes Selected to Law360's 2011 Energy Editorial Advisory Board

Business law publisher Law360 recently announced that Bill Holmes, Partner in the firm’s Energy Development practice, has been selected to serve as a member of Law360’s 2011 ENERGY Editorial Advisory Board. Holmes was one of 12 board members selected from over 1,000 attorney candidates. The board will review feedback from readers of the Energy Law360 publication and discuss topics for future coverage.

Read the Law360 press release (subscription required)

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Environmental Leader: Best Practices for Renewable Energy, Carbon Offset Claims

The online newspaper Environmental Leader recently published a column by Stoel Rives' Joseph Eckhardt, addressing rules in the FTC's proposed Green Guides that address green energy and carbon offset certification, entitled "New Green Guides Suggest Best Practices for Renewable Energy, Carbon Offset Claims." 

The article explains:  "The FTC's proposed, revised Guides for the Use of Environmental Marketing Claims . . . for the first time address the issue of marketing green energy and carbon offsets.  Producers, resellers, and consumers of 'green' certificates and credits should take notice."

Read the full column here.

ALJ Releases Ruling Setting Briefing Schedule for CPUC Implementation of Amendments to CA Feed In Tariff Program

From our colleage Seth Hilton:

In 2006, Assembly Bill (AB) 1969 ushered in the era of the Feed In Tariff (FIT) in California. AB 1969 added section 399.20 to the Public Utilities Code, which allowed for tariffs and standardized contracts for eligible renewable resources up to 1.5MW owned by, and located on, public water and wastewater treatment facilities. In 2007, the California Public Utilities Commission (CPUC) expanded the program to all utility customers. In 2008, Senate Bill (SB) 380 established a standard tariff for all utility customers and applied that tariff to San Diego Gas & Electric (SDG&E) in addition to Pacific Gas & Electric (PG&E) and Southern California Edison (SCE).

Also in 2008, the CPUC adopted the final tariff structure and standardized contracts. The pricing for the tariffs was set at the market price referent (MPR), as adjusted by time of use (TOU) factors. A more detailed description, and the MPR and TOU tables, is available here. The total cap of the program is currently 500MW divided between SCE, PG&E, and SDG&E.

In 2009, SB 32 was signed into law, which, among other things, increased the eligible project size to 3MW. SB 32 went into effect on January 1, 2010. However, the CPUC has not yet fully implemented these amendments to the FIT program.

On January 27, 2011, Administrative Law Judge (ALJ) Anne E. Simon released a ruling setting the briefing schedule in response to the CPUC’s implementation of SB 32. The ruling states that respondents must, and other parties may, file briefs on such issues as eligibility, program size and requirements, and the setting of the tariff price, or any other issue they believe to be “relevant to the Commission’s implementation of SB 32.”

ALJ Simon’s ruling further stated that parties may also file, as a separate action in their brief, a request for any “further activities” they believe should be conducted (i.e., workshops, hearings, etc.).

Filed briefs must be no more than 50 pages and must be filed and served by respondents, and may be filed and served by other parties, no later than March 4, 2011. Reply briefs, which can be no more than 25 pages, must be filed by served no later than March 22, 2011.

Texas Moves Ahead With New Transmission to Support Renewable Energy

From our colleague David Hattery:

In its year-end report, the Electric Reliability Council of Texas (ERCOT) outlined its program for an unprecedented build-out of high voltage lines to serve renewable energy projects. ERCOT will be overseeing the design and construction of more than 2,000 miles of new 345-kV transmission to serve additional wind capacity in remote areas of the ERCOT service area. The new projects are part of the Competitive Renewable Energy Zone (CREZ) program enacted by the Texas Legislature in 2005. The CREZ projects, which are expected to cost an estimated $4.9 billion, will provide access to deliver 18,500 MW of additional wind-generated power from the panhandle and west Texas to load centers in Dallas, Austin and San Antonio. In conjunction with the transmission projects, ERCOT recently completed the CREZ Reactive Power Study that recommends additional improvements necessary to control, condition, and route the additional renewable energy through the grid. Many of these projects are currently under construction and the entire CREZ program is scheduled to be complete by the close of 2013.

Links
ERCOT Report
CREZ Progress Report No. 2, January 2011

Idaho PUC Considers Reducing Published Avoided Cost Rate Eligibility Cap for QFs

The Idaho Public Utilities Commission (the “Commission”) heard oral arguments today on the Joint Petition filed by Idaho Power, Avista Corporation and PacifiCorp d/b/a Rocky Mountain Power (collectively the “Utilities”) in Docket No. GNR-E-10-04, requesting that the Commission address various issues related to avoided costs for PURPA Qualifying Facilities (“QFs”), including ownership and valuation of Renewable Energy Credits, system reliability, lack of a standard contract template, and the increased size and scale of QF projects. Specifically, the Utilities are seeking an order reducing the published avoided cost rate eligibility cap for Idaho QFs from the current 10 aMW level to 100 kW. On December 3, 2010, the Commission issued a Notice of Joint Petition and Order No. 32131 (the “December 3rd Order”), denying the Utilities’ request to immediately reduce the eligibility cap, and breaking the proceeding up into two phases. In the first phase, the Commission will address whether the eligibility cap should be reduced temporarily, pending a decision on the broader avoided cost issues in phase two.

Today’s hearing focused solely on the Utilities’ request to reduce the eligibility cap, during which the Commission sought discussion on the appropriateness of exempting non-wind QF projects from the reduced eligibility cap, and the consequences of disaggregation (i.e., dividing larger wind projects into multiple 10 aMW projects in order to qualify each for the published avoided cost rate). The Utilities argued that temporarily reducing the eligibility cap while addressing the other avoided cost issues is the simplest and most effective way to proceed and would address one immediate concern – the large number of currently proposed contracts, which the Utilities argue are not from small, unsophisticated developers, but instead are from large scale wind projects that are being disaggregated to meet the 10 aMW cap. Each of the Utilities agreed that although the magnitude of the problem is related to wind resources, the reduction, if granted, should apply to all QF projects. Commission Staff testified in support of a reduction in the eligibility cap, but argued that the reduced cap should apply to wind resources only. Recent industry publications have reported that Commission Staff may be willing to consider instituting a rule that requires disaggregated facilities to be located at least five miles apart (rather than the current one-mile rule provided for under FERC regulations); however, that option wasn’t raised at the hearing.

The hearing room overflowed with the more than a dozen parties who have intervened in the case, whose interests and testimony varied, but each warned of the chilling effect of such reduction on development of renewable energy projects in Idaho and the need for further evidentiary hearings to resolve the issues presented. The Commission seemed sensitive to the impact of any temporary cap reduction, particularly on projects currently under development, and the need to resolve the broader avoided cost issues quickly. However, all parties agreed that such proceedings would not be quick, and would take six months to a year to resolve. Such a delay could certainly kill a project under development, and would undoubtedly dissuade new developments in Idaho in 2011.

The Commission did not say when to expect an order on the temporary reduction, only that they would issue one as soon as possible. Pursuant to the Commission’s December 3rd Order, any order reducing the eligibility cap will have a retroactive effective date of December 14, 2010.

For more information, or if you have questions regarding the Commission’s proceeding and the impact it may have on renewable energy development in Idaho, feel free to contact Teresa Hill at tahill@stoel.com or Chad Marriott at ctmarriott@stoel.com.
 

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Renewable Electricity and Wine - A Perfect Pairing

An entry from our colleague Jake Storms:

While wineries and vineyards have long been moving toward being “green,” several have taken the next step by installing renewable energy generation onsite. One of the most recent is August Cellars, just outside Newberg, Oregon. The winery recently installed a 150-foot-tall, 50-kilowatt wind turbine. August Cellars maneuvered around the somewhat prohibitive cost of the project (between $70,000 and $100,000) by not actually owning the turbine, but instead leases the turbine from a third party with an option to buy.

August Cellars is following in the footsteps of such giants as Constellation Wines, which, in September 2010, announced it would increase its solar photovoltaic (PV) usage to nearly 4MW with new installations at its Estancia, Ravenswood, and Clos du Bois wineries in California. These systems would expand on the company’s already existing use of solar PV at its Gonzales winery. Constellation will own the systems and take advantage of the tax credits. Once completed, the installations will cover nearly 100% of the energy needs of Estancia and Ravenswood, 75% of Clos du Bois, and 60% of Gonzales and is projected to save the wine giant nearly $1 million annually from reduced energy costs.

The move by wineries toward renewables is not merely a “West Coast thing” either. Red Caboose Winery, a 10,000-case rural winery located in Meridian, Texas, recently released a statement that it would be using a USDA Rural Energy for America Program (REAP) grant of $15,617 to help install a solar PV system. According to the owners, the new system will allow the winery to have a net annual energy consumption of zero.

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Upcoming Energy Conference Highlights

Through industry presentations and publications as well as through our blog, our energy attorneys are dedicated to helping you stay informed and knowledgeable about legal developments that affect your business.

Visit our website for the latest calendar of events. Upcoming highlights include:

Wind & Solar Integration Summit
January 24-26 – Scottsdale, AZ
Featuring speakers Stephen Hall, Ed Einowski, Bill Holmes, Jennifer Martin and Dina Dubson – use Infocast conference code 110808 for a 25% registration discount.

Electricity Storage: Business and Policy Drivers
January 24-26 – Houston, TX

Bill Holmes and Edna Vassilovski will discuss “Due Diligence Considerations in Electric Energy Storage Business Relationships” at this post conference workshop on 1/26.

Wave Energy in the U.S. Today
February 1 – via teleconference or at Stoel Offices in Portland, Seattle, and Sacramento

Chad Marriott will serve as a panelist for this teleconference presented by the American Bar Association's Renewable, Alternative, and Distributed Energy Resources Committee.

Wind Power Finance & Investment Summit
February 2-4 – San Diego, CA
Join conference speakers Duff Bryant and Greg Jenner along with Ed Einowski, Julia Pettit, Howard Susman, Morten Lund and David Quinby at the Rancho Bernardo Inn – Use Infocast conference code 110166 for a 15% registration discount.

Geothermal Energy Finance Forum
February 9 – New York, NY
Visit the Big Apple with Gary Barnum and John McKinsey, conference speaker and Geothermal Energy Association Board Member.

Next Generation Bio-Based Chemicals Summit
February 14-17 – San Diego, CA
Network with industry leaders and Stoel Rives speakers John Eustermann, David Quinby, and Edna Vassilovski – use Infocast conference code 111016 for a 15% registration discount.

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The California Public Utilities Commission Lifts Moratorium on Approval of Tradable Renewable Energy Credit Transactions; Limits Use of Out-of-State Generation for California RPS Compliance

A legal update from our colleague Seth Hilton:

Ten months after initially authorizing the use of tradable renewable energy credits (TRECs), the California Public Utilities Commission (CPUC) today lifted its moratorium on approval of TREC transactions. CPUC Dec. 11-01-025. Today’s decision, however, retains restrictions on TREC transactions that could limit the amount of out-of-state generation that the three major investor-owned utilities can use to meet their California Renewable Portfolio Standard (RPS) obligations.

At its March 11, 2010 meeting, the CPUC authorized the use of TRECs for compliance with the RPS, subject to certain limitations. CPUC Dec. 10-03-021 (March Decision). Among the limitations that the March Decision imposed was a cap limiting the use of TRECs for RPS compliance for the largest investor-owned utilities (Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric) to 25% of their annual RPS compliance obligations. That cap was to remain in place until December 31, 2011, when the CPUC would consider modifying or removing that limitation. The March Decision also imposed a price cap of $50 per TREC. The price cap was also set to expire on December 31, 2011.

To continue reading, click here

Projects & Money 2011

As we approach the beginning of a new year, financing options for energy projects (both conventional and renewable) under the current economic conditions continue to be a challenge and a focal point for the energy industry.  In order to gear up for financing opportunities in 2011,  I, along with my colleagues Marcus Wood, Graham Noyes and Adam Kobos, will be heading to the Big Easy for Projects & Money 2011.  Stoel Rives is proud to be a Gold Sponsor at this engaging conference, where Capital Providers, Project Developers and other dealmakers in the financing community will gather together to share information, discuss deal leads and capitalize on new market opportunities.

Projects & Money incorporates its comprehensive market updates with networking opportunities, introductions to new project developments, and interactive multimedia components. Presentations from industry professionals provide an inside look at some of the most ground-breaking deals of 2010, examine the trends they reveal, and provide a better understanding of what it takes to make deals happen.

Stoel Rives attorney Graham Noyes will present "DOE's Loan Guarantee Program: Crucial Financing Mechanism or a Costly Distraction?" on Tuesday, January 11, at 1:30 p.m. during the Pre-Summit Briefing.

On Wednesday, January 12, Partner Marcus Wood will moderate the discussion panel, "Transmission Outlook," at 2:15 p.m. during Track II: Project Sector Outlooks.

Hope to see you there!

To learn more about the conference or to register online, please visit: http://www.infocastinc.com/index.php/conference/416

Projects & Money
When: January 11-13, 2011
Where: Harrah's New Orleans – New Orleans, LA

California Adopts its Cap-and-Trade Program for Greenhouse Gas Emissions

After a full day of testimony and deliberation on December 16, 2010, the California Air Resources Board (ARB) adopted the state’s Cap-and-Trade Program on a 9-to-1 vote. The Program is promulgated under the California Global Warming Solutions Act (A.B. 32) as a market-based compliance mechanism to help achieve reduction of the state’s greenhouse gas (GHG) emissions to 1990 levels by 2020. The 10-hour public hearing on the proposed regulation included more than six hours of public testimony, crisscrossing the broad spectrum of stakeholders with an interest in the Program. The large scope of comments made it clear that there were numerous details that still need to be resolved, and that litigation may be pending.

Indeed, even with the December 16 approval, there will be several modifications to the Cap-and-Trade regulation that was released in early November for public review, based on ARB staff-proposed changes presented at the hearing. These changes and other “conforming modifications” will be released for an abbreviated 15-day comment period. Staff will then continue to revise the fine points of the regulation that do not purportedly require further Board action, with a goal of having all the details of the Program confirmed by July 2011. ARB’s approval also included four protocols for creating offset credits. The Cap-and-Trade Program, which contains numerous convoluted provisions, consists of several major elements.

Click here to continue reading.

If you have any questions about the issues of this update, please contact:

Lee N. Smith at (916) 319-4651 or lnsmith@stoel.com
Allison C. Smith at (916) 319-4759 or acsmith@stoel.com

California Public Utilities Commission Approves Renewable Auction Mechanism

On Friday, December 16, 2010, the California Public Utilities Commission unanimously approved a decision ("Final Decision") ordering a new tariff for a procurement protocol called the Renewable Auction Mechanism, or RAM. RAM applies to California's three largest investor-owned utilities ("IOUs"). All renewable energy projects up to 20 MW that are located in the service territory of one of the IOUs are eligible for RAM. The program authorizes the IOUs, on an interim basis, to acquire up to 1,000 MW of renewable generation, with each IOU allocated a portion of the 1,000 MW cap.

RAM will consist of two auctions per year. Twenty-five percent of the total program allocation will be offered in each auction; unsubscribed capacity and drop-out capacity is added to the next auction. Auctions for all three IOUs will be conducted simultaneously, and a project may bid into all three auctions. If a project is selected in more than one auction, however, it must notify all affected IOUs which one shortlist it will accept within 10 days of its notice that it was selected in multiple auctions.

To continue reading, click here.

If you have any questions about the issues of this update, please contact:

Seth Hilton at (916) 319-4749 or sdhilton@stoel.com
Morten Lund at (858) 794-4103 or malund@stoel.com
Brian Nese at (858) 794-4102 or bjnese@stoel.com

Stoel Rives Helps Launch Solar Industry's First EPC Contract Template

SolarTech, a non-profit private/public consortium, recently announced the solar industry’s first engineering procurement and construction (EPC) contract template for solar financing. Whereas a PPA (power purchase agreement), loan agreement or operating lease agreement handle the front-end financing relationship, the EPC agreement handles the execution phase of the project. The template was developed by the SolarTech Finance committee, with the support of my colleague Howard Susman, and is projected to reduce contract negotiations by 50 to 75 percent.

In SolarTech’s announcement, Howard said that “our guiding principles in developing this form were, first, to achieve sufficient balance in the allocation of risks that both contractor and owner would feel comfortable with the terms, and second, to include provisions typically acceptable to the financial community, without whose acceptance, there would be no projects at all.”

 

You can download a copy of the EPC contract template here (free for SolarTech members; $395 for non-members).

Renewable Energy Law Alert: The Upper Midwest Reopens to Renewable Energy Development

Yesterday, December 16, 2010, the Federal Energy Regulatory Commission (FERC) conditionally approved a proposal by the Midwest Independent Transmission System Operator (MISO) that significantly changes how large transmission upgrades are funded across the MISO region.

MISO’s proposal creates a new category of transmission projects called Multi-Value Projects (MVPs) for upgrades that are determined to enable reliable and economic delivery of energy in support of public policy mandates or laws that address transmission reliability and congestion across multiple transmission zones.

MISO’s proposal is effective as of July 16, 2010 and thus applies to transmission projects identified in Appendix A of 2010 MISO Transmission Expansion Plan (MTEP).

To continue reading, click here.

If you have any questions about the order, how it may affect your generation or transmission project, or wind energy development in the Midwest, please contact one of the following attorneys:

Minneapolis, MN
Mark Hanson at (612) 373-8823 or mjhanson@stoel.com
Kevin Johnson at (612) 373-8803 or kdjohnson@stoel.com
Kevin Prohaska at (612) 373-8805 or krprohaska@stoel.com
David Quinby at (612) 373-8825 or dtquinby@stoel.com
Joe Thompson at (612) 373-8822 or jrthompson@stoel.com
Sarah Johnson Phillips at (612) 373-8843 or sjphillips@stoel.com

Portland, OR
Jennifer Martin at (503) 294-9852 or jhmartin@stoel.com
Marcus Wood at (503) 294-9434 or mwood@stoel.com
Sara Bergan at (503) 294-9336 or sebergan@stoel.com
Jason Johns at (503) 294-9618 or jajohns@stoel.com

Energy Law Alert: EPA Publishes CO2 Geologic Sequestration Rule in Federal Register

On Friday, December 10, 2010, EPA published in the Federal Register its final rule governing the underground injection of carbon dioxide (CO2) for geologic sequestration (GS) under the Safe Drinking Water Act (SDWA). EPA released a pre-publication version of this rule back on November 22, 2010. Stoel Rives previewed the pre-publication version on our Renewable Energy + Law Blog. This alert highlights some key deadlines included in final rule, as published last Friday.

Background: Last Friday's rule focuses on protecting underground sources of drinking water (USDW) from endangerment due to CO2 GS activities. The rule was promulgated pursuant to EPA’s SDWA authority. The rule, which becomes effective on January 10, 2011, resulted from a proposed rule issued by EPA on July 25, 2008 (73 FR 43492) and a notice of data availability and request for comment by EPA on August 31, 2009 (74 FR 44802).

Continue reading this alert >

For more information about how last Friday’s rule could affect your CO2 injection plans, feel free to contact one of the following Stoel Rives’ attorneys.

Geoffrey Tichenor at (503) 294-9389 or gbtichenor@stoel.com
Jerry Fish at (503) 294-9620 or jrfish@stoel.com
Thomas Wood at (503) 294-9396 or trwood@stoel.com
Sara Bergan at (503) 294-9336 or sebergan@stoel.com
Sarah Johnson Phillips at (612) 373-8843 or sjphillips@stoel.com
Eric Martin at (503) 294-9593 or elmartin@stoel.com

 

First Federally Coordinated Renewable Energy and Energy Efficiency Export Initiative

 

On Tuesday, December 7, 2010, U.S. Commerce Secretary Gary Locke, together with several other  government agencies, announced a Renewable Energy and Energy Efficiency Export Initiative.

 

The Initiative brings together the Trade Promotion Coordinating Committee Working Group on Renewable Energy and Energy Efficiency,  the Export-Import Bank of the United States, the Overseas Private Investment Corporation,  the U.S. Trade and Development Agency, and the Office of the United States Trade Representative.  This coordinated effort is the first of its kind.

 

The goal is to promote and increase renewable energy and energy efficiency exports as part of a cohesive program during the next five years.  The U.S. Government plans to offer new financing products for exporters and facilitate market access, among other things.

 

See http://export.gov/reee for the  report released on Tuesday by the Commerce Department.

Stoel Rives Energy Regulation Report

IN THIS EDITION:

  1. FERC opens a rulemaking on variable energy resources.
  2. FERC extends the comment deadline in the appeals by wind farms registered for transmission reliability functions.
  3. FERC denies a petition to protect priority to interconnection capacity rights.

FERC Opens Rulemaking on Intra-Hour Scheduling, Forecasting Requirements, and Integration Services for Variable Energy Resources

The Federal Energy Regulatory Commission (FERC) proposed amending its pro forma open access transmission tariff to correct practices that are unduly discriminate against variable energy resources (VERs) such as wind and solar energy generators. In the November 18, 2010 Notice of Proposed Rulemaking, FERC outlines measures that, if adopted, will (a) require transmission providers to offer transmission service that can be scheduled on 15-minute intervals, (b) require interconnection customers that operate VERs to provide site-specific forecasting and meteorological data to transmission providers that are deploying and/or developing power production forecasting processes, and (c) add a new rate schedule for generation regulation (i.e., integration) services. The proposed rulemaking is the first to come out of the January 2010 Notice of Inquiry on the Integration of VERs—a docket that received well over 100 comments from industry stakeholders.

Read more on the Notice of Proposed Rulemaking on VERs here.

FERC Extends Comment Period in Wind Farms’ Appeal of NERC Decision to Uphold Registration as Transmission Owners/Operators

FERC has extended the comment deadline in an appeal by two wind farms that were registered for Transmission Owner and Transmission Operator reliability functions, a potentially costly registration for the wind farms that was affirmed by the North American Electric Reliability Corporation (NERC) in October. The NERC decision and its supporting analysis, if affirmed by FERC, have the potential to broadly apply to many generation developers, owners, and operators.

Read more on the wind farms’ appeal here.

FERC Denies Puget Sound Energy's Request to Protect Interconnection Capacity Rights

In June of this year, Puget Sound Energy (Puget) filed a petition with FERC for a declaratory order to protect its rights to 1,250 MW of interconnection capacity that would eventually serve the Lower Snake River Project wind farm. Puget argued that constructing the entire interconnection capacity needed for the full project upfront was financially efficient and environmentally responsible, and that other developers should not be able to claim rights to the capacity. On November 18, 2010, FERC distinguished the petition from an earlier decision in Milford and denied Puget’s request to establish its priority rights to the interconnection capacity. FERC reasoned that the capacity over Puget’s generator lead lines must be governed by its open access transmission tariff. FERC also found that any interconnection capacity that is not appropriately reserved for Puget’s native load must be made available to other open access customers.

Read more on the FERC decision denying Puget’s request to protect its interconnection capacity rights here.

If you have questions about the issues addressed in this report, please contact:

Marcus Wood at (503) 294-9434 or mwood@stoel.com
Jennifer Martin at (503) 294-9852 or jhmartin@stoel.com
Jason Johns at (503) 294-9618 or jajohns@stoel.com
Sara Bergan at (503) 294-9336 or sebergan@stoel.com

Oklahoma's Significant Renewable Energy Legislation is Going Into Effect

An update on Oklahoma from Laura Suesser and Sara Bergan:

The Oklahoma legislature passed three bills (H.B. 2973, S.B. 1787, and H.B. 3028) in 2010 that affect the renewable energy industry. Two have already gone into effect and the third will go into effect on January 1, 2011. A summary of each bill is included below.

The Oklahoma Wind Energy Development Act (the “Act”), H.B. 2973, becomes effective on January 1, 2011 and will be codified in Okla. Stat. tit. 17 §§160.11-17 (2010). The Act includes the following:

  • Decommissioning: Decommissioning requirements apply to any wind energy facility entering into or renewing a power purchase agreement (PPA) on or after January 1, 2011. If energy is not being sold under a PPA, the requirements apply to wind energy facilities which commence construction on or after January 1, 2011. The requirements include:
    • Restoration: Owners of a wind energy facility must remove wind energy equipment (to a depth of 30”) and restore land surfaces to substantially the same pre-construction condition (excluding roads) within 12 months of abandonment of a project or the end of the useful life of the equipment.
    • Cost Estimate and Posting of Financial Security: After the 15th year of operation, facility owners must file a professional estimate of the decommissioning costs together with a financial security (either a surety bond, collateral bond, parent guaranty or letter of credit) to cover such costs. Those failing to so file may incur an administrative penalty of up to $1,500/day.
  •  Payment Statements and Access to Records: Any owner or operator making payments to landowners based on the amount of electrical energy produced is required to deliver a statement to the landowner, within 10 business days of payment, explaining the payment calculation and a means for the landowner to confirm its accuracy. Landowners have the right to inspect owner/operator records to confirm the accuracy of payments for up to 24 months following payment. Records must be made available for review within the state of Oklahoma.  
  •  Insurance:   Owners or operators are required to obtain commercial general liability insurance policy with limits consistent with prevailing industry standards (or a combination of self insurance and excess liability insurance policy), which name the landowner as an additional insured and certificates of insurance must be delivered to landowner prior to commencing construction of the facility.
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Utah Energy Initiative Task Force Issues Draft Plan

On June 8, 2010, Utah Governor Gary Herbert launched a formal planning process for the Utah Energy Initiative.  Over the past several months the members of the Utah Energy Initiative Task Force and various subcommittees have conducted public hearings and a series of meetings to gather input for purposes of drafting a 10-year strategic energy plan.  The Energy Initiative Task Force issued a draft report on November 3, 2010.  Written comments on the draft report are due by November 10, 2010 and should be submitted to abuchholz@utah.gov.  A public hearing at which public comment will be accepted will be held on November 10, 2010 from 5:00 to 7:00 p.m., at the Senate Building (State Capitol complex east building), Room 215, Salt Lake City, Utah.

The energy plan outlined in the report contains the following themes:

  1. Economic Development and Energy Jobs
  2. Energy Development and Environment
  3. Energy Efficiency, Conservation and Demand-Response
  4. Transportation and Air Quality
  5. Transmission, Infrastructure and Transportation
  6. Developing and Applying Technology and Science

 

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California Election Results Provide Endorsement for Renewable Energy

A legal update from our colleagues Seth Hilton, John McKinsey and Allison Smith:

The results are in on the California election, and it's supportive of renewable energy. The two most important developments: Jerry Brown prevailed over Meg Whitman in the gubernatorial race and Proposition 23 failed. The election appears to have been, in part, an affirmation of California's quest to expand its use of renewable energy.

Proposition 23 would have suspended the California Global Warming Solutions Act (AB 32) until the state's unemployment rate dropped to 5.5% or less for four consecutive quarters. Given that California's current unemployment rate is about 12% and the unemployment rate has been below 5.5% for four consecutive quarters only three times since 1980, Proposition 23 would have likely halted the implementation of AB 32 indefinitely. AB 32 mandates a reduction in greenhouse gas emissions to 1990 levels by 2020. More importantly for the renewably energy industry, the current mandate for 33% of the state's electricity to come from renewable energy resources by 2020 hinges almost entirely on AB 32. The California Air Resources Board (ARB), pursuant to its authority under AB 32 and following the edict of Governor Schwarzenegger's Executive Orders S-21-09 and S-14-08, is implementing a "33% by 2020" renewable energy standard (RES).

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PG&E Suspends WaveConnect Project

On October 28, 2010, Pacific Gas & Electric ("PG&E") announced that it was suspending development of its Humboldt WaveConnect Pilot Project (FERC Docket No. P-12779) off of the Northern California coast.  The company stated that "several major challenges made the project unviable at its current location and configuation."  However, "PG&E remains committed to [wave energy] technology." 

In fact, PG&E will continue its work to determine the feasibility of its proposed Central Coast project (FERC Docket No. P-13641).  The Central Coast project is proposed in 45 square miles of coastal waters off the coast of Santa Barbara County, California.  PG&E submitted its preliminary permit application in December 2009, and was awarded its preliminary permit on May 14, 2010. 

The hydrokinetic industry has come a long way in the last few years and some bumps in the road should be expected as the industry works toward the commercial deployment of projects in state and federal waters of the United States.  However, the federal government continues to "put its money where its mouth is" when it comes of offshore renewable energy development.  Most recently, the U.S. Department of Energy, the Bureau of Ocean Energy Management, Regulation, and Enforcement, and the National Oceanic and Atmospheric Administration awarded $5 million to eight research projects related to offshore development through a joint solicitation.

REMINDER: Applications for SBIR and STTR Phase I Grants Due November 15th

Don't forget that the deadline for Phase I grant applications under the U.S. Department of Energy's ("DOE") Small Business Innovation Research ("SBIR") and Small Business Technology Transfer ("STTR") programs is 8:00 p.m. Eastern, November 15, 2010.  Qualified small businesses with strong research capabilities in science or engineering in any of the research areas identified in the September 28, 2010 Funding Opportunity Announcement are encouraged to apply.  Phase I grants of up to $150,000 will be awarded in FY 2011 under the SBIR; and grants of up to $100,000 will be awarded under the STTR. 

The Phase I Technical Topics document lists several areas of particular interest for the renewable energy industry.  Note that the following is not an exhaustive list.  The full list and descriptions can be found in the Phase I Technical Topics document.

  • Advanced Cooling and Waste Heat Recovery: Advanced Cooling; Advanced Waste Heat Recovery; Geoexchange heat pump (GHP) component R&D; Innovative GHP System/Loop Designs.
  • Production of Bioenergy and Biofuels from Cellulosic and Non-Food Biomass:  Biomass Feedstock Stabilization and Drying; Biomass Torrefaction; Sugar Catalysis to Advanced Biofuels and Chemical Intermediates; Pyrolytic Thermal Depolymerization.
  • Hydrogen and Fuel Cells:  Reducing the Cost of High Pressure Hydrogen Storage Tanks; Fuel Cell Balance-of-Plant; Demonstration of Alternative-Fuel Fuel CElls as Range Extenders.
  • Innovative Solar Power:  High Efficiency, Low Cost Thin Film Photovoltaics; Low Cost Building Integrated Photovoltaics; Static Module PV Concentrators; Solar-Powered Water Desalination; Distributed Concentrating Solar Power ("CSP").
  • Advanced Water Power Technologies: Pumped Storage Hydropower; Advanced Hydropower Systems; Wave and Current Energy Technologies; Advanced Component Design for Ocean Thermal Energy Conversion Systems.
  • Wind Energy Technologies: Transportation and Assembly of Extremely Large Wind Turbine Components for Land-Based Wind Turbines; Wind Energy Capture in Non-Conventional Wind Resources; Offshore Grid Infrastructure Hardware Development; Offshore Mooring and Anchoring Technology.

Detailed descriptions of each subtopic are included in the Phase I Technical Topics document.

ODOE Announces Funding for Small Renewable Projects Gone

Earlier this year, the Oregon Department of Energy (“ODOE”) allocated $10 million in tax credits for renewable energy projects with costs of less than $500,000 (“Tier One Projects”). On Wednesday, October 13, ODOE announced that it will no longer accept applications for Tier One Projects because as of October 11 ODOE had received applications for credits in excess of the $10 million allocated for Tier One Projects. ODOE expects funding for Tier One Projects to become available in January 2011.

Upcoming Webinar: Legal Implications of Energy Storage

Join Stoel Rives renewable energy partners Bill Holmes, Marcus Wood and Edna Vassilovski for this EUCI-sponsored webinar on Wednesday, October 20. They will be speaking on the Legal Implications of Energy Storage. This webinar will appeal to anyone involved in and with renewable energy.

  • Overview of the role of energy storage in the overall energy system
  • Intellectual property issues: invention and use of advanced storage technologies
    • Patent law basics
    • Licensing agreements
  • Is energy storage transmission or generation?
    • Legal impact of adding to the distribution system, the bulk transmission system, or both
  • Energy storage tolling agreements
    • Basic terms and conditions
  • Incorporating storage into renewable energy development plans

When:

Wednesday, October 20, 2010
2:30 p.m. ET; 11:30 a.m. PT

For more information about this webinar and to register, please click here.

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

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

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

 

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

 

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

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

Air Resources Board Adopts 33% Renewable Energy Standard; Four California Energy Agencies Vow to Cooperate on Implementation

Here's an Energy Law Alert prepared by Seth Hilton, John McKinsey and Stephen Hall:

Last Thursday evening, the California Air Resources Board (ARB) unanimously adopted its Renewable Energy Standard (RES), mandating that California's electric utilities—both public and investor-owned—procure 33% of their electricity from renewable resources by 2020. The RES was adopted pursuant to the authority granted the ARB in AB 32, the California Global Warming Solutions Act of 2006, which vested the ARB with the authority to promulgate regulations to reduce California's greenhouse gas emissions. The RES requires utilities to submit plans by July 2012 on how they will comply with the new regulations. The regulation includes several multi-year compliance intervals—from 2012 to 2014 the RES is 20%, from 2015 through 2017 it is 24%, from 2018 to 2019 it is 28%, and from 2020 forward the RES remains at 33%. The RES is met through the retirement of Western Renewable Energy Generation Information System (WREGIS) certificates; unlike the current 20% Renewable Portfolio Standard (RPS) that applies to investor-owned utilities, there is no requirement that any energy be delivered to California. WREGIS certificates may be retained or traded for up to three years, utilities may also bank those certificates for RES compliance indefinitely. The RES also provides that ARB will conduct comprehensive reviews of the program by December 31, 2013, 2016, and 2018, and that those reviews may trigger modifications to the RES.

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A National Renewable Energy Standard Bill Surfaces in DC

Sens. Jeff Bingaman (D-NM) and Sam Brownback (R-KS), with Sens. Byron Dorgan (D-ND), Susan Collins (R-ME), Tom Udall (D-NM), Mark Udall (D-CO) and others joining, announced today that they will introduce a stand-alone Renewable Electricity Standard (RES) bill.  The bill will require sellers of electricity to obtain the following milestones in adding renewable energy resources or energy efficiency:

2012-2013 - 3%

2014-2015 - 6%

2017-2018 - 9%

2019-2020 - 12%

2021 - 2039 -15%

Renewable resources that can be used toward compliance will include wind, solar, ocean, geothermal, biomass, landfill gas, incremental hydropower, hydrokinetic, new hydropower at existing dams, and waste-to-energy.  For utilities that are unable to meet their RES targets, the bill proposes to charge a compliance payment at a rate of 2.1 cents per kilowatt hour, with such amounts then being used for renewable energy development or to offset consumers' bills.

A first step, yes.  But a small one.

Follow the link to learn more:  

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MPUC Issues Order on Renewable Energy Credit Ownership

Following our post from a couple weeks ago, the Minnesota Public Utilities Commission released its Order today regarding ownership of renewable energy credits in a group of "silent" power purchase agreements (Docket No. 08-440). The Order is available here and our previous post describing its substance is here.

California Energy Commission Proposes Revisions to RPS Guidebooks

An alert written by Stoel Rives partners Seth Hilton and John McKinsey:

The California Energy Commission RPS staff has proposed some significant and potentially important revisions to the RPS Eligibility Guidebook and the Overall Program Guidebook.  Written comments on the proposed revisions are due September 10, 2010, by 5:00 p.m.  The CEC will consider approval of the revisions at the November 17, 2010 CEC Business Meeting.  The revisions would become effective immediately upon adoption. 

Some of the most significant changes proposed to the RPS Eligibility Guidebook include:

Biodiesel:

  • Facility operators and fuel suppliers would now be required to verify that fuel meets RPS eligibility requirements.

Biogas:

  • Biogas use would now be allowed to generate electricity at the fuel processing site.  If not, the biogas must be transported by one of three methods to the electric generating facility.
  • The eligibility of biogas would now be expanded to include electric generating facilities located outside of California (but within the WECC – must deliver to pipeline that is directly linked to California).

Biomass:

  • Biomass facilities could now use up to 5% nonrenewable fuel if the facility participates in the Existing Renewable Facilities Program and up to 2% if the facility participates only in the RPS program.
  • Facility operators would now be required to provide verifications that fuel meets RPS eligibility requirements.

Fuel Cells:

  • Fuel cells would now be allowed to use the following renewable fuels in electrochemical reaction to generate electricity:  landfill gas, digester gas, other RPS-eligible gases, and Hydrogent or hydrogen-RCI gases derived from a non-fossil fuel or feedstock through the use of power generated by an RPS-eligible resource.

Out-of-State Facilities:

  • The proposed changes would require submission of environmental documentation to support the analysis submitted on Laws, Ordinances, Regulations and Standards requirements.

Multiple Fuel Facilities – Measurement Methods:

  • The proposed changes would require all facilities using multiple energy inputs to select and submit an appropriate measurement method, or submit an alternative, that will be used to measure the contribution of each resource.  Such measurements would apply to three categories: combustion and fuel cell, non-combustion thermal, and non-thermal electric generating technologies (excluding fuel cells).

CEC staff also proposes changes to the Overall Program Guidebook, including changes to the definitions of biogas, biomass, central station and distributed generation, commercial operation and hydroelectric. 

 

Perhaps equally important, CEC staff will consider further changes immediately after the November 17 CEC Business Meeting, including for example, limitations on biogas delivery via injection into natural gas pipelines.  CEC staff has asked for stakeholder input on additional areas, which can be found at http://www.energy.ca.gov/portfolio/notices/2010-08-30_Staff_Workshop_Revised.pdf.

If these changes are important to you, comments will be accepted up to September 10 and again at the CEC Business Meeting on November 17.

If you have any questions about the issues of this update, please contact:

Seth Hilton at (916) 319-4749 or sdhilton@stoel.com
John McKinsey at (916) 319-4746 or jamckinsey@stoel.com

California Legislature Fails to Pass 33% Renewable Portfolio Standard

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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Understanding "Beginning Construction" Under Section 1603

The Treasury Department recently issued a series of FAQs in an effort to clarify when projects will be treated as having "begun construction" for purposes of the section 1603 grant. As you may be aware, a project that otherwise qualifies for the grant but is not placed in service before the end of 2010 may still be eligible for the grant if construction on the project is begun in 2009 or 2010 and the project is eventually placed in service before the applicable "credit termination date." The new FAQs address a number of the unanswered questions. However, the framework adopted by the Treasury Guidance and the new FAQs is complex, and there appears to be a considerable amount of confusion among developers about how the "beginning construction" requirement can be met. Therefore, we thought it important to issue this alert.

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RNP and AWEA respond to WSJ editorial about wind energy

Energy Law Alert: CPUC Proposes to End Moratorium on TREC Transactions; Increase Cap to 40%

On August 25, the California Public Utilities Commission (“CPUC”) issued a proposed decision (“PD”) that would end the CPUC’s moratorium on approval of tradable renewable energy credit (“TREC”) transactions and increase the cap on such transactions for large investor-owned utilities to 40%.

Previously at its March 11, 2010 meeting, the CPUC authorized the use of TRECs for compliance with California’s Renewable Portfolio Standard (RPS), subject to certain limitations. CPUC Dec. 10-03-021 (Mar. 15, 2010)(“March Decision”). Among the limitations that the March Decision imposed was a cap limiting the use of TRECs for RPS compliance for the largest investor-owned utilities (Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric) to 25% of their annual RPS compliance obligations. That cap was to remain in place until December 31, 2011, when the CPUC would consider modifying or removing that limitation. The March Decision also imposed a price cap of $50 per TREC. The price cap also expires on December 31, 2011.

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Minnesota PUC Settles Longstanding Dispute over REC Ownership

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.

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

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

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

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

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

Good News and Bad News for DOE's Loan Guarantee Program

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. 

USDA Issues Notice of Funding Available for Renewable Energy Feasibility Studies

From our colleague Sarah Johnson Phillips:

Today, the U.S. Department of Agriculture (USDA) released a Notice of Funding Available (NOFA) for up to $3,000,000 in renewable energy feasibility study grants under the Rural Energy for America Program (REAP). 

  • The grants are available to farmers, ranchers, and rural small businesses for conducting feasibility studies for renewable energy systems.
  • The maximum amount for a feasibility grant is $50,000 or 25 percent of the eligible project cost of the study (whichever is less). Eligible costs include, but are not limited to, resource assessment, transmission studies, and environmental studies.
  • Applications are due to USDA Rural Development State Offices by October 5, 2010.

The REAP program also provides grants and loan guarantees to support renewable energy systems and energy efficiency improvements as well as energy audit and renewable energy development assistance grants. The REAP program is administered by the Rural Business-Cooperative Service

The full NOFA is available in today’s Federal Register (Federal Register, Vol. 75, No. 151, 47525-47535, August 6, 2010).

 

This Week in Biofuels, A Patent Perspective

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.

DOE Designates New Southeast National Marine Renewable Energy Center

The U.S. Department of Energy ("DOE") continued its support of marine and hydrokinetic ("MHK") technology development on Tuesday, announcing that Florida Atlantic University has been designated as the nation's third national center for ocean energy research and development.  The Southeast National Marine Renewable Energy Center ("SNMREC") joins centers in the Northwest, at the University of Washington and Oregon State University (jointly, the Northwest National Marine Renewable Energy Center) and in Hawai'i, at the University of Hawai'i.

With an additional $250,000 grant from DOE, the SNMREC will continue to focus research efforts on technologies designed to convert ocean currents like the Gulf Stream as well as ocean thermal energy into electricity for the grid.  On a personal note, I had the opportunity to visit FAU's Dania Beach (SeaTech) campus in November 2009 to take part in the USNC TAG/TC-114 "Marine Energy- Wave and Tidal Energy Converters" international standards process.  I was impressed by the students, faculty, and the facilities at the Institute for Ocean and Systems Engineering and I look forward to seeing FAU excel in its new role.

Illinois Legislation Passed to Encourage Renewable Energy Investment

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.

FERC Comments on Electric Storage Technologies Due August 9

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

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

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

Texas Court of Appeals Hands Down Decision in Important Wind Curtailment Case

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.

Interagency Ocean Policy Task Force Issues Final Recommendations

On Monday, July 19, 2010, the White House Council on Environmental Quality ("CEQ") issued the Final Recommendations of the Interagency Ocean Policy Task Force.  The Final Recommendations are the culmination of a process that began on June 12, 2009 when President Obama formed the Task Force and tasked it with developing recommendations to enhance national stewardship of the ocean, coasts, and the Great Lakes and promote the long-term conservation of those resources. 

The Final Recommendations will likely be carried over into an Executive Order to be signed by the President, which will establish a National Policy for the Stewardship of the Ocean, Coasts, and Great Lakes and create a National Ocean Council to enhance ocean governance and coordination between federal and state agencies.  The Final Recommendations also express the Task Force's unanimous agreement that the United States should acceed to the Convention on the Law of the Sea and ratify its 1994 Implementing Agreement.

The CEQ's press release is available here.  Attorneys at Stoel Rives are reviewing the Final Recommendations and assessing their impact on, among other things, offshore renewable energy development including offshore wind and marine and hydrokinetic projects.  Stay tuned for more on this important development.

Minnesota Angel Investment Tax Credit

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.

Upcoming BETC Deadline--July 30, 2010

Pursuant to recently issued temporary regulations, the Oregon Department of Energy has imposed a July 30, 2010 deadline for projects seeking a BETC that have projected facility costs of $6 million or greater. See the link below for specific details.

Tier Three Projects

EPA Issues Proposed RFS2 Rules for 2011

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.