Great River Energy Issues Request for Proposals
On August 15, 2011, Great River Energy (GRE) issued a request for proposals (RFP) for community-based energy development (C-BED) renewable energy resources. Eligible energy technologies include: wind, solar, hydroelectric of less than 100 megawatts, biomass, municipal solid waste, landfill gas and anaerobic digesters, and hydrogen produced from any of the previous resources.
In announcing the RFP, GRE noted that it already has enough renewable resources in its energy portfolio to meet Minnesota's Renewable Energy Standard. Minnesota's RES requires electric utilities to supply an increasing percentage of their energy sales from renewable energy sources, reaching 25 percent by 2025. Nevertheless, GRE issued the RFP to "evaluate if additional C-BED renewable resources can provide value to our member cooperatives in the future," according to Jon Brekke, Great River Energy vice president of member services. GRE plans to evaluate proposals based on their impact to wholesale power rates and other factors.
Proposals are due before 4pm Central Prevailing Time on Sept. 9, 2011. GRE plans to notify short listed bidders by September 30 and has targeted November 1, 2011 as the execution date for a power purchase agreement (PPA). GRE is clearly looking for bargains from developers who can take advantage of the Section 1603 cash grant, a program that expires on December 31, 2011, and who can place a project in service by December 31, 2012. Since projects seeking the cash grant will need to "begin construction" (as that concept is defined in Section 1603) by December 31, 2011, the November 1 target execution date will likely be critical for developers seeking to arrange project financing before year end.
GRE is interested in entering into a PPA rather than a build-transfer or other ownership arrangement. GRE's form of PPA can be found here. The RFP itself can be found here. For more information about the RFP, contact Mark Rathbun at 763-445-6104 or 2011cbedrenewablerfp@grenergy.com.
Minnesota PUC clarifies that "other credits" include RECs
Last year, we reported on the resolution of a longstanding dispute between Xcel Energy and 46 renewable energy generators about the ownership of Renewable Energy Credits (RECs) when the Power Purchase Agreement (PPA) is silent. In an Order released September 9, 2010, the Minnesota Public Utilities Commission decided that 1) generators own the RECs produced under PPAs signed under the 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) Xcel owns the RECs produced under PPAs signed under Minnesota’s 1994 wind and biomass mandates, unless the generator could demonstrate that the PPA was not silent. Today, the Commission released an Order offering more clarity to PPAs in the latter category.
Following the September 2010 Order, two generators (St. Paul Cogeneration LLC and Mission Funding Zeta) with contracts under the wind and biomass mandates sought to demonstrate to the Commission that their PPAs were not silent on REC ownership. Both PPAs at issue contained language allocating to the generator the benefit of “any tax credits, allowances or other credits” related to the generation facility. In today’s order, the Commission determined that this language unambiguously includes RECs. As a result, the Commission found that St. Paul Cogeneration and Mission Funding Zeta own the RECs under the terms of their PPAs. The Commission also found that Xcel owns the RECs under any remaining unsettled wind and biomass mandate PPAs, unless the generator demonstrates that the PPA is not silent within 30 days.
Stoel Rives' Mark Hanson and Greg Jenner to speak at Renewable Energy in the Midwest
Join Stoel Rives Partners Mark Hanson and Greg Jenner in Minneapolis, for Renewable Energy in the Midwest States: New Policy, Business and Legal Developments. Here they will meet with leading renewable energy professionals, innovators and regulators to address opportunities and challenges for developers and entrepreneurs in the Midwest renewable market and the developing Smart Grid sector.
Both Mark and Greg will present on Friday, August 26, and will discuss environmental issues and updates of federal and state programs, as well as ways to move renewable projects forward with less government support.
For full conference details, click here.
Debate Heats Up over Minnesota Wind Energy Siting Standards and Setbacks
Late last week, an administrative law judge (“ALJ”) found that the Minnesota Public Utilities Commission (the “Commission”) is not obligated to consider or apply a county wind ordinance containing siting standards that are stricter than the Commission’s statewide standards. And even if the Commission were obligated to consider and apply the more stringent standards, the ALJ recommended that the Commission be excused from doing so for lack of good cause under the Minnesota Wind Siting Act (the “Act”). The ALJ’s recommendations to the Commission were released at the same time Minnesota legislators are considering a proposed state law that would require larger setbacks for wind turbines from neighboring property lines statewide.
In October 2010, Goodhue County amended its zoning ordinance for wind projects to, among other things, require turbines to be setback 10 rotor diameters (or about half a mile) from dwellings of landowners not participating in the project. In comparison, the project developers proposed setbacks of 1,500 feet from non-participating dwellings and the Minnesota Office of Energy Security recommended this setback distance as a permit condition. State standards typically require setbacks of 750 to 1,500 feet to comply with noise standards. Two weeks after Goodhue County adopted its wind ordinance, the Commission determined that it did not have a sufficient record before it to determine how or whether to apply the county’s standards. To develop that record, the matter was referred to an ALJ at the Office of Administrative Hearings for a contested case proceeding.
The Act provides that a state site permit for a wind project 5 MW or larger is the only site approval required. The state permit supersedes and preempts all local zoning, building, or land use rules, regulations, or ordinances. Local governments retain authority to regulate siting and construction of wind projects 5 MW and smaller. The Act allows counties to assume responsibility for permitting wind projects 5 MW and larger up to 25 MW using general permit standards developed by the Commission. However, the Act includes a provision that allows counties to adopt more stringent standards for wind energy projects 5 MW and larger, which the Commission must consider and apply before granting a site permit in that county unless the Commission finds good cause not to do so. The ALJ found that the Act does not require the Commission to consider or apply Goodhue County’s ordinance and that, even if it did, there would not be good cause to do so. The case now moves back to the Commission for a final decision.
Recent attention to wind siting standards in Minnesota hasn’t been limited to the Goodhue County case. Yesterday, the Minnesota Senate Energy, Utilities and Telecommunications Committee heard wind siting/setback legislation (S.F. 1069) that would require wind turbines to be set back one-half mile or more from property lines of non-participating landowners in townships exceeding certain population densities. The House companion bill (H.F. 811) was heard last week and failed to pass out of committee on a tied vote. The setback requirements proposed in these bills could significantly reduce the amount of land area available for wind development in Minnesota.
Minnesota Power Announces RFP for up to 100 MW of Wind
Minnesota Power has announced a request for proposals (RFP) seeking up to 100 MW of wind generation. Proposals must be for wind generation that is deliverable to Minnesota Power's service territory prior to the expiration of the Federal Production Tax Credit on December 31, 2012. Minnesota Power serves northeastern Minnesota.
Details about the RFP and a Model Power Purchase Agreement are available on Minnesota Power's website.
The deadline for submissions is 4:00 pm Central Standard Time on January 5, 2011.
MPUC Issues Order on Renewable Energy Credit Ownership
Following our post from a couple weeks ago, the Minnesota Public Utilities Commission released its Order today regarding ownership of renewable energy credits in a group of "silent" power purchase agreements (Docket No. 08-440). The Order is available here and our previous post describing its substance is here.
Minnesota PUC Settles Longstanding Dispute over REC Ownership
Last week, the Minnesota Public Utilities Commission resolved a longstanding dispute over who owns Renewable Energy Credits (RECs) when the Power Purchase Agreement (PPA) is silent. Following the establishment of an REC tracking system for Minnesota, Xcel Energy asked the Commission to clarify ownership of RECs associated with 46 wind, biomass, hydro, and landfill gas facilities totaling 467.5 MW. These PPAs were written before the concept of RECs existed.
On August 17, 2010, the Commission resolved the dispute partially in favor of Xcel and partially in favor of the generators. The Commission divided the disputed PPAs into two categories: 1) PPAs signed under 1978 federal Public Utilities Regulatory Policy Act (PURPA) and 2) PPAs signed under Minnesota’s 1994 wind and biomass mandates (Minn. Stat. §§216B.2423 and 216B.2424).
For the PURPA contracts, the Commission decided that the generators are the rightful owners of RECs because they had only been paid avoided cost with no premium for the electricity being from renewable sources.
For the wind and biomass mandate PPAs, the Commission favored Xcel and decided that the utility had acquired ownership of the RECs, unless the generator can make a showing that the PPA is not silent on REC ownership. For this category, the Commission reasoned that Xcel had contracted to buy electricity that would meet specific renewable mandates. Without the RECs, the electricity would not satisfy the renewable mandates.
The Commission exempted two PPAs close to being privately settled from its decision as well as 13 PPAs that were already privately settled.
Filings related to the "silent PPAs" dispute can be found by searching for Docket No. E-002/08-440 in Minnesota’s eDocket system.
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.
Minnesota Renewable Energy Projects RFP
The State of Minnesota’s Office of Energy Security (OES) is requesting proposals from organizations that are engaged in or will engage in the manufacture of renewable energy systems or fuels, energy storage systems, geothermal energy systems for heating and cooling, components of these systems, or equipment for the manufacture of these systems or components.
The maximum award is $1 million. Up to a total of $2 million is available to all recipients. OES anticipates that two to six projects will be selected for awards under this solicitation.
All work to be performed within a proposed scope of work must be completed no later than June 30, 2011. An applicant must provide at least 40 percent of the total cost of the proposed scope of work. Applicant’s match may be cash or in-kind.
Each applicant must submit a notice of intent no later than December 4, 2009 to be eligible. Final proposals are due on December 18, 2009. OES anticipates provisional notification of successful applicants no later than January 29, 2010. Final selection will be contingent on determination by U.S. Department of Energy of compliance with the National Environmental Policy Act.
For more information and to download a copy of the RFP, please visit www.energy.mn.gov and click on Active Request for Proposal (RFP).
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.
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.
New Minnesota Solar Power Incentives
Minnesota politicians held a news conference yesterday on the state capitol mall to provide an overview of recent legislation relating to solar energy projects. Minnesota has allocated $14.5 million in stimulus money for renewable energy projects, with a portion flagged for solar projects to encourage the installation and use of solar-powered systems. Another piece of legislation gives utilities the opportunity to double their commitments to solar energy projects under the Conservation Improvement Program currently in place. Representatives from Xcel Energy Inc. (Xcel), which serves more than 1.2 million customers in Minnesota, announced yesterday that they filed a $280 million plan with regulators to offer incentives for Minnesota customers to conserve energy, which could include installation of solar panels on homes and businesses. Under Xcel’s proposed “Solar Rewards Program,” Xcel would provide rebates to customers who install solar photovoltaic systems of up to 40 kilowatts on their premises.
Deadline Approaching for Minnesota Biodiesel Grants
The Minnesota Department of Agriculture has announced that it will be providing $300,000 in grants to qualified applicants to use for the addition of infrastructure that would allow for the blending of biodiesel in all types of weather, including cold conditions. Facilities must offer biodiesel for a minimum of five years, contingent upon the availability of diesel or biodiesel fuel. The Grantee must notify the Minnesota Department of Agriculture in writing in the event that diesel or biodiesel fuel is not readily available. Complete information is available on the Department's website.
The deadline for submitting applications is December 12, 2008.
