Virginia Jumping in to Offshore Wind
In late February, the Associated Press reported that the Minerals Management Service received proposals from two Virginia companies for leases on the outer continental shelf to develop offshore wind farms. Apex Wind Energy Inc. is proposing to lease 116,000 acres for an undetermined number of wind turbines with the potential to generate up to 1,500 megawatts of power, and Seawind Renewable Energy Corp. envisions building 240 turbines to generate enough power for more than 250,000 homes annually, according to a company statement.
Both wind farms would be located 12 miles off of Virginia Beach.
The Virginia Offshore Wind Coalition estimates the development of a wind power hub in Virginia has the potential to become an $80 billion industry creating more than 10,000 jobs. Coalition members include the Cities of Virginia Beach and Norfolk, Apex Offshore Wind, AREVA, BAE Systems Ship Repair, Colonna’s Shipyard, Dominion Virginia Power, Earl Energy, Fugro Atlantic, Old Dominion Electric Cooperative, Science Applications International Corporation, Seawind Renewable Energy Corporation, Weeks Marine and W. F. Magann.
Proposed Legislation to Limit ITC Grants for Renewable Projects
Proposed legislation in the Senate would greatly limit the effectiveness of the grant in lieu of tax credits for renewable energy projects under section 1603 of the American Recovery and Reinvestment Act.
The section 1603 grant currently applies to renewable energy projects, such as wind, solar, geothermal and biomass, that are placed in service before 2011 or for which construction begins in 2009 or 2010 (and that are placed in service by certain dates). In its current form, if a project qualifies for the grant, the Treasury Department is required to pay the grant.
Expressing concern that a significant portion of the grants paid so far have gone to non-U.S. companies, Senator Charles Schumer (NY) and three other Democratic senators have sponsored a bill that would make payment of the grant subject to the discretion of the Treasury Department. It also would make the grant subject to the Buy American requirements of the stimulus bill, and would require that Treasury conduct an analysis of the "domestic job preservation and creation provided by" a project for which a grant application is submitted.
Various trade associations involved in renewable energy (such as AWEA, GEA and SEIA) are taking immediate action to register their opposition. Their focus will be on the incorrect assumptions underlying the proposal (for example, that it does not create U.S. jobs) and that, if enacted, it likely would destroy the effectiveness of the program.
We encourage our readers to register their strong opposition with their members of Congress and with the trade associations with which they are associated. The more opposition that is registered, and the longer the proposal drags out, the less likely it is to be enacted.
Read the March 4, 2010 Stoel Rives Law Alert on this proposed legislation.
Michigan GLOW Council Issues Legislative Recommendations for Offshore Wind
Michigan's Great Lakes Wind Council (GLOW Council), an advisory body within the Michigan Department of Energy, Labor & Economic Growth to examine issues and make recommendations related to offshore wind development in Michigan, has issued recommendations for a regulatory framework for offshore wind in Michigan's Great Lakes. These recommendations follow the GLOW Council's September 1, 2009 report (see previous blog entry), which contained proposed steps forward to developing an offshore wind industry in Michigan.
The recommendations, dated March 3, 2010, include a process that the Council recommends for inclusion in any bill introduced into the legislature to regulate offshore wind energy development in the Great Lakes, as well as recommendations for changes to transmission siting laws when the transmission relates to service of an offshore wind energy development.
186 More Species to be Protected by the Migratory Bird Treaty Act (MBTA)
My colleagues Greg Corbin and Eric Martin report on an important development under the Migratory Bird Treaty Act that may affect the siting and permitting of wind projects
Yesterday the U.S. Fish and Wildlife Service (FWS) announced the addition of 186 migratory birds to its list of species protected by the MBTA. Effective at the end of this month, this is the first update to the MBTA list in 25 years and will bring the total number of species receiving federal protection under the MBTA to over 1,000. Because the MBTA protects the vast majority of birds in the country, it covers many species not covered by the Endangered Species Act (ESA) or other laws.
Similar in some respects to the ESA, the MBTA prohibits the “take” (e.g., wounding or killing) of migratory birds. However, unlike the ESA, the MBTA does not have a routine mechanism for permitting incidental take of migratory birds. Accordingly, there is no way to be completely free of legal liability if a wind project results in the take of a migratory bird. Project developers, though, can seek assurances from the FWS that it will exercise its enforcement discretion if the project developer implements measures to protect migratory birds, such those that might be contained in an Avian & Bat Protection Plan. The measures necessary to avoid or mitigate impacts to migratory birds are project specific and always result in some additional cost, whether through changes to project layout and operation, or supplying mitigation funds.
In light of this newly expanded list of species protected by the MBTA, developers and operators of wind project would be well advised to review their strategy for minimizing the risk of prosecution under the MBTA.
The complete list of birds that will be protected by the MBTA is available at http://www.fws.gov/migratorybirds/.
Register Now for Live Meeting/Teleconference: Perspectives on Current Issues Facing Midwest Wind Projects
RENEWABLE ENERGY & DEMAND-SIDE MANAGEMENT COMMITTEE
Live Meeting/Teleconference
Midwest Wind Development: Perspectives on Current Issues Facing Regional Wind Projects
February 23, 2010
12:00 noon - 1:30 p.m. (Eastern Time)
11:00 a.m. - 12:30 p.m. (Central Time)
9:00 a.m. - 10:30 a.m. (Pacific Time)
In this seminar, the expert panelists will discuss current issues for developing commercial wind projects in the Midwest. In particular, the panelists will address:
- State regulatory issues for regional wind projects;
- Current prospects for developing wind energy on the Great Lakes;
- Community wind projects: current prospects for small scale wind projects;
- MISO cost allocation and market/operational issues affecting regional wind projects.
| Moderator: | David Gilles, Godfrey & Kahn, S.C. | |
| Presenters: | David Sapper, Customized Energy Solutions (Presenting from Madison Host Location)
William H. Holmes, Stoel Rives, LLP (Presenting from Minneapolis Host Location) Jeffery C. Paulson; Jeffery C. Paulson & Associates, Ltd. (Presenting from Minneapolis Host Location) |
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| Organizers: | David Gilles, Godfrey & Kahn, S.C. Jeff Dennis, Edison Electric Institute |
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| Host Locations: | Godfrey & Kahn, S.C. (beverages and light lunch provided)
Stoel Rives LLP (beverages and light lunch provided) McCarthy, Sweeney & Harkaway, P.C. (beverages provided) |
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| Questions for the Panelists: | Please send any questions for the panelists to David Gilles at dgilles@gklaw.com at any time prior to the Program. | |
REGISTRATION INFORMATION
To register for this Live Meeting/Teleconference, please complete and return the registration form.
Pre-registration is required and registration forms along with payment must be returned by no later than February 18, 2010. If you have questions, please contact Marlo Brown at marlo@eba-net.org.
Host Locations:
Godfrey & Kahn, S.C., One East Main Street, Suite 500, Madison, WI 53703
Stoel Rives LLP, Minneapolis City Center, 33 South Sixth Street, Suite 4200, Minneapolis, MN 55402
McCarthy, Sweeney & Harkaway, P.C., 1825 K Street N.W., Suite 700, Washington, DC 20006
HB 3680 Passes Oregon House
On February 10, 2010, the Oregon House passed HB 3680, which if enacted would substantially curtail the BETC for certain renewable energy projects. HB 3680 would impose an overall statewide cap, on the amount of potential tax credits that the Department of Energy could certify. The statewide cap would be $300 million for the 2009-11 biennium, and $150 million for the year beginning July 1, 2011 and ending June 30, 2012. HB 3680 would also authorize the Department of Energy to write rules relating to the priority to be given if applications for preliminary certification exceed those caps. In addition to the overall cap discussed above, HB 3680 would also impose the following cutbacks for large wind facilities (more than 10 megawatts):
- For facilities that obtain preliminary certification between January 1, 2010 and January 1, 2011, the BETC would be limited to $3.5 million
- For facilities that obtain preliminary certification between January 1, 2011 and January 1, 2012, the BETC would be limited to $2.5 million
- For facilities that obtain preliminary certification after January 1, 2012, the BETC would be limited to $1.5 million
HB 3680 would adopt several criteria implemented by the Department of Energy in the Temporary Rules adopted in November 2009, and would modify the definition of a “transportation facility” to include efficient truck technology for commercial motor vehicles. These provisions would apply retroactively to July 1, 2009. HB 3680 would also allow the Department of Energy to suspend or revoke a final certificate if a facility is no longer operating. This provision would apply retroactively to January 1, 2009. Finally, HB 3680 would extend the sunset date to January 1, 2014, for renewable energy resource equipment manufacturing facilities, but would not extend the sunset date for other facilities.
POSSIBLE RESTRUCTURING OF 1603 GRANTS
Congress is considering a complete rewrite of the 1603 grant program. Some of the changes being considered are very helpful while others would be extremely troubling. Please continue reading to get the full story ...
Continue Reading...
Michigan Announces $1.3M in Grants for Offshore Wind Research
On February 8, 2010, the Michigan Public Service Commission issued an order approving $1.6 million in Michigan Energy Efficiency grants, $1.3 million of which will go to Grand Valley State University, Michigan Alternative and Renewable Energy Center, in partnership with the University of Michigan Memorial Phoenix Energy Institute to conduct and/or perform studies to explore the feasibility of deployment of offshore wind technologies in Michigan.
The grants are part of the Low‑Income and Energy Efficiency Fund, which provides energy bill assistance for low‑income customers and promotes the efficient use of energy by all customer classes.
APS Announces Wind and Solar RFPs
On January 27, Arizona Public Service (APS) announced two requests for proposals (RFPs), one for new sources of photovoltaic (PV) solar energy and the other for Arizona-based wind.
The RFP for solar PV seeks proposals for projects that are between 15 and 50 megawatts and that employ commercially proven technology. APS's goal is to procure approximately 220,000 megawatt hours per year from this PV solicitation. Respondents are required to provide proposals for long-term power purchase agreements and/or "turn-key" agreements. The latter are sometimes called BTAs (Build-Transfer Agreements) or DBS (Design-Build-Sell) agreements--however named, APS anticipates that the agreement would require the developer to build the project and transfer it to APS when the project is completed. (As an aside, turn-key agreements that do not transfer the asset until commercial operation require very careful attention to "notice to proceed" clauses and conditions, lest defects in title, permits or some other matter thwart the closing and leave the developer's asset unsold or, worse, stranded.)
In its press release, APS encouraged parties to participate in the photovoltaic RFP bidder's conference on March 12, 2010. Additional information about the conference and the RFP is available online at www.aps.com/rfp. RFP submissions are due April 7, 2010.
On the wind side, APS is looking for wind projects between 15 and 100 megawatts located entirely within Arizona. Respondents are required to provide proposals for long-term power purchase and/or "turn-key" agreements. Interested parties are encouraged to participate in the Arizona-based wind RFP bidder's teleconference on March 17, 2010. Additional information about the conference and the RFP is available online at www.aps.com/rfp. RFP submissions are due April 14, 2010.
Stoel Rives LLP assists with first juwi-developed U.S. wind farm
The first wind farm developed by juwi in the U.S. will soon generate clean and safe electricity. Construction works at the Flat Water Wind Farm in Richardson County, Neb., have already started. By the beginning of 2011, 40 turbines will be up and running, thereby producing roughly 220 million kilowatt hours of carbon-dioxide-free power per year. The project will be constructed by Gallop Power LLC, a U.S.- based company established to develop, own, and operate clean energy projects. Gallop has acquired Flat Water Wind Farm from juwi's J.W. Prairie Wind Power LLC. Stoel Rives LLP represented juwi in the transaction.
"We were very pleased to have assisted juwi in accomplishing the transaction that will result in the construction and operation of their first wind farm in the United States. juwi, as an international player in the wind and solar energy with operating generation facilities in Europe and elsewhere, is the kind of company that we need active in the U.S. markets to help move our renewable energy sector forward," said Ed Einowski, Stoel Rives LLP partner who represented juwi in the transaction.
Continue Reading...Cuyahoga County Issues RFP for Studies on Lake Erie
On January 21, 2010, the Great Lakes Energy Development Task Force, under the authority of Cuyahoga County, issued a Request for Proposals to agencies and organizations interested in providing Avian and Bat ecological studies. The studies supplement the Task Force's Feasibility Study for an early stage commercial deployment project consisting of up to eight (8) turbines with total rated capacity at 20 MW for a Lake Erie Wind Power Project near the water intake crib of the City of Cleveland, Ohio.
Completed proposals must be submitted to the Cuyahoga County Office of Procurement and Diversity, no later than 11:00 a.m. on February 22, 2010.
Stoel Rives Clients Receive Huge Tax Credit Awards
Stoel Rives would like to congratulate REC Silicon and SolarWorld on their awards of tax credits by the IRS and DOE. These two companies, combined, received over 10 percent of all the tax credits awarded nationwide under section 48C of the tax code.
On Friday, January 8, the Department of Energy awarded to 183 companies $2.3 billion in tax credits for projects designed to expand, re-equip or establish manufacturing facilities for the production of equipment used to produce renewable and other green energy. The $2.3 billion was the full amount authorized by Congress in the stimulus bill as part of new section 48C of the tax code.
Applications for the credit far exceeded the dollar amount of credits available. Stoel Rives is proud to have been directly involved with these companies in preparing the complex applications for the credit. REC Silicon received the largest award of any company -- $154.8 million. SolarWorld received the seventh largest award -- $82.2 million. These credits will provide these companies with a dollar-for-dollar offset against their federal income tax liability.
There is considerable discussion in Congress regarding adding additional funds to the section 48C program, which will permit another round of awards. Please contact your favorite Stoel Rives attorney if you have any questions about these awards or extension of the section 48C credit.
Upcoming Webinar: Impact of State RPS's and the Prospect of a Federal RPS on What Utilities are Doing in Terms of Purchasing the Output of Wind Farms - January 27, 2010
With 3/5 of the States having Renewable Portfolio Standard in place and the prospect of a Federal RPS, many utilities are seeking to become first time purchasers of the output from wind projects. And utilities with a history of purchasing wind are seeking additional resources. In 2009, the presenters collectively worked on over 40 wind power purchase agreements for projects located throughout the United States, enabling them to present a comprehensive overview of the impact of these developments. A number of first time purchasers have been using the RFP process as a vehicle for educating themselves about wind, and often experience difficulty in translating PPA terms that are appropriate for base load resources into PPA terms that work for intermittent resources like wind. Through various PPA terms, utilities are increasingly seeking to place the risk of non-compliance with the RPS on the wind project developer. These developments can result in PPA terms that are very problematic for the financing of the project. This webinar will explore these recent developments, including issues related to output and availability guarantees, allocation of curtailment risk for long-distance transmission to load, wind integration charges, delay damages, conditions precedent, termination rights and the measure of damages.
Moderator:
Edward D. Einowski, Partner, STOEL RIVES LLP
Panelists:
Teresa Hill, Partner, STOEL RIVES LLP
William H. Holmes, Partner, STOEL RIVES LLP
Jennifer H. Martin, Partner, STOEL RIVES LLP
Marcus Wood, Partner, STOEL RIVES LLP
To register: http://infocastinc.com/index.php/conference/255
XCEL Plans New Wind Solicitation In Connection With Anson Plant
In a January 8 letter to the Minnesota Public Service Commission, Xcel Energy informed the Commission that it intends to conduct competitive negotiations with wind projects that are able to interconnect at Xcel's Angus Anson generating station in Sioux Falls.
The Angus Anson plant is a gas-fired peaking facility that has firm transmission to deliver its output. Xcel wants to make better use of this transmission by looking at ways to locate wind generating capacity nearby and connect it to the transmission system at Anson. Over the next several months, Xcel plans to accept proposals and conduct competitive negotiations for wind projects that can interconnect at the Anson site. Xcel does not believe that transmission upgrades will be needed for the proposed interconnection.
CPUC Proposed Decision on TRECs--Comments Due January 19
The California Public Utilities Commission ("CPUC") issued a proposed decision on December 23, 2009 that would, if adopted, allow California investor-owned utilities, energy service providers, and community choice aggregators to purchase renewable energy credits alone, without the associated energy (sometimes referred to as "unbundled renewable energy credits ("RECs)" or "tradable RECs"), to satisfy their obligations under California's RPS. California's largest investor-owned utilities—Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric—would be limited to meeting no more than 40% of their annual procurement targets under the RPS with tradable RECs, and a price cap of $50 would be imposed. The CPUC will revisit both the percentage cap and the cost cap and whether those caps should be revised within 24 months of the decision.
Out-of-state renewable energy projects could be adversely impacted if the proposed order were adopted. The proposed decision would define all renewable generation purchased from out-of-state facilities1 as the purchase of unbundled or tradable RECs, making any out-of-state renewable energy sale subject to the cap that bars the large investor-owned utilities from using such sales to meet more than 40% of their overall RPS obligation. Although the proposed decision states that this classification would apply only to contracts signed on or after the effective date of the decision, contracts signed prior to the effective date would be considered REC-only contracts from the effective date forward, and would be "subject to the limits and rules applying to REC-only contracts" according to the proposed decision. Furthermore, although the purchase of tradable RECs from out-of-state facilities would be permitted, the delivery requirement in the RPS legislation would still have to be met, so a comparable amount of power would have to be imported into the state, along with the RECs. The jurisdiction to determine whether and how this delivery requirement is met, however, still remains with the California Energy Commission.
Comments on the proposed decision are due on January 19, 2010, and reply comments are due January 25, 2010.
For additional information about the history and effect of the proposed decision, see our Stoel Rives alert on the topic.
Interior Secretary Salazar Invites Parties Interested in Cape Wind Project to Resolve Impact of Determination that Nantucket Sound Is Eligible for Listing as an Historic Property
Stoel Rives partner Michael O'Connell reports:
On January 4, 2010, the Keeper of the National Register determined that Nantucket Sound is a traditional cultural property (TCP) of two Indian tribes that is eligible for listing in the National Register of Historic Places, even though the area is submerged. The Keeper made that determination in response to a request from the Mineral Management Service (MMS), which is considering a request for a lease of outercontinental shelf land for 130 wind turbines for the Cape Wind Project. MMS and the Massachusetts State Historic Preservation Officer (SHPO) disagreed on whether Nantucket Sound was eligible for listing.
Continue Reading...Zino Green Investment Forum
The ZINO Society, a Seattle-based angel investment group, announced last week that its annual “ZINO Green Investment Forum” would be held on March 4, 2010, at the McKinstry Innovation Center in Seattle. Up to fifteen early-stage companies in “green tech, clean tech, and sustainable products or services” will be selected by the ZINO Green screening board to present their businesses to angel investors and business leaders attending the investment forum. Finalists will be selected to compete for a $50,000 award from ZINO’s investment fund.
Last year’s winner of ZINO Society’s $50,000 GreenFund award was Hydrovolts, the developer of a hydrokinetic turbine. After winning the award last year, Burt Hamner, CEO of Hydrovolts, stated that “Our new technology makes it possible to generate renewable energy from fast water currents that could not be tapped before, using a really novel turbine design. It’s a challenge to explain [our technology] quickly and the presentation, coaching and business model feedback we received from ZINO Society members was incredibly helpful.” Hydrovolts went on to win the 2009 Clean Tech Open National Sustainability Award.
Stoel Rives has been a proud sponsor of The Zino Society since its inception.
The application to apply to present at ZINO Green may be found at https://angelsoft.net/angel-group/zino-society. More information about the event is available at ZINO’s website http://www.zinosociety.com/calendar/1143/ or by contacting Rob Brown at r.brown@zinosociety.com or 206-621-0466.
Federal Court Halts Wind Project to Protect Indiana Bat
United State District Court Judge Roger W. Titus recently issued an injunction halting the construction of the Beech Ridge wind project in Greenbrier County, West Virginia to protect the Indiana Bat, a species listed as "endangered" under the Endangered Species Act ("ESA"). The ruling is the first of its kind in the law developing around the intersection of wind project development and the ESA, and provides valuable guidance for future wind projects that may encounter protected species.
Specifically, for wind project developers, the decision highlights the importance performing diligent site assessments for protected species, working cooperatively with agency personnel, hiring qualified and thorough consultants, and obtaining counsel with specific experience in the intricacies of the ESA permitting framework.
Click here to read an analysis of the case details, Judge Titus' ruling and implications of this decision. 
Wyoming Game & Fish Department Extends Comment Period for Wind Energy Recommendations
The Wyoming Game and Fish Department ("WGFD") has extended the public comment period on a draft document: "Wind Energy Issues: Impacts and Mitigation for Wildlife in Wyoming" from December 18, 2009 to February 1, 2010. The document provides recommendations for assessing impacts to wildlife from wind energy projects, for collecting data, and for mitigating effects on wildlife. The WGFD is especially concerned about the potential impacts of wind energy on sage grouse, which are highly sensitive to disturbances and habitat modification. The adoption of the proposed recommendations could greatly impact the future siting and development of those wind energy projects in Wyoming that are required to obtain a permit from the Wyoming Industrial Siting Council. The Interwest Energy Alliance, a trade association focused on furthering renewable energy development in the intermountain region (Arizona, Colorado, Nevada, New Mexico, Utah and Wyoming), will be working with wind energy developers and concerned stakeholders in this matter, including the Wyoming Power Producers Coalition and Pacificorp, in preparing comments to the WGFD's recommendations. Parties interested in becoming a member of the Interwest Energy Alliance should contact Craig Cox, Executive Director, Interwest Energy Alliance, P.O. Box 272, Conifer, Colorado 80433, (303) 679-9331, cox@interwest.org.
Technical Correction to Section 1603 Grant May Loosen Rules for Investment by Tax Exempts
On December 2, House Ways & Means Chairman Rangel and Ranking Member Camp introduced a tax technical corrections bill (H.R. 4169). We will likely see an identical version introduced in the Senate very soon.
Included among the technicals are changes to the Grant in Lieu of ITC under section 1603 of ARRA. The most important change is one that allows the grant to be made to certain tax-exempt organizations.
Under current law, the grant may not be made to a governmental entity, tax-exempt entity, certain other entities (including Indian tribes and electric coops), or a pass-thru entity that includes any of the former as an equity owner. This provision has made it impossible for these organizations (or funds that include such organizations) to invest in renewables and receive the grant unless they establish a blocker (taxable) corporation to hold their interest in the project. Many entities are uncertain whether they have the authority to establish taxable corporations.
The technical, if enacted, would provide that a grant may be made to tax-exempt organizations, retirement funds, and to state colleges and universities (but not other governmental entities) if the income from the project is treated as income from an unrelated trade or business (“UBTI”). In most situations, this would be the case where power from the qualified facility was being sold. It is not clear whether this provision would apply if the power was being used for the entity’s own purposes (not sold). Where applicable, the technical will eliminate the need for a blocker corporation in cases where the tax exempt or retirement fund is an investor or where a college or university is selling the power. Note -- the technical does not eliminate the need for a blocker corporation in order for the entity to qualify for accelerated depreciation.
Nevertheless, this could be a major change, particularly for colleges and universities that are selling renewable power but which otherwise could not receive the grant.
A cautionary note: the technical has not yet been enacted and it is not clear when it will be. However, to even be introduced, a technical has to have been agreed upon by both tax writing committees, which means its enactment is virtually assured eventually.
Please contact your favorite Stoel Rives attorney with any questions.
New York Power Authority issues RFP for Great Lakes Wind
Earlier this week, the New York Power Authority issued a Request for Proposals for the development of offshore wind projects in either Lake Ontario or Lake Erie. The Power Authority is soliciting proposals for the development of a utility scale, offshore wind power project in the range of 120 to 500 MW. The date for submitting an optional Notice of Intent to submit a proposal is March 20, 2010. Questions about the RFP will be accepted until April 9, 2010. The due date for proposals is June 1, 2010. Any winning project(s) would be expected to be awarded by December 2010. The target date for completion of the power purchase agreement (PPA) negotiations is May 31, 2011. Prospective developers are encouraged to periodically check the NYPA website to see if there are any modifications to the dates.
The RFP can be accessed directly through the NYPA website.
Update: Animal Rights Group Seeks Injunction to Halt Wind Project on ESA Grounds
As a brief update to the "Animal Rights Group Seeks Injunction to Halt Wind Project on ESA Grounds" article we posted on September 4, 2009, the Court in Animal Welfare Institute et al. v. Beech Ridge Energy LLC held a 4-day bench trial, which ended on October 29, 2009. The Court currently has the case under advisement, but once the Court issues an opinion, we will post a new article describing the implications from the Court’s opinion. Stay tuned.
Will Wyoming Tax Electricity Generated From Wind Energy Projects?
On November 18, 2009, the Wyoming interim Joint Revenue Committee (the "Committee") considered two bills, each of which proposed to tax wind generated electricity. Neither bill passed the committee on tie votes of 6-6 (4-4 House members and 2-2 senate members). One of the bills sponsored by Sen John Schiffer, R-Kaycee, chairman of the Committee (legisweb.state.wy.us/interimCommittee/2009/10LSO-0126w4.pdf) proposed a tax of $.0010 upon each kilowatt hour for electricity produced and sold in the State of Wyoming. An exemption was provided for electricity produced for the personal consumption of the producer. A power producer using coal or other fuels would break even on the generation tax through a credit equal to the severance tax portion of their electricity production costs. The proposed tax works out to be an approximately 5 percent tax on generation. The second bill considered by the Committee was sponsored by Rep. David Miller, R-Riverton, (legisweb.state.wy.us/interimCommittee/2009/10LSO-0062w2.pdf). Rep. Miller's bill was similar to Sen. Schiffer's bill, but would only provide the credit to traditional power producers if they agree to use 90 percent of the credit on electricity generation or transmission projects and put the other 10 percent into the state's low income energy assistance program. Proponents of the proposed tax cited a number of factors in favor of the bill including the fact that wind projects should contribute to state and local governments equally with other energy industries. For example, Wyoming imposes a severance tax on natural resources, which includes (approximately) a 6 percent tax for oil and gas and a 7 percent tax for coal. Opponents of the tax bills, including the group of wind energy developers represented by the Wyoming Power Producers Coalition, argued, among other things, that (i) wind energy projects already pay property taxes and provide other financial benefits to the local communities and (ii) the taxation issue should be studied carefully so as not to discourage wind energy development in Wyoming.
Continue Reading...Come Visit Us at E3, The Midwest's Premier Energy, Economic and Environmental Conference, on Nov. 17, 2009
As a proud Exhibit Hall sponsor of E3, the Midwest’s premier energy, economic and environmental conference, Stoel Rives LLP would like to encourage you to attend this annual event. Hosted by the University of Minnesota’s Initiative for Renewable Energy and the Environment, E3 will focus this year on the intersection of innovative technologies and policies, environmental benefits and emerging market opportunities across the renewable energy spectrum.
Stoel Rives attorneys Mark Hanson, Bill Holmes and Greg Jenner are part of the event faculty. Mark will moderate a panel presentation on the challenges and opportunities of converting carbon dioxide to fuels. Bill will moderate a panel discussing exactly how sophisticated smart power grids need to be in order to scale up renewables as a major U.S. energy contributor. Greg, meanwhile, will participate in a panel discussion on the most efficient and effective strategies for financing renewable energy projects.
For more information and to register, please visit the following link: http://bit.ly/XUUjJ. We hope to see you there, and encourage you to visit our booth (#24). In addition to our presenters, Debra Frimerman, Kevin Johnson, Kevin Prohaska, Katie Roek, Mary Sennes, Joe Thompson and Vicki Twogood will be available to discuss any questions you may have. Don’t forget to pick up complimentary copies of our Law of Series handbooks, including The Law of Solar, The Law of Wind, The Law of Biofuels, The Law of Building Green, Lava Law,and our most recent additions The Law of Algae and Show Me the Money: The Law of the Stimulus (2d ed).
FERC Conditionally Approves MISO Tariff Amendment on Cost Allocation
This afternoon, the Federal Energy Regulatory Commission conditionally approved the Midwest Independent Transmission System Operator's (MISO) proposed tariff amendment regarding allocating the cost of network upgrades for generation interconnection projects meeting MISO's regional expansion criteria and benefits (RECB) standards. See my previous blog entry for a more detailed discussion on the history of the tariff amendment, as well as protests to the amendment filed by AWEA and others.
Under the decision rendered today, FERC found that the proposed solution provides an interim solution, and directs MISO to make a compliance filing (1) to fulfill its commitment to file superseding tariff revisions regarding the Phase II cost allocation methodology on or before July 15, 2010, and (2) to reflect certain conforming changes to its tariff. In addition, FERC expects MISO to provide the Commission with status reports on the Phase II process.
To see any of the documents filed in this proceeding, go to FERC's eLibrary website and enter in Docket No. ER09-1431.
Avista Seeks Additional Renewable Energy
Avista announced earlier this week that it is seeking proposals from suppliers of renewable energy. Avista wants to acquire roughly 35 average megawatts (aMW) of long-term qualified renewable energy, to be supplied by the end of 2012 . The company is looking for proposals from wind, solar, geothermal, biomass, qualified hydroelectric and other renewable resources that meet Washington's RPS standard.
Avista plans to host a conference call for potential bidders on September 30. Responses to the request for proposals are due by October 23, 2009. The full RFP and instructions for bidders can be found here.
Wisconsin Bill Addresses State Wind Siting Standards
Wisconsin Governor Jim Doyle has signed a bill into law that will require the state Public Service Commission (PSC) to promulgate rules establishing common standards for political subdivisions to regulate the construction and operation of wind energy systems. The legislation seeks to address the patchwork regulatory framework created by local jurisdictions' development of their own siting regulations, and to address the concerns of developers who have been hesitant to develop wind energy systems in the state.
Previously, a municipality was prohibited from placing any restriction on the installation of a wind energy system unless the restriction satisfies certain conditions, including protection of public health or safety. The new law allows limited and generally uniform regulation of wind energy systems, and specifies that a municipality (i) may not regulate wind energy systems unless it adopts an ordinance that is no more restrictive that the PSC rules, and (ii) may not impose any restriction on a wind energy system that is more restrictive than the PSC rules.
Maryland Jumps Into Offshore Wind
The Maryland Energy Administration has issued a Request for Expression of Information and Interest to gather information from industry representatives on the potential for offshore wind development in the state. The MEA is also simultaneously initiating a study to evaluate opportunities for offshore wind energy on the Maryland coast (state waters) and the Outer Continental Shelf (federal waters). This study will "assess the viability of offshore wind energy generation and build on important marine spatial planning work being currently developed by the Maryland Department of Natural Resources and The Nature Conservancy."
Under Maryland's Renewable Portfolio Standard, at least 20 percent of the retail sales of electricity in the state must come from renewable resources by 2022. Responses to the REII are due by January 31, 2010. Prospective developers interested in participating in the strategy process must submit a response to the MEA by February 28, 2010.
$13 Million Awarded from the Rural Energy for America Program
In an earlier blog, my colleagues, Debra Frimerman and Janet Jacobs reported about the Rural Energy for America Program (“REAP”), in general and specifically in regards to small wind projects. REAP is a Department of Agriculture (“USDA”) program that provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems. Eligible renewable energy systems include those that generate heat, electricity or fuels from wind, solar, biomass, geothermal, hydro power, and hydrogen based feed stocks.
The USDA has announced that it has awarded more than $13 million in REAP funds for 233 renewable energy projects in 38 states. Examples of the awards include a $1.8 million guaranteed loan and $500,000 grant for Milford Wind Energy, LLC; a $435,271 guaranteed loan and $435,271 grant for Unaka Forest Products, Inc.; and a $15,000 grant to Pacifica Marine, Inc.
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DOE to release eagerly awaited commercial solicitation
On a webinar yesterday, Michael Fraser, Senior Program Manager at the DOE, advised that the DOE plans to release a commercial solicitation for the loan guarantee program later this month or in early October. The current solicitation that is active for renewable energy projects requires that projects satisfy the innovative requirement. A project is defined as innovative only if it has not been employed in three or more similar applications in the US of five years duration. Thus many established renewable energy projects such as those utilizing wind or geothermal technology that is tested and proven, cannot apply under the current solicitation. The release of a commercial soliciation has been eagerly awaited by renewable energy project developers. These loans will be backed by private banks as well with DOE typically only guaranteeing 80-90% of the loan. DOE hopes that this structure will motivate private lenders to perform much of the due diligence necessary and only bring shovel-ready and bankable projects to the table. Interest rates on the loan are anticipated to run at Treasury plus 25 to 75 basis points. This is a very attractive interest rate but there are substantial fees associated with the program that will offset a portion of this value. The other key factor for projects to consider is whether they will be able to meet American Reinvestment and Recovery Act requirements and thus be eligible to have their credit subsidy costs covered by government funding. I am cautiously optimistic that DOE will be successful with these efforts and we will see a flurry of good projects moving forward Q1-Q2 2010 with the assistance of this program.
Animal Rights Group Seeks Injunction to Halt Wind Project on ESA Grounds
From our colleague Ryan Steen:
On July 10, 2009, the Animal Welfare Institute and others (”Plaintiffs”) filed a motion for a preliminary injunction to halt construction of the Beech Ridge wind project in Greenbrier County, West Virginia (the “Project”). The Plaintiffs seek the injunction to prevent unavoidable harms that they allege the Project will cause to the Indiana bat, a species listed as endangered under the Endangered Species Act (“ESA”). The Plaintiffs’ injunction request follows closely on the heels of the complaint the Plaintiffs filed in the Federal District Court for the District of Maryland (Civ. No. 09-1519), which alleges that the Project will unlawfully “take” Indiana bats in violation of Section 9 of the ESA. In their complaint and request for an injunction, the Plaintiffs assert that the Project cannot lawfully move forward without an incidental take permit (“ITP”) issued under Section 10 of the ESA. Judge Titus recently ordered that the hearing on the Plaintiffs’ motion for a preliminary injunction will be addressed in conjunction with the trial on the merits of the case, currently scheduled for October 2009.
Continue Reading...November 17: Energy, Economics and Environment (E3) Conference
The University of Minnesota’s annual conference on Energy, Economics and the Environment – E3 – will be held in St. Paul on November 17. Hosted annually by the University of Minnesota’s Initiative for Renewable Energy and the Environment (IREE), this year’s conference will explore current technologies, environmental benefits and market opportunities in renewable energy.
Stoel Rives will be a sponsor of the E3 conference and will, as usual, host a booth at the event. Minneapolis tax partner Greg Jenner will join a panel to discuss “What’s the most efficient and effective strategy for financing renewable energy projects?” To review the agenda and register for the conference, click here.
Free Webinar on Loan Guarantee Program Hosted by DOE
The U.S. Department of Energy is hosting a free webinar on "How to Build a Strong Application" for the DOE Loan Guarantee Program on Tuesday, September 8, 2009 from 1:00 PM - 2:00 PM EST. The webinar is intended to explain the loan guarantee program and help lenders and applicants navigate the application process. DOE will also be providing suggestions on how to create a strong loan guarantee application.
DOE recently released two solicitations under the program for innovative energy efficiency, renewable energy and advanced transmission and distribution technologies and transmission infrastructure investment projects. DOE is particularly interested in wind, closed-loop biomass, open-loop biomass, geothermal, landfill gas, trash-to-energy, hydropower and solar projects that are able to commence construction before September 30, 2011.
DOE will be hosting a series of free webinars on the application process over the next few months.
FERC Issues MISO Letter of Deficiency on RECB Cost Allocation Issue
On September 2, 2009, the Federal Energy Regulatory Commission issued a letter of deficiency to the Midwest Independent Transmission System Operator in MISO's RECB Phase I generator interconnect cost allocation tariff amendment proceedings (Docket No. ER09-1431). See my previous blog entry on AWEA's protest to the MISO filing for additional background.
The letter instructs MISO to provide certain supplemental information within fifteen days. Specifically, MISO is instructed to provide a list of all of the interconnection projects that will be affected by the tariff amendment, an explanation of MISO's position on the relevant date for determining which cost allocation method methodology will apply, and additional support for certain statements made in its filing regarding attrition rates and elimination of certain requirements of interconnecting generators resulting from the filing. Finally, MISO is instructed to provide a timeline and description of the anticipated RECB Phase II methodology stakeholder process that will be followed to permit MISO to meet its commitment to file a succeeding tariff proposal by July 15, 2010.
Michigan's Great Lakes Wind Council Finalizes Offshore Report
On September 1, 2009, the Great Lakes Wind Council, created by Michigan Governor Jennifer Granholm in February 2009, issued its final report to the Governor. The intended purpose of the report is to identify criteria that can be used to review applications for offshore wind development in the Great Lakes, and to identify criteria for identifying and mapping areas that should be categorically excluded from offshore wind development as well as those areas that are most favorable to such development.
Recommendations contained in the report include a set of criteria (broken out into most favorable areas, conditional areas, and categorical exclusion areas) to identify and map prudent siting for offshore wind, legislative and rule changes to establish a bottomland leasing process, the state ask the U.S. Army Corps of Engineers prepare a Programmatic Environmental Impact Statement, and the Public Service Commission convene a forum to work with stakeholders on the economic analysis of different policy scenarios.
The report further recommends exclusion of offshore wind permits and leases from Part 325 of Michigan’s Natural Resources and Environmental Protection Act, clarification of state law to provide for offshore waters to be included in the public trust, and creation of a new statute governing offshore wind that would outline application requirements, permit review criteria, site assessment requirements, construction and operation plans requirements, decommissioning plans, and uses of funds by the state.
First Treasury Grants in Lieu of ITC Awarded
Treasury Secretary Tim Geithner and Energy Secretary Steven Chu announced the first awards of cash grants in lieu of the investment tax credit (ITC) today. The total award value was over $502 million. Recipients include projects in Colorado, Connecticut, Maine, Minnesota, New York, Oregon, Pennsylvania and Texas. Click here for a detailed list of the awards announced today. Additional awards will be announced in the coming weeks.
For more information on this program and the application process, please see the Stoel Rives Energy Law Alert: Treasury Issues Guidance on Applications for Grants in Lieu of the ITC and PTC.
Australia passes 20% renewable energy target by 2020
From my colleague Adam Walters:
On August 20 the Australian government announced the passage of a bill quadrupling its Renewable Energy Target (RET) to ensure that 20% (approximately 45,000 GWh) of Australia’s electricity is generated from renewable energy sources by 2020.
How does Australia’s RET Scheme Work?
The RET scheme is an expansion of Australia’s Mandatory RET scheme introduced in 2001, the first of its kind in the world. It works through the creation and sale of Renewable Energy Certificates (RECs) by renewable power generators to “liable parties” (mainly large-scale electricity utilities and consumers), who must provide a designated quantity of REC’s to Australia’s renewable energy regulator to demonstrate compliance and avoid having to pay charges for any shortfall. One of the changes brought about the new legislation is to increase from $40/MWh to $65/MWh.
Renewable energy sources eligible for accreditation under the RET scheme include: solar, wind, hydro, tidal, wave, biomass and geothermal, as well as solar water heaters and other smaller generation units. Hydro has historically dominated Australia’s renewable energy landscape, but recent project announcements and funding opportunities for wind and solar projects signal greater diversification of the industry, particularly for proven technologies.
Continue Reading...NV Energy Issues RFI for Short Term (1 Month to 3 Years) Energy Supply
On August 21, NV Energy issued a press release reminding renewable energy developers of that it has issued a Request of Information (RFI) for renewable energy that can be provided on a short-term basis. This solicitation is separate from NV Energy's recently announced 2009 Renewable Energy Request for Proposals. NV Energy will consider proposals for solar, wind, geothermal, biomass and other resources eligible for portfolio energy credits under the Nevada renewable portfolio standard.
NV Energy is now looking for proposals from entities that can deliver renewable energy to its system on or after Oct. 1, 2009 and for a period of one month to three years.
Parties interested in submitting a response to the RFI, or those seeking more information related to the RFI or renewable energy laws can contact NV Energy at: ShortTermRFI@nvenergy.com . In addition, prospective bidders can email any questions to Ron Helbing, rhelbling@nvenergy.com.
Bidders must submit their responses to NV ENergy's short term renewables solicitaion by 9:00 AM (PPT) on Sept. 2, 2009.
AWEA, Others File Protests at FERC to MISO Proposed Cost Allocation
On August 13, 2009, the American Wind Energy Association, Wind on the Wires and certain wind developers filed protests at the Federal Energy Regulatory Commission to the Midwest Independent Transmission System Operator's (MISO) recent filing at FERC. The MISO filing proposes to revise MISO's cost allocation methodology for network upgrades for generator interconnection, and resulted from MISO's Regional Expansion Criteria & Benefits (RECB) Task Force.
The current cost allocation methodology in place provides that the cost of network upgrades for generator interconnection are funded initially by generator interconnection customers, and the customer is entitled to a 50% reimbursement where it is demonstrated that the output will serve MISO’s network customers or the facility has been designated a network resource. For facilities rated 345 kV and higher, 20% of the refund cost is allocated to all MISO pricing zones on a postage-stamp basis, and 80% is allocated among pricing zones using a line outage distribution factor (LODF) method.
Under the MISO proposal, cost allocation would be as follows: (i) for network upgrades below 345 kV, 100% to the interconnection customer, and (ii) for network upgrades 345 kV and above, 90% to the interconnection customer and 10% to all transmission customers through a postage stamp-type charge.
To read any of the documents related to the MISO filing, go to the FERC eLibrary website and enter in Docket No. ER09-1431.
Detroit Edison Issues RFP Seeking Additional Renewable Energy Resources
On August 18, 2009, Detroit Edison issued request for proposals (RFPs) seeking additional renewable energy resources for its portfolio.
The first RFP involves development of a Michigan-based wind farm (or farms) capable of producing up to 75 MW of new wind power. The facilities must be operational by Dec. 31, 2011. Detroit Edison plans to take ownership of the facilities upon completion of construction, and to receive 100 percent of the wind energy and renewable energy credits. Responses to this RFP are due by Nov. 2, 2009.
The second RFP seeks long-term (20-year) agreements for the purchase of capacity, energy and renewable energy credits from approximately 106 MW of renewable energy resources. Eligible facilities include wind, solar, landfill gas and biomass. Responses to this RFP are due by Oct. 23, 2009.
The Wind Energy Promotion Act: Turbo Charging the Renewable Energy Production Tax Credit
U.S. Representatives Collin Peterson (MN) and Tim Walz (MN) introduced the Wind Energy Promotion Act (WEPA) last month. If WEPA becomes federal law, the Renewable Energy Production Tax Credit (PTC) promises to become an even more potent driver for wind power project development. Under current law, the PTC may only be used to shelter passive activity income from tax liability.
If adopted, WEPA would allow the use of the PTC to shelter up to $40,000 of ordinary income, a modification that would boost the effectiveness of the PTC.
Click here to read the full analysis on WEPA and the opportunities this presents.
For more information, please contact Joel Dahlgren of our Minneapolis office, or any of our other energy attorneys.
Show me the Money: DOE Proposes Amendments to its Loan Guarantee Program
Today, the Department of Energy (DOE) issued a notice of proposed rulemaking to amend 10 CFR Part 609, the rule regulating the loan guarantee program authorized by section 1703 of Title XVII of the Energy Policy Act of 2005. The two principal goals of section 1703 of Title XVII are to encourage commercial use of new or significantly improved energy-related technologies and to achieve substantial environmental benefits. (See these recent alerts regarding the DOE loan guarantee program and the related application process)
After reexamining Title XVII, the DOE has concluded that the statute does not require a first lien on all project assets. DOE has discovered that its current requirement that it be in lien position is in conflict with the financing structure of many energy projects. For example, many utility scale power plants are jointly owned by public power agencies, cooperative power systems and investor-owned utilities. In these cases, it may not be commercially feasible to obtain a lien on all project assets or the credit of a sponsor may be sufficient to support a more modest pledge of assets.
Furthermore, DOE has found that other parties are interested in participating as co-lenders, co-guarantors, or insurers of Title XVII loans. However, these other parties expect to share, on a pari passu basis, in any collateral securing such loans.
Consequently, DOE proposes two amendments to the current rules:
- Delete the requirement of a first priority lien on all project assets and leave to the Secretary (of DOE) the determination of an appropriate collateral package, as well as intercreditor arrangements; and
- Allow the Secretary (of DOE) to determine if pari passu lending is in the best interests of the United States
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Minnesota Think Tank Estimates 4,000 MW of More Wind Power Needed
In a recent report published by Minnesota 2020, a non-partisan think tank focused on public policy matters including economic development, health care, education and transportation, the group notes that Minnesota needs an additional 4,000 MW of wind power to meet its Renewable Energy Standard, set at 25% by 2025. The think tank also notes that achieving the RES would "create up to 2,200 new jobs during the 17-year construction phase and more than 900 sustained jobs during the wind farms lifetime operations," which numbers may increase as Minnesota reaches beyond its minimum 25% requirement. The report also includes several short- and long-term recommendations to encourage the presence of wind energy companies in Minnesota, and thus the market (including training) for jobs within the wind industry as well.
Show me the Money: Webinar Explaining the Wind Turbine Drivetrain FOA
About a month ago we issued an alert regarding a $45 million funding opportunity announcement ("FOA") for the development of a wind turbine drivetrain testing facility (alert available here).
Today, the Department of Energy ("DOE") announced that they are hosting a webinar regarding this FOA. The webinar will be held July 30, 2009 at 11:00 a.m. Eastern. Through this webinar, DOE will provide a brief overview of the FOA and will participate in a question and answer period. However, all questions must be submitted in advance (by July 27, 2009 at 2:00 p.m. Eastern) to windDynamometer@go.doe.gov
To attend this webinar, register in advance by clicking here.
BPA Issues Decision on Wind Integration Charge in 2010 Rate Case
Today, the Bonneville Power Administration (“BPA”) issued its Final Record of Decision (“Final ROD”) in the 2010 Rate Case. The Final ROD is part of an early wave of efforts by transmission providers to charge wind generators for the costs of providing “integration” or “balancing” services. Transmission providers are responsible for maintaining reliability of the transmission system. To do so, they must balance both loads (the electrical power consumed by customers) and resources (generation from hydro, thermal, or wind power plants) on their systems. BPA reserves part of its hydro resources so that if a large wind “ramp” event occurs, in which the wind output increases or decreases in a short amount of time, BPA can deploy its hydro reserves to keep the grid in balance. Before 2009, BPA did not charge a wind integration rate for providing such balancing services.
Background
BPA first proposed a wind integration charge in the 2009 Wind Integration Rate Case. This case was settled, with BPA's wind generator customers agreeing to a rate that was approximately four times lower than what BPA initially proposed in the 2010 Rate Case in exchange for BPA working toward the implementation of operational advances that would bring down the cost of providing wind integration services.
In its 2010 Rate Case Initial Proposal, BPA sought to charge its wind generator customers a wind integration rate of approximately $12 per megawatt-hour (“MWh”). BPA's wind generator customers argued that this rate would deter renewable energy development in the Pacific Northwest and make it difficult for the region to meet the Obama Administration's clean energy goals. BPA maintained that this charge was necessary, in part because the wind fleet had increased to such an extent that BPA feared it would be unable to provide enough reserves while also preserving system reliability. BPA argued that the increased size of the wind fleet was compounded by the wind generators’ inability to accurately account for wind ramp events in their schedules, thereby requiring BPA to hold a significantly larger amount of reserves in order to provide balancing services.
BPA's Decision
Once the wind generators on BPA’s system were made aware of their scheduling inaccuracies, they began taking steps to improve their scheduling. As BPA acknowledged in its Final ROD, over the next several months, BPA’s wind generator customers made significant improvements. Due in part to the wind fleet’s improved scheduling accuracy, the Final ROD sets the wind integration rate at approximately $5.70/MWh—less than half the rate in the Initial Proposal. This rate is subject to Federal Energy Regulatory Commission approval and varies somewhat depending on a project’s capacity factor.
The rate ultimately set by BPA has been criticized as not being cost-based, partly as a result of the way in which BPA allocated its embedded costs and its decision to also charge wind generators for lost "surplus" sales as a result of holding generation in reserve. BPA's wind generator customers argued that BPA's cost allocation violates Federal Energy Regulatory Commission policy. The wind generators also pointed out that BPA has been slow to implement the operational advances that would significantly lower the cost of wind integration. Despite the disparate views of BPA and its wind generator customers, the Final ROD echoes some of the arguments made by the wind generators in bringing the rate down from the initial $12/MWh and demonstrates a willingness by BPA to continue to work with the wind industry on improving its wind integration services.
Stoel Rives represented the Northwest Wind Group, a coalition comprised of Renewable Northwest Project and five major wind energy developers—BP Alternative, Columbia Energy Partners, enXco, Horizon Wind Energy, and RES America Developments Inc.—in this proceeding. We will be sending out an Energy Law Alert discussing the Final ROD and its implications for the wind industry shortly. If you’d like to receive Stoel Rives Energy Law Alerts, click here and fill out the form.
$22 Million for Community Renewable Energy
The Department of Energy (DOE) announced this week that up to $22 million from the Recovery Act would be allotted to up to 4 eligible communities nationwide in order to encourage utility-scale renewable energy systems that provide clean, reliable, and affordable energy supplies for their communities, while creating jobs and new economic development opportunities. The projects will demonstrate how multiple renewable energy technologies, including solar, wind, biomass, and geothermal systems, can be deployed at scale to supply clean energy to communities. Eligible applicants are local and state governments, Indian Tribes and Tribal Energy Resource Development Organizations or Groups.
Successful applicants will be awarded financial assistance to support the implementation of an integrated renewable energy deployment plan for a community, and the construction of renewable energy systems. DOE expects each project to also have substantial private sector investment in addition to the funds from DOE. Completed applications are due September 3, 2009 and the DOE will select awardees by the end of November 2009.
U.S. Wind Industry Breaks Records in 2008, Gets a Boost From Secretary Chu
Today, U.S. Department of Energy Secretary Steven Chu announced that 28 new wind energy projects will receive up to $13.8 million in funding for wind turbine research and testing and transmission analysis, planning, and assessments. Most of the $13.8 million comes from Recovery Act funds. Recognizing the struggles that Americans are facing in the current economic climate, Secretary Chu noted that the Recovery Act funds are intended to rebuild the fundamentals of the economy, in part by “spur[ring] a revolution in clean energy technologies.” Chu added that wind energy is a “critical factor” in achieving President Obama’s clean energy and job growth goals.
Secretary Chu’s funding announcement was coupled with the release of the Department of Energy’s 2008 Wind Technologies Market Report. As detailed in the report, the U.S. wind industry continues to reach impressive milestones. For the fourth year in a row, the U.S. boasted the fastest-growing wind power market. Also for the fourth consecutive year, wind power was the second largest new resource added to the electrical grid, contributing 42 percent of all new U.S. electrical generating capacity in 2008. As a result of increased demand for wind, the share of domestically manufactured wind turbine components increased dramatically in the last three years, with about 50 percent of these components now being manufactured in the U.S. In 2008, approximately 8,400 new domestic manufacturing jobs were added in the wind sector. Given these statistics, it is no wonder that cultivating a strong domestic wind industry is one of the keys to meeting the Obama Administration’s clean energy and economic recovery goals.
Show me the Money: Applications Available for the Washington State Energy Program
Washington previously received $60.9 million in Recovery Act funding for its State Energy Program (“SEP”). The Washington Legislature later provided $38.5 million to the Washington State Community, Trade and Economic Development (“CTED”) agency to administer a loan and grant program for eligible projects in the areas of energy efficiency, renewable energy and clean energy innovation (see our earlier blog entry here for more details). The deadline for submitting a notice of intent to apply is July 27, 2009 at 5:00 p.m. Pacific time, and the application is due August 17, 2009 at 5:00 p.m. Pacific time.
I attended an informational meeting held by CTED on July 13, 2009. The meeting provided an overview of the loan and grant program, as well as funding details, eligibility guidelines and evaluation criteria. Eligible projects can receive between $500,000 to $2 million in loans and grants in the first round, with the requirement that applicants provide other sources of funding at least equal to the amount of the loan or grant request. The non-SEP funding may include amounts spent or committed to the project since January 1, 2009. Projects will be evaluated based on the feasibility and quality of the project plan, the experience and qualifications of the project team, the ratio of matching funds to SEP funds, job creation, and energy savings/production. CTED intends to announce award decisions in September 2009.
USDA Small Wind Grants Cover 25% of Costs
Farmers, ranchers and rural business owners have until July 31, 2009 to apply for a Rural Energy for America Program ("REAP") grant from the USDA for the purchase and installation of small wind turbines. The grants provide up to 25% of the total installed cost of a small wind turbine system, and together with the Federal Investment Tax Credit ("ITC"), can cover up to 50% of the costs of the system for an eligible candidate. Additional funds may also be available from local utility cooperatives or rural electric associations which give rebates to their members.
Applications must be submitted to local USDA Rural Development offices by July 31, 2009. However, the application itself takes time to complete, and applicants should give themselves 2 weeks to fill it out.
Treasury Issues Guidance on Applications for Grants in Lieu of the ITC and the PTC
The American Recovery and Reinvestment Act of 2009 (ARRA), which was enacted in February, permits an applicant to receive a grant from Treasury in lieu of claiming investment tax credits (ITCs) or production tax credits (PTCs).
Today the U.S. Treasury Department issued much-anticipated guidance concerning applications to receive cash grants in lieu of claiming income tax credits for certain renewable energy projects. Although the guidance includes a sample application form, the U.S. Treasury has stated that it will not accept applications until August 1.
If you have questions about today's Treasury Department guidance and grants in lieu of ITCs or PTCs, contact:
Chris Heuer at ckheuer@stoel.com
Greg Jenner at gfjenner@stoel.com
Carl Lewis at cslewis@stoel.com
Kevin Pearson at ktpearson@stoel.com
Adam Kobos at ackobos@stoel.com
Show me the Money: Applications Available now for Washington's State Energy Program
On July 1, 2009, Washington State’s Department of Community, Trade and Economic Development (“CTED”) issued application guidelines and forms for its State Energy Program (“SEP”) (available by clicking here). The American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) provided $60.9 million in new funding for Washington’s SEP. Subsequently, the Washington Legislature allocated $38.5 million to CTED to administer a loan and grant program for energy efficiency and renewable energy program (see our client alert, available here, regarding the legislative action).
Continue Reading...DOE Announces $59 million in Conditional Loan Guarantees
On July 2, 2009, the Department of Energy ("DOE") announced $59 million in conditional loan guarantees in the form of $16 million for a wind turbine assembly plant and $43 million for a 20 megawatt flywheel energy storage plant.
Nordic Windpower, USA has been conditionally offered a $16 million loan to support the tooling and commercial-scale set up of its assembly plant in Pocatello, Idaho. This assembly plant produces one megawatt two blade turbines which are 10% less costly to manufacture, install, operate, and maintain than competing systems.
Beacon Power was conditionally offered a $43 million loan to support the construction of a 20 megawatt flywheel energy storage plant in Stephentown, New York. The flywheel system is utilizing a newly developed technology to provide frequency regulation services by absorbing and discharging energy to maintain the consistency of power on the electric grid.
Stoel Rives Expands Its San Diego Office
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We welcome energy attorneys Morten Lund and David Quinby to the firm’s San Diego office as members of the Energy and Telecommunications group. They join attorneys Howard Susman and Brian Nese. The San Diego office has relocated to a larger space at 12265 El Camino Real, Suite 303, to accommodate further expansion (new contact information below). |
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The California energy team's capabilities also include real estate, land use and permitting, equipment procurement and construction, state and federal regulation, environmental matters, and dispute resolution. Stoel Rives has received a national ranking for its Renewables and Alternative Energy practice from Chambers USA: America's Leading Lawyers for Business (2009), rating among the top law firms in this category. The firm has been at the forefront of growth in renewables in recent years and represents many of the industry leaders in solar, wind energy, geothermal, biomass, hydroelectric, ocean, combined-cycle natural gas, carbon sequestration and biofuels project development in California, the United States, Canada and abroad. For more information about the Stoel Rives Renewable Energy Group, visit www.stoel.com/renewableenergy or contact: Howard Susman at |
North Dakota Legislature Addresses Wind Leases, Easements and Options
In its final days of session, the North Dakota legislature passed a bill creating certain requirements for leases or easements for wind energy development that are entered into in the state.
The bill's requirements for wind leases and easements include: placement of a cover page on every wind lease encouraging the landowner to review the agreement with his or her attorney; negotiations may not be maintained as confidential (although the terms of the final agreement may be kept confidential under a mutual confidentiality provision); the lease may not be signed until at least ten days after it has been delivered to the landowner; and the landowner may terminate the lease if the wind energy facility has not operated for a period of at least three years (unless certain payments are made to the landowner under the lease).
Interior Issues Limited Leases for Offshore Wind Projects
On June 23, 2009, the Minerals Management Service, a division within the U.S. Department of Interior, issued five limited leases to offshore wind energy developers for wind data collection on the Outer Continental Shelf. These leases will allow for the construction of meteorological towers to collect site-specific data on wind speed, intensity, and direction. The data collected under these leases will be shared with the MMS, and "used to inform and support future commercial renewable energy projects, such as wind turbine farms, to help coastal States meet mandated renewable energy portfolio standards."
The leases were issued to Deepwater Wind (two locations off the coast of New Jersey), Bluewater Wind (one location off New Jersey, one location off Delaware), and Fishermen's Energy (one location off New Jersey).
Show me the Money: Florida, Idaho, and Kansas State Energy Programs Received $77.1 Million from the Recovery Act
On June 24, 2009, the Department of Energy (“DOE”) announced more than $204 million in Recovery Act funding to ten states for their State Energy Programs ("SEPs").
Here is a summary of how the monies will be used in Florida, Idaho, and Kansas:
Florida's SEP will fund energy efficiency, renewable energy, and alternative fuels projects in the state. Florida will deploy these funds through several loan and grant programs to promote the commercialization of new clean technologies. Florida was awarded $50.4 million, and will receive an additional $63 million after demonstrating successful implementation of its SEP.
Idaho's SEP will launch a set up new programs, including the Renewable Energy Business Development Program, to further renewable energy development in the state while creating new jobs and stimulating the economy. Further, new zoning regulations will be created to attract renewable energy developers and projects. Idaho received $11.4 million and will receive more than $14 million in additional funding after demonstrating successful implementation of its SEP.
Kansas's SEP will launch several initiatives to boost energy efficiency in commercial buildings, increase financial options for renewable energy, and increase cost savings for individual homeowners in its state. A portion of the money will also be deployed to create a new utility rate price plan and to fund an energy audit rebate plan. Kansas received $15.3 million and expects to receive an additional $19 million after demonstrating successful implementation of its SEP.
My colleagues are blogging on the other states that received funds.
Labor Unions Target Renewable Energy Development
My partner Dennis Westlind recently posted this article to our sister blog, the Labor & Employment Group's World of Work:
Labor unions are seeing a rare growth opportunity in green power. Despite the recession, there has been a building boom in green energy, in particular solar and wind projects. As reported recently in the New York Times, labor unions see something in green energy for them as well, and they're using intense political pressure to get it.
When a new solar or wind project is being built, a union will approach the builder and demand that it use only union labor on the project. If the builder agrees, the union then urges local regulators to quickly approve the project; if the builder refuses, however, the union then raises myriad environmental concerns with regulators in an attempt to stall or even completely derail the project. Apparently, a union-built solar installation won't have the same impact on the habitat of the short-nosed kangaroo rat or the ferruginous hawk as a non-union one. Right.
These tactics aren't new; labor unions have made aggressive use of the environmental laws for years to put pressure on traditional energy producers to use union labor. But, with union membership in an overall decline, unions are desperate to maintain relevance in the growing green economy.
Show me the Money: Conneticut and Utah State Energy Programs
Today, the Department of Energy (“DOE”) announced more than $204 million in Recovery Act funding to ten states for their State Energy Programs ("SEPs").
Here is a summary of how the monies will be used in Connecticut and Utah:
Connecticut will use its SEP funding to further a variety of programs. Examples include the deployment of alternative-fuel vehicles and in-home energy audits. In-home energy audits involve a specialist performing an energy assessment, weatherizing the home, and installing energy conservation devices. After demonstrating successful implementation of its plan, the state will receive an additional $19 million, for a total of $38 million.
Utah will use its SEP funding to collect data about potential renewable energy resources in the state and to improve energy efficiency. The energy efficiency program will provide financial incentives to upgrade residential, commercial, public education, and government buildings. New construction developments will also qualify for rebates if they meet specific energy efficiency goals. After demonstrating successful implementation of its plan, the state will receive an additional $17 million, for a total of $35 million.
My colleagues are blogging on the other 8 states that received funds today.
Cowlitz and Klickitat PUDs Share DOE Public Power Wind Pioneer Award
The U.S. Department of Energy Wind Powering America Program today announced that two Washington state public utility districts, Cowlitz County PUD and Klickitat PUD, are the co-winners of the 2009 Public Power Wind Pioneer Award for their outstanding teamwork and innovation in the development of the White Creek Wind Farm. The annual award was created in conjunction with American Public Power Association (APPA) and the Demonstration of Energy-Efficient Developments (DEED) Program to recognize pioneers in wind power.
A panel of wind, government, national laboratory, and public power experts from across the United States selected Cowlitz and Klickitat from sixteen public power utilities nominated for the award.
Nebraska Passes Legislation Governing Wind Leases
The Nebraska legislature recently passed a bill amending existing state law governing wind easements, wind options, or wind leases or lease options entered into in the state for the purpose of wind energy development. Substantive terms of the legislation include a limitation on the initial term of the agreement of not more than 40 years, and an automatic termination of the agreement if development of a wind energy facility has not commenced within ten years (although this may be extended by the parties).
For more information, please contact my colleague Kevin Prohaska.
Rhode Island Legislation Proposed to Move Offshore Wind Forward
Rhode Island has introduced legislation to encourage offshore wind development. Under the draft bill, the state's largest electricity supplier, National Grid, would be required to purchase the energy output from an offshore wind project proposed by the state's selected preferred offshore wind developer, Deepwater Wind. National Grid has said that it supports the proposal, under which it would be permitted to collect a payment from its customers equal to around 3 percent of the value of the renewable energy contracts it signs.
Show me the Money: Seminar for Identifying Funding for Renewable Energy Projects
The American Recovery and Reinvestment Act provides almost $94 billion dollars in direct and indirect spending to clean energy company and projects. See Show me the Money: A Guide to Sources of Funding through the American Recovery and Reinvestment Act.
On June 17, 2009, I will be speaking in Cle Elum, Washington about how to get your project "shovel ready" for Stimulus Funding. The seminar will also include sessions on identifying sources of funding and application mechanics.
Show me the Money: $24 million Funding Opportunity for Wind Energy Research and Development
On June 2, 2009, the Department of Energy ("DOE") issued a Funding Opportunity Announcement ("FOA") providing $24 million for the development of consortia between universities and industry to focus on critical wind energy challenges.
DOE intends on awarding two to three grants of $8-12 million. The grants will be used to address two areas:
- Partnerships for Wind Research and Turbine Reliability. Universities in wind resource areas are encouraged to apply with industry partners to study major challenges facing today's wind industry. DOE is highly encouraging research in turbine reliability, but projects are eligible if they meet one or more challenges described in the 20% Wind Energy by 2030 report.
- Wind Energy Research & Development. Universities are encouraged to apply with industry partners for grants to fund R&D to advance material design, performance measurements, and analytical models related to wind energy development. The goals of this research shall be to improve power systems operations, wind turbine and/or component manufacturing, and interdisciplinary systems integration.
Applicants interested in either area must file a letter of intent by June 16, 2009 and FOA applications are due by July 29, 2009.
*****UPDATE******
On June 19, 2009, DOE announced an extension to the deadline for submittal of a letter of intent for this program. Letters of intent must now be submitted by June 29, 2009. Applications are due on July 29, 2009.
LLC Law Monitor
Renewable energy developers often use limited liability companies (LLCs) as project companies and to form entities for other purposes. My partner Doug Batey has started a new law blog that will likely be helpful to those charged with setting up, understand and maintaining these LLCs. Here's today's announcement:
Stoel Rives LLP is pleased to introduce its new LLC law blog, LLC Law Monitor, at www.llclawmonitor.com
The LLC Law Monitor focuses on the rapidly developing laws affecting limited liability companies. LLCs are a popular form of business entity and are a relatively new development in the law. LLC statutes vary from state to state, and cases of first impression are being decided by state courts every month.
In light of this new and evolving legal environment, Stoel Rives has launched LLC Law Monitor to provide business executives, attorneys, accountants and other professionals engaged in or working with LLCs with timely updates and insights on the new and developing laws shaping this burgeoning business sector.
LLC Law Monitorauthor Douglas L. Batey has nearly 30 years of experience advising executives on corporate and business legal matters. His experience includes counseling clients in a wide range of industries on company formation, mergers and acquisitions, and general corporate governance matters.
We hope that you will find the LLC Law Monitor helpful.
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Douglas L. Batey |
Apply Now for REAP Grants and Loan Guarantees
The USDA announced today that it is accepting applications under the Rural Energy for America Program (“REAP”). REAP provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems.
REAP funds are available in the following amounts:
- Grants for energy efficiency projects are available for up to the lesser of $250,000 or 25% of the project costs.
- Grants for renewable energy systems are available for up to the lesser of $500,000 or 25% of the project costs.
- Grants for feasibility studies for renewable energy systems are available for up to the lesser of $50,000 or 50% of the costs of the study.
- Loan guarantees are available for up to the lesser of $25 million or 75% of the project costs.
Applicants must be agricultural producers or rural small businesses. Agricultural producers are farmers or ranchers that obtain more than half of their gross income from agricultural operations. Small rural businesses are small businesses, as determined in accordance with the Small Business Administration's small business size standards, located in rural areas. Applications are due July 31, 2009.
Doing Business with Indian Tribes
My colleagues Michael O'Connell and Stephen Kelly, both of whom have a great deal of experience representing clients engaged in energy and natural resources transactions with Indian tribes, are putting on a webinar entitled "Doing Business with Indian Tribes." Since the best private lands are often already spoken for, renewable energy developers are looking more and more at developing projects on public lands and Tribal lands. The Webinar that Mike and Steve are presenting will discuss doing business with tribes generally, but their presentation will be relevant to those seeking to develop renewable energy projects in partnership with Indian tribes or on tribal lands.
Details are as follows:
Please join Stoel Rives attorneys Michael O’Connell and Stephen Kelly for a webinar on Doing Business with Indian Tribes on Wednesday, June 10, 2009. They will conduct a lively, interactive program that will cover:
There are over 550 federally recognized Indian tribes. Indian tribes engage in a broad range of business transactions governed by a complex array of federal, tribal and state laws. Stoel Rives is pleased to offer a webinar that will offer you tools to recognize the unique legal status of Indian tribes and how it affects business transactions with Indian tribes.
- Tribes and tribal business structures
- Contracting, sovereign immunity, and dispute resolution
- Leases, easements, and other agreements for use of tribal land
- Tribal and federal environmental reviews and approvals
- Taxation issues
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When: |
Wednesday, June 10, 2009 |
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Complimentary (lunch included) |
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Or at your computer. Information on how to access the webinar will be provide to those who register. |
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Parking: |
We will validate parking for most nearby parking garages. |
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RSVP: |
Space is limited! Register online by Monday, June 8. |
Washington's American Recovery and Reinvestment Act Comprehensive Application
On May 11, the Washington Department of Community, Trade, and Economic Development (“CTED”) filed an application with the United States Department of Energy to receive American Recovery and Reinvestment Act (“ARRA”) funds for Washington’s State Energy Program (“SEP”). The application contains funding for renewable energy, energy efficiency, and farm energy assessments. Once the SEP is approved, funding will commence through CTED with advice from the Clean Energy Leadership Council.
Continue Reading...Client Alert: Summary of Final MMS Regulations on OCS Leasing
As promised in a recent blog entry, we've issued a client alert providing a detailed analysis of the final Minerals Management Service (MMS) regulations governing leases for energy production on the Outer Continental Shelf (OCS), including wind and ocean energy. Please contact us with any questions!
AWEA, Chicago and Law of Wind 5th ed
Greetings from the Windy City, where the American Wind Energy Association (AWEA) is expecting a record conference attendance of around 17,000 people. A large contingent of Stoel Rives wind attorneys are attending the AWEA wind energy conference in Chicago this week, May 4 to May 8. My partner Ed Einowski will be speaking about co-location of wind projects with other energy projects, Katie Roek is speaking about offshore wind development on both coasts and the Great Lakes, and I'll be presenting on interesting new issues affecting power purchase agreements.
We also have copies of our newest edition of Law of Wind, which we've updated through April 2009. Our team of wind energy lawyers have updated all of the chapters and added several new ones, including chapters on securities law and the Foreign Corrupt Practices Act. We'll be at Booth 3148 if you'd like to stop by and pick one up. And, of course, you can also download a copy of the Law of Wind (5th edition) from our website.
Although we've historically updated our Law of Wind once a year right before the AWEA annual conference, we are planning to do two editions this year to keep up with a raft of new developments affecting wind energy. The 6th edition will feature new chapters on offshore wind energy and build transfer arrangements.
"Show Me The Money"
We announce the publication of a guide to federal clean energy funding opportunities under the $787 billion American Recovery and Reinvestment Act (“ARRA”). Titled “Show Me The Money,” the guide reviews the various programs and potential sources of federal funding for clean energy companies and projects. The guide addresses funding opportunities under the ARRA for each of the following energy industry areas: wind, solar, biofuels, biomass, smart grid, transmission, geothermal, marine and hydrokinetic, green building, energy efficiency, advanced battery and fuel cell technology, clean energy equipment manufacturing, green vehicles and clean coal. The guide also contains information about some of the funding opportunities and updates at the federal and state level which we will continue to track closely.
MMS Finalizes Regulations for Renewable Energy Projects on the OCS
The Minerals Management Service (MMS) has issued its final regulations for renewable energy projects on the Outer Continental Shelf (OCS). Stoel Rives attorneys are reviewing the 579-page rule now and will provide further updates soon!
Client Alert - FERC and MMS Memorandum of Understanding on OCS Energy Development
As promised in a previous blog entry discussing the recently signed MOU between FERC and MMS regarding energy development on the Outer Continental Shelf, I'm attaching a link to the client alert prepared by my colleague, Cherise Oram, on the subject. Please contact us with any questions!
Green Power Express Receives Green Light from FERC
On April 10, the Federal Energy Regulatory Commission approved a request for various transmission infrastructure investment incentives submitted by Green Power Express LP (GPE), a transmission-only partnership that proposes to build a 765 kV "green superhighway" consisting of three interconnected loops in North and South Dakota, Minnesota, and Iowa. GPE's proposal will also extend radially into Wisconsin, Illinois, and Indiana, making use of existing substations in some locations and constructing high voltage substations in others. In total, the project will include approximately 3,000 miles of transmission lines that reach 12,000 MW of wind and stored energy. GPE estimates the project's cost at $10-12 billion and hopes the project will be in service in 2020.
FERC's approved the following (non-exhaustive) key incentives that reduce GPE's exposure to risk in moving the project forward.
Abandoned Plant. FERC granted GPE's request to recover prudently incurred expenses if the project is abandoned for reasons outside of GPE's control. FERC stated that the recovery of abadonment costs is a means for encouraging transmission development, reducing the risk that GPE's investors may lose their entire investment.
Regulatory Asset. FERC will allow GPE to create initial and subsequent vintage regulatory assets in order to defer pre-construction, development, and start-up costs until GPE has customers from which it may later recover those costs. Such cost deferral will also help GPE attract financiers.
Construction Work in Progress. FERC approved GPE's request to include 100 percent of construction work in progress in its revenue requirement, allowing GPE to service its debt and reduce borrowing over the project's development--something that would otherwise be difficult for a $10-12 billion project with a 2020 in-service date.
The incentives granted to GPE, as well as other recent changes to FERC's transmission policies, show that the agency is becoming increasingly serious about spurring transmission development forward. If we are to reach the 62 GW of wind currently in the Midwest ISO interconnection queue, as well as other renewable resources elsewhere, transmission developers will need creative regulatory solutions to help attract financiers and gain firm commitments from generation developers. FERC continues to take positive steps forward.
Upcoming Webinar: Four Primary Ways the Stimulus Bill will Impact the U.S. Wind & Biofuels Industries
Biofuels Journal and Wind Today Magazine are hosting this free webinar on April 14, 2009 at 2 p.m. Central Time.
Please join me and my colleague, Graham Noyes, as we discuss the Obama Administration’s economic stimulus package and how it will impact the wind and biofuels industries.
REGISTER HERE: https://www1.gotomeeting.com/register/244944960
There will also be a live Twitter feed available at #stimulusbill
Topics covered include:
• Stimulus Grants and the DOE Loan Guarantee Program - the Administration has provided $2.5 billion in grants for R&D and Demonstration projects; expanded the Loan Guarantee Program by $5 billion; as well as promised to streamline the application processes and speed the release of funds to biofuels plants and other projects under these programs.
• The Production Tax Credit vs. the Investment Tax Credit - review of the varying incentive programs available for wind energy projects.
• Grants In Lieu of Tax Credits - consideration of when grants will provide the highest value for projects.
• The Pending Smart Grid and how this is likely to impact the rapidly growing but transmission constrained wind industry in the U.S.
Interior Highlights Opportunities for Renewable Energy Development on OCS
The U.S. Department of Interior recently published a report highlighting the information currently available regarding the nature and scope of energy resources on the Outer Continental Shelf (OCS), including renewable energy. The report is a result of the new administration's approach to developing energy resources on the OCS, and will serve as background information for four regional meetings that Secretary Salazar is hosting in April to review the findings of the report and gather input from all interested parties on whether, where, and how the U.S. will develop conventional and renewable energy resources on the OCS. The report also identifies information gaps regarding available data on and environmental issues connected with energy development on the OCS. The report's three main sections are: (1) renewable energy resources, (2) oil and gas resources, and (3) sensitive environmental areas and resources.
President Obama Clamps Down on Lobbyists and First Amendment
On March 20th, President Obama issued a directive to the heads of executive branch departments and agencies. The directive is aimed at achieving the laudable goal of ensuring merit based decision-making for grants and other forms of stimulus funds provided by the American Recovery and Reinvestment Act of 2009 (usually referred to as the Stimulus Bill). It seems that while candidate Obama promised repeatedly during his campaign to limit the influence of lobbyists in Washington DC, the passage of the Stimulus Bill has sent record numbers of lobbyists to D.C. to scramble for federal dollars.
In apparent response to this, President Obama has singled out registered lobbyists and regulated their contacts with the executive branch. His directive provides that “executive department or agency officials shall not consider the view of a lobbyist registered under the Lobbying Disclosure Act of 1995, concerning particular projects, applications, or applicants for funding under the Recovery Act unless such views are in writing.” Officials are directed to inquire regarding the possible presence of registered lobbyists both upon the scheduling and commencement of phone calls and in-person conversations “with any person or entity concerning particular projects, applications, or applicants for funding under the Recovery Act.” If any registered lobbyists are detected, the directive forbids them from attending the meeting or participating in the phone call.
Not surprisingly, the American League of Lobbyists (ALL) has objected to the Obama Administrations restrictions. In a demonstration that politics does indeed sometimes make strange bedfellow, ALL has been joined by the ACLU and the Citizens for Responsibility and Ethics in Washington (CREW). In a letter to the President released Tuesday, these three groups requested that President Obama rescind the constitutionally offensive provisions of the directive immediately.
As tempting a political target as they may be, registered lobbyists have a place in our political system and rights under our Constitution. The President should heed the groups’ advice and tailor his directive to enable transparency while not muzzling any voices--including those paid to advocate.
Stoel Teams with EUCI to Present Law of Renewable Energy Webinars
Stoel Rives LLP is teaming up with EUCI to present a series of webinar’s based on our series of “Law of” books about renewable energy. The Law of Renewable Energy web conferences will address the major legal issues associated with the development of renewable energy projects. The web conferences will include the following topics:
Tax and Project Finance Structuring Issues for Renewable Energy Projects
April 27, 2009
Real Estate and Site Rights for Renewable Energy Projects
May 11, 2009
PPAs for Renewable Energy Projects
May 18, 2009
Siting and Permitting for Renewable Energy Projects
June 1, 2009
EPC, Major Component, Construction and Balance of Plant Contracts for Renewable Energy Projects
June 8, 2009
Regulatory and Transmission Issues for Renewable Energy Projects
June 15, 2009
Please sign up here if you’d like to get your own copy of any book in our “Law of” series. We update the “Law of” books regularly, and we'll have copies of the Law of Wind (5th edition) at Booth No. 3148 at the AWEA conference in Chicago on May 4-7, 2009. In addition, please sign up here if you’d like to receive our Stoel Rives Energy Law Alerts and other periodic updates.
New tax credit for "qualifying advanced energy project"
Although this blog is focused on renewable energy, manufacturers in the renewable space should be aware of a new tax credit included in the stimulus bill. The provisions is complicated and unlike most tax credits. Nevertheless, its benefits, especially for manufacturers on the cutting edge, may be too great to ignore.
Taxpayers who qualify are entitled to a 30 percent tax credit for investment in a “qualifying advanced energy project." A "QAEP" is defined as one that reequips, expands or establishes a manufacturing facility that produces:
1. property designed to produce energy from the sun, wind, geothermal, and other renewable resources,
2. fuel cells, microturbines, or an energy storage system for use with electric or hybrid-electric motor vehicles
3. electric grids to support the transmission of intermittent sources of renewable energy, including storage of such energy,
4. property designed to capture and sequester carbon dioxide emissions,
5. property designed to refine or blend renewable fuels or to produce energy conservation technologies, and
6. new qualified plug-in electric drive motor vehicles (and components),
The program is to be established by IRS, in consultation with Energy Department, on or before August 26, 2009.
Once the program is established, the Secretary of Treasury is to award certifications for tax credit. Applications must be submitted within 2 years, and applicants will have one year from the date their application is accepted to provide evidence that requirements for certification have been met. After certification awarded, an applicant has 3 years to place project in service.
The following are the criteria for certification:
-- Reasonable expectation of commercial viability
-- Greatest domestic job creation (both direct and indirect)
-- Greatest net impact in reducing air pollutants, greenhouse gases, etc.
-- Greatest potential for technical innovation and commercial deployment
-- Lowest levelized cost of energy generated or stored or of measured reduction in energy consumption or greenhouse gas emissions
-- Shortest project time from certification to completion.
The credit generally applies only to construction, etc. after February 17, 2009.
The credit is new and unlike anything IRS has ever administered before. Therefore, it is reasonable to expect that IRS will take some time to get the program fully functional. Nevertheless, it makes considerable sense to begin assembling materials that explain the company’s project and address the criteria for selection. In addition, it would be advisable to submit any applications as soon as possible after the program is established.
Stoel Rives would be pleased to assist in planning for and submitting applications for the credit.
California PUC Proposes Criteria to Evaluate the Viability of Proposed RPS Projects
Under California’s Renewable Portfolio Standard, investor-owned utilities only have until 2010 to procure 20% of their power from renewable sources (although certain flexible compliance measures do apply). There are concerns that the rapidly-approaching deadline is leading utilities to sign power purchase agreements with projects that are not viable and may never achieve commercial operation. To help prevent this going forward, the California Public Utilities Commission Energy Division has proposed project viability criteria to evaluate each project bidding into California’s RPS program. Utilities would be required to score potential RPS projects based on developer experience in project financing, RFOs, and facility ownership and operation; technical viability; and project-specific viability criteria such as equipment procurement, project development lead time, transmission lead time and cost of transmission interconnection, site control, permitting, and pricing structure. The project viability score could be taken into account in PPA approval by the CPUC and in gaging whether to excuse utilities that fail to meet RPS goals. Scoring projects based on viability criteria has the potential to affect who successfully participates in the RPS solicitation process and the types of technologies that are selected as RPS projects. Comments on the CPUC proposal are due on February 27, 2009. Read more about the proposal in my colleagues’ recent Renewable Energy Law Alert.
FERC Technical Conference on Wind Integration
From our colleague Jason Johns:
The Federal Energy Regulatory Commission will host a technical conference on March 2 to discuss the challenges of integrating large amounts of variable generation into wholesale markets and the grid. The Commission is also asking for innovative proposals that will help accomplish such large integration. Notably, the conference could hardly occur at a more appropriate time, as wind installation grew by 8,358 MW in the US in 2008 (more than gas-fired capacity) and certain regions of the country are hotly debating the costs of putting wind on the grid. Conference panelists will include Don Furman (Iberdrola Renewables), Brian Parsons and Brendan Kirby (National Renewable Energy Laboratory), Bob Kahn (Northwest & Intermountain Power Producers Coalition) and Steve Oliver (Bonneville Power Administration, which put its first wind integration charge in place in 2008).
FERC Rejects MISO's Market Coordination Service Proposal, Approves Anchor Tenant Merchant Transmission
From our colleague and FERC guru, Jason Johns:
MISO’s Proposed Market Coordination Service:
The Federal Energy Regulatory Commission today rejected the Midwest ISO’s proposed Market Coordination Service that would have given certain transmission owners access to the ISO energy and operating reserve markets without requiring those owners to hand over control of facilities or share in transmission development costs. Although the proposal was an innovative approach to expanding the ISO’s market footprint, FERC worried that the proposal would harm consumers and cause the ISO to unravel as transmission owners opt out of full membership to avoid transmission cost-sharing. FERC also questioned whether the proposal would attract more wind energy into the ISO market because, by leaving pancaked transmission rates intact, wind resources could face higher transmission rates as ISO members withdraw in favor of Market Service. The Midwest ISO must remove all Market Service language from its tariff within the next 30 days.
Renewable Energy Transmission Project Rates:
In other news, FERC accepted a request for waiver of criteria traditionally used to evaluate merchant transmission projects. In their applications, the Zephyr and Chinook merchant transmission projects proposed to presubscribe 50% of the projects’ 3,000 MW capacity to an “anchor tenant” wind developer in order to defray upfront development costs, and then allocate the remaining 50% through a traditional open season process. The proposal was intended to avoid the “chicken-and-egg” scenario often associated with merchant transmission, i.e.,resources will not develop without assurances that transmission is available, and likewise transmission projects will not move forward without assurances from resource developers. FERC’s acceptance of this modified approach to merchant transmission expressly opened the door to similar proposals in the future. “Anchor tenant” merchant transmission is the new standard.
Utah PSC Revises Net-Metering Policy Creating New Incentives for Solar and Wind Energy
Renewable energy supporters in Utah are cheering a recent order which will make renewable energy systems such as wind turbines and solar panels more cost effective for consumers.
On February 12, 2009, the Utah Public Service Commission issued an order revising the Rocky Mountain Power net metering policy. In the past customers who own renewable-energy facilities were credited for excess generation based on an avoided-cost calculation, which results in a low financial benefit to the customer. The new net-metering policy provides a "full retail" or dollar-for-dollar credit for every kilowatt-hour of excess power generation, creating a much greater incentive for renewable-energy production by residential, commercial and industrial consumers. In addition, the order declared that renewable energy certificates shall be "deemed owned by the net-metering customer or as otherwise agreed to or designated by the net-metering customer." The PSC order will become effective on April 1, 2009.
Salt Lake County Mayor Peter Corroon and Salt Lake City Mayor Ralph Becker, both supporters of renewable energy and this net-metering policy change, are reportedly investigating ways to promote investment in solar power in the region having jointly received a Solar America grant from the U.S. Department of Energy.
Utah Legislation Addresses Definition of Independent Power Production Facility
Last year, we reported on Utah Public Service Commission decisions regarding the need for the Milford Wind Power Project to obtain a certificate of convenience and necessity. Ultimately, the Commission ruled that the Project’s 90-mile transmission line connecting the wind farm to a point of interconnection at the Intermountain Power Project generating station was not part of the power production facility and was therefore not excluded from Commission jurisdiction. Docket No. 08-2490-01, Order on Petition for Rehearing, July 2, 2008. Thus, Milford Wind was required to obtain a certificate of convenience and necessity for the transmission line. In an apparent attempt to avoid that type of result in the future, the Utah Legislature is considering a bill that adds a definition of “generation facility” to the Public Utilities Code, providing that “’Generation facility’ means all electric plant used for the production or generation of electricity, including all electric plant used to interconnect the production or generation plant.” S.B 76. The bill also then uses that term “generation facility” in the definition of “independent power production facility,” and through other definitions, exemption from Commission jurisdiction is provided for such facilities.
Michigan Governor Creates Great Lakes Wind Council
On February 6, Michigan Governor Jennifer Granholm signed an executive order creating the Great Lakes Wind Council, an advisory body within the Department of Energy, Labor, and Economic Growth that will provide citizens with a public forum to begin to identify where, in the Great Lakes, wind energy systems may be prudently sited. Appointments to the Council include representatives from the Michigan State University Land Policy Institute, the Michigan Environmental Council, the Little Traverse Bay Bands of Odawa Indians, ITC Holdings Corp., the Michigan Charter Boat Association, and Detroit Edison. This follows on the heels of actions by the Wisconsin Public Service Commission and others to investigate the feasibility of siting wind turbines in the Great Lakes, as discussed in one of my recent blog entries.
The Wind and Solar Power Industries Now Employ Twice the Number of Workers in the U.S. as the Coal Mining Industry
In the midst of an unprecedented amount of bad news surrounding the economy, the robust growth in employment in the wind and solar energy sectors has been receiving a lot of attention. Wind industry jobs have increased 70% over the past year, totaling 85,000 in 2008. These 85,000 jobs in the wind industry include some 13,000 manufacturing jobs, many of which are being filled by workers who lost jobs in other manufacturing industries, like the steel industry. Similarly, the solar industry employs more than 80,000 workers in the U.S.
CNNMoney.com ran an article earlier this week noting that the wind industry now outstrips the coal mining industry in number of workers. The article, “Wind Jobs Outstrips Coal,” noted that the coal mining and extraction industry employs about 81,000 workers. According to a 2007 U.S. Department of Energy report cited in the article, these numbers have been steady in recent years, but are down nearly 50% since 1986. Estimates for the total direct employment in the U.S. coal industry range from 136,000 to 174,000 workers, and includes those who mine coal, haul it by rail, barge and truck, and who operate and maintain coal-fired power plants. Thus, the solar and wind energy sectors have quickly caught up the coal industry in terms of overall employment and will soon surpass the coal industry in total employment.
These facts demonstrate the potential of renewable energy to lead the country’s economic recovery when you consider that renewable energy currently supplies a tiny portion of the nation’s electricity supply—about 3 percent—compared to coal, which supplies about 50 percent of our electricity.
WOW - Wisconsin's Wind on the Waters Report Finalized
The final report commissioned by the Wisconsin Public Service Commission on the feasibility of Great Lakes offshore wind development was published on January 15, 2009. The final report reflects comments made from the draft report that was circulated for public comment in the fall of 2008. As reported in a previous blog entry, the report analyzed the feasibility from four perspectives: Engineering and Economic Issues, Human Environment Issues, Legal Issues, and Community Involvement Issues.
The report was discussed in detail this morning in a webinar put on by the Great Lakes Regional Wind Energy Institute. Presenters included representatives from the National Renewable Energy Lab and the Wisconsin PSC. Check back for presentations, they'll be posted soon!
Dingell Unseated; Waxman to Head House Energy and Commerce Committee
In a move that could have a significant impact on the energy sector (and create a buzz among political science departments) nationwide, Representative Henry Waxman (D-CA) has dethroned Representative John Dingell (D-MI) in his nearly 28-year post as chairman of the influential Committee on Energy and Commerce. The 137-122 secret vote has shaken up the seniority system that has driven the caucus for decades. It also replaces a long-time friend of the auto industry with someone who has been championed by environmentalists for his positions on clean air and global warming.
Waxman’s ascension to the Energy and Commerce Committee chairmanship is particularly significant because the committee shepherds legislation on climate change, energy, and health care—all of which are key priorities of the Obama Administration. Waxman (who also has a strong leadership record on health care issues) has pushed for aggressive targets for carbon emissions reductions, more stringent auto emissions standards, and a national cap-and-trade program. Although Dingell recently proposed legislation that would impose gradual reductions in greenhouse gas emissions, Waxman has put forth much more ambitious climate change legislation.
Also of note is Obama’s recent appointment of Philip Schiliro, a longtime aide to Waxman, as the new White House director of Congressional relations. This appointment is considered to be significant in that it provides Waxman with a direct channel to the White House. Congressional insiders have also noted that House Speaker Nancy Pelosi is a close ally of Waxman’s. This web of connections underscores the potential for the Obama Administration and Congress to work closely together to usher in major changes to U.S. climate change policy.
Washington Supreme Court Gives Green Light to Kittitas Wind Project
In a decision of great importance to the wind energy industry, the Washington State Supreme Court this morning upheld the approval of Horizon Wind Energy’s Kittitas Valley Wind Power Project. See Residents Opposed to Kittitas Turbines v State Energy Facility Site Evaluation Council (EFSEC). The wind project will be located to the east and west of Highway 97 approximately 12 miles northwest of Ellensburg in Kittitas County, Washington, and is permitted for up to 65 wind turbines. With a proposed installed capacity of approximately 100 megawatts, the project will be able to generate clean renewable power for approximately 30,000 average homes each year.
The Washington Supreme Court’s unanimous decision sets important precedent on the authority of the Washington Energy Facility Site Evaluation Council (EFSEC) to offer “one-stop” licensing for large energy projects. Horizon Wind Energy had worked collaboratively to get approval of EFSEC, Gov. Chris Gregoire and many governmental environmental agencies and nonprofit groups. However, some local residents and the Kittitas County Commission opposed the project and argued that EFSEC could not preempt the County’s authority under the Growth Management Act. The Washington Supreme Court rejected their arguments. Developers wishing to site wind and other energy projects in Washington now know what the Washington EFSEC can do, and many of the principles articulated in the decision will be helpful to the wind developers fighting similar battles in other states.
My colleagues Tim McMahan and Erin Anderson, who have worked tirelessly on behalf of Horizon Wind Energy in pursuit of this result, are preparing a summary of the Supreme Court’s sixty-page decision. We'll be sending out the summary and its implications as an Energy Law Alert shortly. If you’d like to sign up to receive Stoel Rives Energy Law Alerts, you can do so by clicking on this link and filling out the form.
In the meantime, for stories covering the Washington Supreme Court’s decision, see:
Renewable Northwest Project Press Release
Governor Schwarzenegger Strikes Again: 33% RPS by 2020 and Streamlined Renewable Energy Permitting in California
Governor Schwarzenegger’s been keeping busy on California’s big-ticket environmental issues. Yesterday the Governor’s office issued Executive Order S-14-08, with the laudable goal of accelerating the development of renewable energy resources . . . not to mention bolstering California’s economy with clean-tech jobs. Governor Schwarzenegger announced the Order at what will be the largest solar panel manufacturing facility in North America. The Governor’s remarks on his Executive Order highlighted that investing in renewable energy projects will help us fight climate change, “while driving the state’s green economy.”
Executive Order S-14-08 calls for California to get 33% of our electric energy from renewable sources by 2020. The current Renewable Portfolio Standard (RPS), instituted in SB 107 in 2006, requires that 20% of California’s power come from renewable sources by 2010. Unlike the current RPS, the Governor's new target applies to both investor-owned utilities and public utilities. A recent ballot initiative in California, which would have applied California's RPS to public utilities, failed on November 7th, after being opposed by a broad coalition of environmental groups and renewable energy industry groups. The Governor says he will propose legislation that will codify the 33% RPS for all retail sellers of electricity.
The Order also implements an MOU signed yesterday by the California Energy Commission (CEC), the California Department of Fish and Game (DFG), the U.S. Bureau of Land Management (BLM), and U.S. Fish and Wildlife Service.
Starting in February 2009, renewable energy projects should enjoy a streamlined project approval process before a special joint unit of DFG and CEC. But exactly how will these two agencies “immediately create,” as the Order directs, a one-stop process for permitting renewable energy generation power plants? For thermal power plants over 50 MW, including geothermal and solar thermal facilities, the CEC already is, supposedly, the one-stop shop.
Continue Reading...Ohio Power Siting Board Adopts Wind Facility Rules
On October 28, 2008, the Ohio Power Siting Board adopted rules implementing certification requirements for wind generating facilities in the state. The full text of the opinion and order approving the rules identifies the procedural background followed by the PSB and highlights comments received from all interested parties (including utilities, citizen groups, and AWEA). The The rules follow Ohio's passage in May 2008 of an RPS which requires that utilities provide 25% of their retail electricity supply from alternative energy resources by 2025, at least half of which must be generated by renewable resources such as wind.
California PUC Moves to Allow Unbundled RECs
The California Public Utility Commission issued a draft decision on October 29th authorizing the use of unbundled and tradable renewable energy certificates (“RECs” or “TRECs”) for compliance with California’s RPS.
Continue Reading...New York Establishes Wind Industry Code of Ethics
On October 30th, the New York Attorney General announced a Wind Industry Ethics Code aimed at assuring the public that wind development in the state is done ethically and legally. The Code is the result of an investigation launched by the Attorney General into allegations of improper actions by wind developers to influence landowners and public officials. According to the Attorney General's office, the Code:
- Bans wind companies from hiring municipal employees or their relatives, giving gifts of more than $10 during a one-year period, or providing any other form of compensation that is contingent on any action before a municipal agency
- Prevents wind companies from soliciting, using, or knowingly receiving confidential information acquired by a municipal officer in the course of his or her officials duties
- Requires wind companies to establish and maintain a public Web site to disclose the names of all municipal officers or their relatives who have a financial stake in wind farm development
- Requires wind companies to submit in writing to the municipal clerk for public inspection and to publish in the local newspaper the nature and scope of the municipal officer’s financial interest
- Mandates that all wind easements and leases be in writing and filed with the County Clerk
- Dictates that within thirty days of signing the Wind Industry Ethics Code, companies must conduct a seminar for employees about identifying and preventing conflicts of interest when working with municipal employees
The Attorney General also established a Task Force charged with monitoring companies to verify their compliance with the Code.
WOW - Wind on the Water in Wisconsin?
In Spring 2008, the Wisconsin Public Service Commission opened a docket and created an external Study Group to complete a study to assist with examining the technical feasibility, economic potential, environmental impacts, and legal requirements associated with developing wind energy on Lake Michigan and Lake Superior. Last Friday, the Study Group released its draft report, with the final report due by December 31, 2008. The draft report is a comprehensive analysis of key issues in the areas of engineering and economics (including transmission and the cost of operation and maintenance), the human environment (including the freshwater ecosystem), legal issues (including consultation of federal, state, local and tribal authorities), and community involvement (including public perception). The draft report does not make a recommendation for or against the development of offshore wind in the Great Lakes, but identifies possible next steps to further evaluate the feasibility of such projects.
The draft report is open for public comment, and the PSC will take comments until Monday, November 10. The docket number is 5-EI-144.
Utah PSC Gives OK to Wind Farm Transmission Line
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The Utah Public Service Commission issued an order last week approving the request by Milford Wind Corridor Phase I, LLC and Milford Corridor Phase II, LLC (collectively, “Milford Wind”) for a certificate of public convenience and necessity (“CPCN”) for the construction of a 90-mile transmission line interconnecting the wind farm to facilities for ultimate delivery of output to Southern California (Docket No. 08‑2490-01).
Although the Commission applied the CPCN statute only to Milford Wind’s transmission line, the exemption it applied with respect to the generation facilities is applicable only to cogeneration facilities or independent power production facilities that produce electric energy “solely by the use, as a primary energy source, of biomass, waste, a renewable resource, a geothermal resource, or any combination of the preceding sources.” As it now reads, that exemption would not be available to other types of generation projects that might be constructed by independent power producers in Utah.
As I noted previously, the Commission initially concluded early in this proceeding that legislation enacted this year exempted Milford Wind from Commission jurisdiction and regulation with respect to Milford Wind’s entire project, including the transmission line. However, the Commission revisited its determination in response to a motion for rehearing filed by the Utah Associated Municipal Power Systems (“UAMPS”), and ultimately agreed with UAMPS and the Division of Public Utilities that the exemption provided by the new legislation does not apply to transmission facilities. Thus Milford Wind was required to go forward and obtain a CPCN for the transmission line.
Whether legislation will be proposed in next year's general session of the Utah State Legislature to further address the question of the Commission's jurisdiction over independent power producers remains to be seen.
Congress Extends PTC and ITC--More Analysis to Follow
In an email alert that we just sent out, my colleagues in the Stoel Rives Tax Section report:
Today the House passed, and President Bush signed into law, H.R. 1424, which includes the Energy Improvement and Extension Act of 2008 (the Act). The Act contains the much-anticipated extension of the production tax credit (PTC) and investment tax credit (ITC) sunset dates.
The Act extends the PTC placed-in-service sunset date for certain wind and refined coal facilities until December 31, 2009, and extends the PTC placed-in-service sunset date for certain other qualifying facilities until December 31, 2010. The Act also expands the PTC to include certain marine and hydrokinetic renewable energy facilities placed in service on or before December 31, 2011.
The Act extends the ITC placed-in-service sunset date for solar, fuel cell and microturbine property until December 31, 2016 and expands the ITC to include combined heat and power system property, qualified small wind energy property, and geothermal heat pump system property.
In addition, H.R. 1424 contains a variety of other renewable energy tax provisions, including provisions allowing the energy credit to offset alternative minimum tax liability; increasing the amount of the biodiesel and renewable diesel fuel credits and extending the sunset dates until December 31, 2009; authorizing new clean renewable energy bonds and qualified energy conservation bonds; and extending the energy efficient commercial buildings deduction and the new energy efficient home credit.
Our Tax Section is working on preparing a more detailed analysis of the tax aspects of HR 1424. If you'd like to receive updates concerning H.R. 1424 and other renewable energy and clean tech issues, please subscribe to our Renewable Energy Mailing List.
Michigan Passes Renewable Portfolio Standard
On September 18, 2008, the Michigan legislature sent the state's first Renewable Portfolio Standard to the Governor's desk for signature. The package mandates "10 percent of the state's energy come from renewable sources by 2015, regulatory reform that protects Michigan ratepayers and allows utility companies to build new electricity generation in Michigan, and a requirement that utilities meet an additional 5.5 percent of Michigan's annual electricity demands through energy efficiency by 2015." AWEA estimates that Michigan is one of the top twenty states in terms of wind energy potential.
The RPS package, however, has its skeptics. The Detroit News published an editorial that criticized the RPS for imposing a high financial burden on customers - for example, all customers must immediately begin paying a monthly surcharge to allow the utility to recover the incremental cost of complying with the utility's renewable energy plan, although utilities aren't required to take any concrete steps until 2012.
Michigan joins Ohio, which passed its RPS last spring, as the latest Midwestern state (and the 28th state nationwide) to pass an RPS.
Upper Midwest Transmission Development Initiative Created
On September 18, 2008, the Midwest states of Minnesota, Iowa, Wisconsin, North Dakota and South Dakota announced creation of a regional transmission planning effort that will "promote regional electric transmission investment and cost sharing" among the states. Several entities, including MISO (which is currently conducting transmission planning studies in the region) and ITC, have issued press releases in favor of the initiative. The initiative, scheduled to have its first planning meeting in October, will coordinate efforts among entities involved in transmission matters, including state regulatory agencies, transmission companies, utilities, independent generation owners and other key stakeholders.
Senate Passes Renewable Extensions
Despite the urgency of the crisis gripping Wall Street, the Senate stepped up yesterday to resoundingly pass HR 6049. The bill must still be reconciled with the competing House version, HR 6899, particularly on the pay-go issues associated with energy measures. The White House released an administration position on HR 6049 suggesting that, while the President opposes the revenue raisers in the bill which raise taxes on the oil and gas industry, the President does not plan to veto the bill. The Senate is pushing the House with this leverage to coalesce behind the Senate version.
Kudos to renewable energy leaders like Senator Cantwell and Representative Inslee who have steadily advocated for the industry. Unless one of the pending bills is successful, the sun will set on the Production Tax Credit, Investment Tax Credit and several related measures that have proven highly effective in the expansion of the wind, solar and biofuels industries. Congress is scheduled to adjourn on September 26th for the electoral season and perhaps the remainder of 2008. Absent a quick Congressional action compromise behind a unified bill, these renewable industries will suffer from lost investment, delayed projects and the dark cloud of future uncertainty.
The Production Tax Credit (PTC) applies to facilities utilizing wind, open and closed-loop biomass, landfill gas, geothermal, hydropower and waste to produce energy. The “placed in service date” in the PTC determines whether qualifying facilities will be eligible for crucial federal subsidies to improve their project economics. The solar energy and fuel cell Investment Tax Credit (ITC) provides powerful subsidies to these promising industries. The biodiesel blenders excise tax credit is crucial to the growth of this industry that is seeking to diversify into next generation feedstocks. While not strictly in the renewables sector, carbon sequestration, energy efficiency, plug-in vehicles, smart grid expansion and incentives for idling reduction units in heavy duty trucks are other promising energy programs awaiting extension or approval.
As referenced above, it is not the renewable energy sources, efficiency measures, or energy innovations that create the central dispute but the issue of “pay go” or “pay as you go”. A broad consensus has emerged that a diversified energy policy is an imperative. The problem arises from the price tag. The simple concept of “pay as you go” is that Congress should simultaneously appropriate or otherwise pay for any expenditures that it includes in a particular piece of legislation. The price tag for the comprehensive new energy package has been in the range of $17 to $18 billion dollars over the next 10 years. Notably, even the use of the 10 year cost evaluation period has caused recurring problems for the renewable energy industry as it encourages Congress to pass shorter term measures that cost less under the pay as you go accounting rules.
The two key pending bills in Congress illustrate the controversy vividly. The “Comprehensive American Energy Security and Consumer Protection Act” (HR 6899) passed the House on September 16th. The “Energy Improvement and Extension Act of 2008” (HR 6049) is the bill that was passed in the Senate with the sponsorship of Senators Baucus, Grassley and Reid. The two bills would both address the price tag issue by repealing some oil and gas domestic production tax subsidies and changing the rules for the calculation of foreign oil and gas extraction income. Renewable industry proponents had recently been encouraged that tentative compromises would allow one of the bills to be passed, thereby extending the sunset dates on the energy programs.
The hurricane and the crisis in the financial markets have shortened the time opportunity for Congress to work out the details of the compromise. There is speculation that even if Congress fails to act this year, a compromise will be reached next year that will be retroactive to January 1st. In other words, If Congress fails to act this year to extend the credits, they will act sometime next year and provide credits to the respective industries for the time when no credits were in place.
Continue Reading...Client Alert: FERC's Conditional Approval of MISO Queue Reform
Check out our client alert on FERC's recent conditional approval of MISO's revised large generator interconnection process. It provides highlights of the ruling and identifies next steps that MISO must take in order to flesh out some issues, including certain milestones that generators must meet in order to move towards getting their project interconnected.
Beth Soholt, executive director of Wind on the Wires, believes that the ruling is pretty consistent with what those in the industry expected, and that the intent was to give generators a more clear picture up front of what the actual costs are for carrying a project through to interconnection. She thinks that we'll have to wait and see how MISO interprets the clarification requirements, and how generators respond to the new process, to really understand what the impact will be and whether this will result in a material change in the number of projects entering the queue.
Stay tuned!
Portland General Electric's RFP Garners offers of 3,000 MW
The Portland Business Journal is reporting that Portland General Electric Company received 38 offers in its April 2008 RFP totaling up to 3000 MW in renewable energy.
Continue Reading...FERC Rules on MISO Queue Reform Proposal
On August 25, FERC issued its ruling on the Midwest Independent Transmission System Operator (MISO) plan to reform the generator interconnection queue process - the method by which transmission requirements for generators wishing to connect new projects to the grid in the Midwest are reviewed and approved. FERC conditionally accepted the proposed tariff revisions, with an effective date of August 25, 2008, and directed MISO to make a compliance filing within 30 days of the Order. Major changes include addition of a Pre-Queue Phase, addition of a Fast Track Process, revisions to the amount and timing of deposits, revisions to the milestones projects must meet to move forward, and limitations on the ability to suspend.
Watch for a client alert shortly!
Texas Court Rules in Horse Hollow Wind Farm Case
The Texas Court of Appeals handed down its decision in Rankin v. FPL Energy, LLC on August 21, 2008. Plaintiffs had brought public and private nuisance claims against FPLE's Horse Hollow Wind Farm in southwest Taylor County, Texas. The court noted that "Texas caselaw recognizes few restrictions on the lawful use of property" and ruled that, under Texas law, there is no nuisance action for "aesthetical impact." In other words, the turbines were not a nuisance just because the plaintiffs thought they looked really ugly.
Plaintiff's remaining nuisance claims were based on the noise that the turbines allegedly produced; the trial court allowed those claims to go to the jury. The jury found against the plaintiffs, and the trial court entered a take-nothing judgment. The balance of the appellate court's opinion analyzes and upholds the trial court's decision to exclude certain testimony. In theory, the plaintiffs could have prevailed on their nuisance claim if they had proven to the jury's satisfaction that noise from the turbines amounted to "the encroachment of a sensory damaging substance." They apparently failed to do so on the evidence presented.
The limitation of nuisance actions to cases involving noise, dust, bright lights, or other health risks -- as opposed to aesthetic objections -- is consistent with the laws of other states, including Washington. See Pierce v. Northeast Lake Wash. Sewer and Water Dist., 847 P.2d 932 (Wash. App. 1993) (4.3 million gallon municipal water storage tank that "loomed" in plaintiff's view was not a nuisance or a trespass or a case of inverse condemnation. Cf. Steele v. Queen City Broadcasting Co., 341 P.2d 499 (Wash. 1959) (television transmission tower built on parcel smaller than required by law constituted a nuisance, in part because it created disagreeable wind noise). We expect that future challenges to wind energy projects will focus on noise and alleged health risks.
When is a Green Building Lease Like a Power Purchase Agreement? Avoiding Deja Vu All Over Again
On April 16, 2008, Northern States Power filed a petition with the Minnesota Public Utilities Commission for a determination that "Xcel Energy has all legal rights necssary to possess, use and dispose of any renewable energy credits ('RECs') arising from the production of renewable energy that Xcel purchases under its renewable energy power purchase agreements ('PPAs')." NSP's request was directed primary at "46 older PPAs that did not contain language explicity addressing the treatment of RECs." Suprisingly, until 2003, Xcel Energy's form of PPA for certain small facilities was silent on the question of which party--the generator or the utility--was entitled to the RECs associated with the renewable energy. Xcel and the affected generators are now filing pleadings before the Commission to sort out the question of who gets to claim the RECs produced by these renewable energy projects--NSP, as the utility buyer, which needs more RECs to meet Minnesota's RPS; or the generators, who wouldn't mind being able make a little more money by selling reserved, unbundled RECs in a separate transction (some of them may have already done just that, and may be unpleasantly surprised if the Commission rules that Xcel is the true owner of those RECs). The discussion rages on in Docket E-002/M-08-440. (To see the filings, go to the Minnesota Public Utility Commission's e-docket and enter "08" in the year and "440" as the docket.)
So, what do renewable energy PPAs have to do with the lease of a green building? Well, imagine this scenario. A developer designs and builds a marvelous new high performance green building with a Platinum LEED certification. The building's developer/owner leases the building to a company that wants to enjoy the prestige of occupying a top-knotch green office space. A couple of years later, the state recognizes and values "white tags" (energy efficiency credits); or, the federal government gets around to enacting a comprehensive carbon cap and trade law. Suddenly, the green building may be yielding additional value in the form of white tags, carbon offset credits or other environmental attributes.
So who gets that value? The owner, who took all that risk to develop the green building? Or the lessee, who is perhaps paying a higher than market rate to rent space in a very desirable green building? Perhaps a lender has a claim that the value was pledged as collateral for its loan. If the lease is silent on the point, the lessor and lessee may find themselves quarreling over who gets to own and sell the tags or offsets. The same issue can crop up in agreements to sell "green" condominiums or other transactions in which some feature of a green building is conveyed to another party.
To avoid re-learning the lesson that Xcel and its generators are now absorbing in a different context, the simple fix is to make sure that the green building lease or transfer agreement directly addresses the question of who gets to keep (or receive) any credits or benefits that are recognized as a result of the building's high performance, green status. Some forethought about how these agreements are drafted can avoid disputes later on.
Quarterly Women of Wind Energy Meeting Held at Minneapolis Stoel Rives Office
The Minneapolis office of Stoel Rives hosted the quarterly meeting today for the Twin Cities Chapter of Women of Wind Energy. Beth Soholt, director of Wind on the Wires, was the guest speaker. Beth discussed Midwest transmission regulatory issues on which she and Wind on the Wires are working, including the MISO queue reform process, the progress of new transmission lines in Minnesota through the CapX2020 project, and other regulatory and legislative updates. The meeting was well attended by more than 30 people involved in the wind industry. If you would like more information about the Twin Cities Chapter of Women in Wind Energy, please contact Katie Roek or Mary Sennes.
More on The Oregon Public Utility Commission's Decision in Honeywell
For those who have been tracking the Oregon Public Utility Commission's In re Honeywell proceeding, Stephen Hall and Pat Boylston have just released a Stoel Rives Energy Law Alert explaining the significance of the decision for third party "on site" solar and wind generation and net metering.
Gail Kinsey Hill reported on the decision and its importance for solar development in a story entitled "Ruling gives solar energy projects in Oregon a big boost", which appeared in The Oregonian on August 1.
Although the OPUC's ruling is a big win for the solar industry in Oregon, the same principles would apply to third "on site" wind generation (although it would not apply to other renewable energy sources).
Oregon Public Utility Commission Gives Green Light to Third-party Ownership Model for Distributed Generation
Comments on 500+ Page MMS Rule Due September 8
On July 9, 2008, the Department of the Interior's Minerals Management Service (MMS) issued proposed regulations for granting leases, easements and rights of way for alternative energy project activities and for alternative uses of existing facilities located on the Outer Continental Shelf (OCS). For those who are less than excited at the prospect of wading through the 500+ page text of the proposed rules, my partner Cherise Oram and summer associate Chad Marriott (University of Oregon) have written an executive summary of the MMS's Proposed Regulations Governing Development of Wind, Wave, Current, Solar and Other Alternative Energy Sources on the Outer Continental Shelf. Comments on the proposed rules must be submitted to MMS no later than Monday, Spetember 8, 2008.
Utah PSC Jurisdiction Over Wind Farm--continued
It looks like Milford Wind isn't ready to throw in the towel yet on the issue of Utah PSC jurisdiction over its proposed wind farm, having filed a Petition for Rehearing or Request for Reconsideration of the Commission's Order on Petition for Rehearing. Utah PSC Docket No. 08-2490-01. Milford Wind provides arguments on why the Commission got it wrong on the reversal of its first order, and also reiterates its arguments on why the Commission doesn't even have jurisdiction over Milford Wind to begin with (arguments the Commission hasn't addressed). Stay tuned.
Utah PSC Asserts Jurisdiction Over Wind Farm Transmission Line
Reversing its earlier decision on the matter, the Utah Public Service Commission has concluded that a wind power project ("Milford Wind") must obtain a certificate of convenience and necessity ("CPCN") for a 90-mile transmission line that it proposes to build in connection with its wind farm to be built in southwest Utah. Order on Petition for Rehearing, Docket No. 08-2490-01. The Commission stuck with its decision that the power production facilities associated with the independent power project are exempt from its jurisdiction pursuant to legislation adopted earlier this year, but concluded that the exemption does not apply to the transmission facilities. The project is under contract with the Southern California Public Power Authority ("SCPPA") for the sale of energy from the first phase of the project.
It'll be interesting to see if there's a move in next year's legislative session to extend the jurisdictional exemption to the transmission facilities of independent energy producers.
Is the Glass Half Empty, or Half Full?
The Oregonian ran an interesting front page article today (July 21, 2008) about the expected explosive growth of wind energy in the Pacific Northwest. The good news (or what should have been the good news) is that wind developers are planning to quadruple the amount of wind power in the region.
The Bonneville Power Administration's recent transmission "open season" produced substantial "pay to play" commitments from major wind developers (including national players IBERDROLA, Horizon Wind Energy, and enXco, among others) and regional utilities, who are together planning to add more than 4,700 MW of installed wind capacity to our region over the next five years. (The article reports that the region's transmission system now handles about 1,490 MW of installed wind capacity, which will rise to about 2,000 MW by the end of 2008.) Once the five year build out is finished, about 8%of the region's electricity needs would be served by wind, which would be among the highest percentages in the nation--wind currently serves about 1% of all US energy needs on average, rising to highs of around 5% in windy Iowa and Minnesota.
Unfortunately, the morning print edition of The Oregonian ran a somewhat sensational headline announcing that "Wind power could blow grid," adding that "utilities and developers want to quadruple Northwest's output, but power lines can't hold that much more." It would have been more accurate to announce "Wind to Power 2,000,000 Homes," but what do I know about selling newspapers? Anyway, the whole point of the BPA's open season was to lay the groundwork for building the new transmission infrastructure that will enable us to make effective use of all that wind without "blowing the grid." In fact, most of the proposed projects won't be built if the transmission infrastructure isn't improved--the crisis that the headline predicted really can't happen. Sadly, a large number of people who don't read "below the fold" aren't going to grasp this little nuance and are going to come away with the impression that "wind is bad." Challenging, yes--bad, no.
Here's the on line version of the article, more plausibly entitled "Rush of wind to hit Pacific Northwest."
Relocating the Wind: Creative Transmission Solutions
A recent article by my partners Marc Wood and Jennifer Martin explores the transmission challenges faced by wind and other intermittent energy resources and then explains how transmission obstacles can be reduced by the effective use of dynamic scheduling, physical storage and exchange (shaping), or some combination of the two. The article urges FERC to initiate technical workshops to explore the potential of dynamic scheduling and storage & exchange as tools for improving the capability of existing transmission systems.
The article "Relocating the wind: New strategies for moving wind generation from high-wind areas to high-load areas" appeared in the May/June 2008 issue of North American Clean Energy.
Ohio's New RPS Yields Duke Renewables RFP
Spurred by Ohio's new renewable energy portfolio standard, Duke Energy Ohio is requesting proposals for renewable energy resources that would begin delivering energy in 2009-2012. Duke is interested both in PPAs and asset acquisitions, and the resources must be able to deliver energy to the MISO grid. Bids are due by August 8, 2008.
In Ohio, "renewable energy resources" include solar PV, solar thermal, wind, hydroelectric, biomass, biogas, fuel cells, renewable power storage, and others. Because Ohio's RPS requires the state's utilities to generate or acquire 50% of their renewable energy requirements from generation facilities located in Ohio, Duke will give preference to Ohio facilities.
Although solar energy is often associated with the sunny southwestern United States, the Duke RFP shows that solar has a role to pay in the Midwest, where it can help to meet summer peak loads. Duke plans to be taking delivery of 15,000 MWh of solar by 2012.
Duke has established a web site for interested bidders
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