Today the Minnesota Senate passed its omnibus energy bill by a vote of 37-26. This follows the Minnesota House of Representatives’ passage of its version of the bill on Tuesday. The bills now move to a conference committee for consolidation. After the conference committee completes its work, the consolidated bill will then return to each chamber for a final vote before heading to Governor Dayton’s desk.
Some major differences between the two bills means the conference committee has its work cut out for it. For instance, the Senate’s bill contains a 1% solar standard while the House of Representatives’ version includes a much more aggressive 4% solar standard. Whatever the number that ends up in the final bill, Minnesota is set to become only the 17th state to enact a solar standard, and one of the few whose standard is not a carve-out of an existing renewable energy standard.
On May 7th, the Minnesota House of Representatives passed its omnibus energy bill by a vote of 70-63. The bill includes a provision that requires investor-owned utilities to obtain 4 percent of their power from solar by 2025, with a goal of reaching 10 percent by 2030. In contrast to the aggressive House bill, the Minnesota Senate’s omnibus energy bill contains a more modest requirement for 1 percent by 2025. If signed into law, Minnesota would be the 17th state to enact a solar standard. Unlike solar standards in other states, however, this standard is not a carve-out of the existing 25 percent by 2025 renewable energy standard; rather, it is an additional mandate.
In order to protect some industries, the House bill exempts any “iron mining extraction and processing facility” or “paper mill, wood products manufacturer, sawmill, or oriented strand board manufacturer” that would otherwise be subject to potential rate increases stemming from the standard. The bill also exempts power cooperatives and municipal utilities from complying with the standard, which means that only the four investor-owned power companies serving Minnesota must comply: Xcel Energy, Minnesota Power, Otter Tail Power Co., and Interstate Power & Light.
The Minnesota House and Senate must complete any compromise bill by the May 20th deadline for votes.
The Minnesota State Legislature is considering a bold move to assist Minnesota’s fledgling solar industry. A new provision in the House transportation omnibus bill requires that any solar array installed on a building, highway, road, bridge, or land owned or controlled by the Minnesota Department of Transportation, must consist entirely of panels manufactured in Minnesota. After passing out of the House, the transportation omnibus bill will meet its Senate counterpart in a conference committee.
This development comes a short time after the Minnesota Senate added a provision to the energy omnibus bill that would create a solar energy standard alongside the existing renewable energy technology standard and a few years after the state legislature enacted the Minnesota Bonus Program. The new solar energy standard would require that utilities generate or procure an increasing amount of solar electric generation capacity at a minimum percentage (not yet specified) by 2016, 2020, and 2025. The Minnesota Bonus program provides Minnesota residents a financial incentive to install solar panels on their homes and businesses by requiring utilities to subsidize the solar power generated by the solar installations.
Under state law, the Minnesota State Legislature must finish its work by Monday, May 20th.
On April 10, President Obama fired the starting gun when he submitted to Congress his budget request for the 2014 fiscal year. The budget contains numerous proposals that are intended to make the U.S. "the leader in the clean energy sector and bring about a clean energy economy with new companies and jobs."
According to the White House, the budget would boost funding for work on clean energy technology by 30% over 2012’s enacted level. That amounts to $7.9 billion across all federal agencies, with the lion’s share going to the Department of Energy (“DOE”). The budget earmarks a total of $6.2 billion for DOE projects, including:
- $614 million to “increase the use and reduce the costs of clean renewable power from solar, wind, geothermal and water energy,”
- $80 million to advance clean energy integration into the delivery grid, and
- $282 million to develop the next generation of advanced biofuels.
Perhaps the biggest news to come out of the budget announcement was President Obama’s call for a permanent and refundable production tax credit (”PTC”). The White House believes the permanent PTC would “provide a strong, consistent incentive to encourage investments in renewable energy technologies and to help meet our goal to double generation from wind, solar and geothermal sources by 2020.” Whereas in the past renewable energy developers have been subject to Congress’ yearly vacillations, a permanent PTC would create a more stable environment for the development of wind, solar, and geothermal projects.
Although the budget proposal is an important first step, it’s important to remember that at this point, President Obama’s proposal is just that – a proposal. The document must still jump numerous hurdles in Congress before it crosses the finish line and returns to the White House for his signature.
The IRS recently announced that the production tax credit (“PTC”) will be more valuable in 2013. In the April 3, 2013 edition of the Federal Register, the IRS issued an important piece of guidance for those in the renewable energy field, stating that the PTC incentive would increase for the 2013 calendar year, from 2.2 to 2.3 cents per kWh for fully qualifying energy sources, while remaining at 1.1 cents per kWh for sources like open-loop biomass and incremental hydro. The IRS last adjusted the PTC in 2010, when it increased the incentive to 2.2 cents per kWh. Prior to 2010, the IRS raised the incentive from 2.0 cents per kWh to 2.1 cents per kWh in 2008.
In addition to the increase, the IRS announced that because the 2013 reference price for electricity produced from wind (4.53 cents per kWh) did not exceed 8 cents when multiplied by the inflation adjustment factor (1.5063), the eventual phaseout of the credit would not begin in 2013.
While an increase in the PTC incentive will surely be greeted as good news by developers, many were hoping to have received guidance by the end of the first quarter on the new tax rules that were a part of the PTC extension. Historically, a project’s qualification was determined by the date the project was placed in service. Now, qualification is based on the date construction begins; that is, as long as construction begins before the end of the calendar year, the project is eligible for the PTC. Guidance from the federal government is necessary on what suffices for beginning construction. Until they hear otherwise, developers must operate under the assumption that they need shovels in the ground by December 31.
The Minnesota State Legislature’s attempt to expand the amount of electricity that utility companies secure from renewable energy sources cleared a major hurdle recently, as H.F. 956 was included in the House omnibus energy bill. H.F. 956 proposes to increase Minnesota’s renewable energy standard (“RES”) to 40% by 2030. The current standard requires that Minnesota’s utilities secure 25% of their power from renewable sources by 2025 (30% for Xcel Energy in exchange for nuclear waste storage at Prairie Island).
Although the Senate companion bill, S.F. 901, does not include the same language, the bill includes a 40% by 2030 renewable energy transmission and integration study. Such a study lays the foundation for an expanded RES, possibly as soon as the conference committee.
In addition to the RES expansion, the bills set forth requirements for the creation of a solar electricity standard and an expansion of the use of distributed generation. The solar electricity standard contained in S.F. 901 would require utilities to generate or procure solar electric generation capacity at a minimum percentage (not yet specified) by 2016, 2020, and 2025. Like the current RES, the solar electricity standard would set different values for Xcel Energy. Notably, the solar energy procured for the solar electricity standard could not be used to satisfy the utilities’ obligations under the RES. H.F. 956 seeks to expand the use of distributed generation throughout Minnesota by requiring the Minnesota Public Utilities Commission to initiate a proceeding to establish a generic standard for utility tariffs for interconnection and parallel operation of distributed generation projects. Among other things, the tariff standards must encourage maximum penetration of distributed generation.
Despite the recent success, more hurdles remain for these bills. The bills must pass additional legislative committees, the House and Senate floors, a conference committee, and secure the Governor’s signature. The remaining seven weeks of the 2013 legislative session should provide some interesting developments.
Seattle City Light recently issued a request for proposals f(RFP) or up to 150,000 megawatt-hours of renewable energy or renewable energy credits per year, starting in 2020. The projects that generate the RECs or energy must qualify as eligible according to Washington State’s renewable portfolio standard. In addition, City Light will require a minimum output guarantee and credit assurances. The utility will also consider proposals for equity ownership.
In its RFP announcement, City Light said that it will consider a broad range of proposals, technologies, and contractual arrangements. A party submitting a proposal must be the owner of the eligible resource or renewable energy credits, or have written authorization from the owner to submit a proposal. City Light prefers baseload or dispatchable resources to complement existing supply resources that are predominately hydroelectric.
For more information on submitting a proposal, contact Robert W. Cromwell, Jr., director of power contracts and resource acquisition at firstname.lastname@example.org, by phone at (206) 684-3856 or by FAX at (206) 386-4555.
PG&E announced today that it expects to issue its Renewable Auction Mechanism (RAM) RFO on May 1, 2012. Offers under the RAM RFO will be due no later than 12:00 noon (PPT) on May 31, 2012.
PG&E will host a Bidders’ Conference at the company's headquarters on May 16, 2012, from 1:30 PM to 3:00 PM. The Bidder's Conference will also be available via Webinar. Attendees are required to register for the Bidders' Conference.
Following the Bidders’ Conference, PG&E will hold a Bidders’ Forum. The Forum will cover survey results and lessons learned from the first RAM RFO. It will also address the valuation of resource adequacy and proposals to address excess transmission costs.
For more information and program specifics, visit PG&E’s website.
The CPUC recently implemented some changes to the RAM program--see Allison Smith's recent blog entry for details.
On February 24, 2012, the U.S. Army Engineering & Support Center issued a draft request for proposals for renewable and alternative energy (the “Draft RFP”). Since posting our initial blog and Energy Law Alert, we have received a number of inquiries about the details of the solicitation. Below are answers to some of the most frequently asked questions.
Before we get to the questions, however, we wanted to remind everyone of the Climate Solutions event entitled “Mission Critical: Clean Energy and the U.S. Military” that will be held at 600 University Street in Seattle from 4:30 to 6:30 p.m. tomorrow. The event will be hosted by David Benson, an energy and clean tech partner in our Seattle office. We look forward to seeing you there.
Q1: Is this the actual RFP?
Q2: When will the Army issue the final RFP and what form will it take?
A2: The Draft RFP does not set a date for release of the final RFP, which will take the form of a Multi-Award Task Order Contract (the “MATOC/Final RFP”). For those unfamiliar with the MATOC process, it is very important to understand four fundamental things: (1) the MATOC will not likely offer the opportunity to bid on any specific project (i.e., a “seed project”) because the Draft RFP covers multiple technologies, (2) the Army will grant multiple awards under the MATOC, (3) awards granted under the MATOC give awardees the right to bid on individual Task Order contracts issued by specific facilities for specific projects (e.g., a Task Order for a 10 MW solar PV project at Joint Base Lewis-McChord in Washington), (4) parties that are not awardees in the MATOC process may not bid on these Task Orders. Thus, a developer must be an awardee under the MATOC/Final RFP in order to have the right to bid on individual project development opportunities. Before issuing the MATOC/Final RFP, the Army will need to complete its review of all of the comments that it receives by the March 21 deadline. At some point after the MATOC/Final RFP is published, the Army will host a pre-proposal conference in Huntsville, Alabama where participants will hear presentations regarding the program, the scope of work, contractual considerations, and small-business considerations.
Q3: Is the Department of Defense really mandated to procure 25% of its electricity from renewable resources by 2025?
A3: No. Section 2852 of the National Defense Authorization Act of 2007 (Pub. L. No. 109-364) codifies the Department of Defense’s (“DoD”) voluntary goal to produce or procure 25% of its total electricity consumption from renewable energy sources by 2025. This is not a Congressional mandate; however, the DoD is taking the goal very seriously. On August 10, 2011, the office of the Assistant Secretary of the Army for Installations, Energy & Environment (“ASA IE&E”) issued an information paper announcing the formation of the Energy Initiatives Office Task Force (“EITF”). The job of the EITF would be (and now is) to serve as the central managing office for large-scale Army renewable energy projects. In that information paper, the Army estimated that an investment of up to $7.1 billion over the next 10 years would be required to procure 2.1 million megawatt-hours (“MWh”) annually to meet Army goals and federal mandates, and to provide enhanced energy security. The Draft RFP is the next step in meeting those objectives
Q4: What quantities of generating capacity, in installed megawatts (“MW”), is the Army looking to procure through power purchase agreements (“PPA”) or equivalent contracts in each of the four categories (wind, solar, biomass, geothermal)?
A4: The Draft RFP sets out specific quantities of power, in total kilowatt-hours (“kWh”) that the Army intends to procure through each of four types of contracts: (1) Solar PPA, (2) Wind PPA, (3) Biomass PPA, and (4) Geothermal PPA. The Draft RFP also states that applicants are to assume the period of performance of those contracts is 30 years. If the proposed procurement quantities are to be delivered over 30 years, and assuming a range of capacity factors for each technology type, we anticipate that the total installed MW of each to fall somewhere in the following ranges:
Assumed Capacity Factor
Projected Total Installed Capacity (MW)
31.7 - 47.6
85.6 - 171.2
144.6 - 180.8
43.5 - 50.7
We note that the total procurement quantity (37.5 million MWh), if delivered in equal amounts over 30 years, would yield an annual procurement of 1.25 million MWh. This number is slightly more than half of the annual procurement that the ASA IE&E, in its August 10, 2011 information paper, estimated would be required to meet the Army’s renewable energy needs.
Q5: Is there a minimum or maximum project size?
A5: The Draft RFP does not specify project sizes, only the aggregate procurement quantity for each technology type. The MATOC/Final RFP, when released, will result in multiple indefinite delivery/indefinite quantity (“ID/IQ”) contracts with a portion of the awards reserved for small businesses (for details on what size projects are reserved for small businesses, see our February 28, 2012 blog or February 29, 2012 Energy Law Alert). The capacity within these ID/IQ contracts (e.g., the 1.5 million MWh capacity proposed for solar) will be shared using the fair opportunity process (a procedure under federal acquisition law) subject to a few restrictions. Specific project sizes, specific site requirements, and government-specific facility requirements will be specified by individual facilities in their Task Order requests for proposals that will be issued against the MATOC.
Q6: Where can a project be located?
A6: Projects may be located on “any federal property located within the Continental United States including Alaska, Hawaii, territories, provinces or other property under the control of the United States Government” for the period of the contract, or “on any properties available for use by the [developer] that are in the proximity of the . . . federal property” to which the electricity will be delivered. Although this response sounds like “anywhere,” individual facility Task Orders may set out specific site requirements and Government-specific facility requirements that could impact the facility’s location.
Q7: Does the Army want to buy renewable energy facilities that developers build for it?
A7: No. The Army wants to enter into long-term PPAs or equivalent contracts only. Developers will be responsible for all aspects of operating and maintaining the facilities.
Q8: Can a developer sell the energy to the Army and keep the renewable energy credits (“RECs”)?
A8: No. Army policy currently requires that RECs “resulting from the renewable energy generated on-site to remain with the Government.” What constitutes “on-site” is unclear, however. Projects may be located on “any federal property” or “on any properties available for use by the [developer] that are in the proximity of the . . . federal property.” Because the Draft RFP specifically states that it is the government’s intent to use the RECs to meet its renewable energy procurement target, we expect that all individual contracts will require that the government receive the RECs. However, prospective bidders may wish to seek confirmation of this point in comments submitted to the Army.
Q9: What types of facility qualify as “biomass”?
A9: “[A]ll technologies that utilize organic material to generate a fuel or energy such as, but not limited to, Biomass-to-Power, Waste to Energy, Refuse Derived Fuels, bio-fuels, etc.” Due to the variability in available waste streams and the type of system required to convert the material to a usable form of energy, the technology-specific requirements will be provided in each individual Task Order request for proposals.
Q10: Can technologies other than solar, wind, biomass, and geothermal be bid in?
A10: The Draft RFP is unclear on this point. The draft sets out specific procurement quantities only for solar, wind, biomass, and geothermal technologies. However, Section C.4.h. defines “[a]lternative energy technologies” to mean “all other future renewable and current and future alternative technologies . . . [which] may include such items as fuel cells, ground source heat pumps, thermal recovery systems, ocean oscillation power generation systems, energy storage, batteries, micro-grids, etc.” The draft RFP also has a very broad definition of “renewable energy,” and it explicitly contemplates the possibility that combined heat and power or “alternative fuels” may be implemented. We recommend that developers of technologies that do not fit into one of the four prescribed procurement buckets file comments with the Army by the March 21 deadline asking whether the procurement will be strictly limited to the four technologies for which it has established kWh targets.
Q11: Could a bidder propose a cutting-edge technology?
A11: Probably not. The Draft RFP refers to “Commercial Technology,” which “typically means a technology in general use in the commercial marketplace in the United States at the time the Task Order RFP is issued.” The Draft RFP goes on to describe technologies “in general use” as those that have been used in three or more commercial projects in the United States in the same general application as in the proposed project, and each of those projects has been in commercial operation for at least five years. If a bidder has any doubt about whether the Army would view a given technology as commercial, the question may be a good one to raise in the bidder’s comments.
Q12: What type of facilities is the Army targeting? Existing facilities? Greenfield development?
A12: Again, the Draft RFP is unclear on this point. While the document does not explicitly prohibit bids from existing renewable energy plants, the assumption appears to be that bids will come from facilities yet to be constructed.
Q13: What about National Environmental Policy Act (“NEPA”) compliance?
A13: To reduce as much risk as possible to developers, the government intends to complete the requirements for NEPA compliance, to the extent practicable, before the issuance of a Task Order request for proposals for a particular facility. The government also intends to do the following before the issuance of a Task Order: (1) collect and share site data; (2) consult with the local utility company and utility regulatory authorities to ascertain and share constraints, procedures, and costs associated with grid interconnection; and (3) obtain necessary federal, state, and local agency approvals where possible.
This week the California Energy Commission's PIER program released a comprehensive report titled "2020 Strategic Analysis of Energy Storage in California." The report discusses the state of technology, policy, barriers to deployment and suggested reforms. A staff workshop related to the report will be held on November 15, 2011 at 10 am at the CEC located at 1516 Ninth Street, Sacramento, California 95814 (webex also available).
The Stoel Rives Energy Development group is proud to announce the publication of the third edition of Lex Helius: The Law of Solar Energy.
In the wake of recent state and federal policies and incentives, investment in solar energy has become increasingly competitive. Accordingly, our energy team desires to provide our readers with the most up-to-date solar market insights. The authors, contributors and editors of Lex Helius have done just that.
Lex Helius analyzes critical issues that solar power project developers confront during the development process, including real property acquisition, regulatory and permitting requirements, interconnection issues, power purchase agreements, financing, and construction contracting. The guide also discusses federal and state incentives available to solar projects, financing structures, market conditions, and sale and transfer of renewable energy credits.
The new edition of Lex Helius will be available at the Stoel Rives booth (#3043) at the Solar Power International 2011 conference in Dallas, October 17-20, 2011.
The guide can also be downloaded, along with the entire Stoel Rives “Law of” library at www.stoel.com/lawofseries.
With the end of 2011 drawing near, many renewable energy developers are seeking to qualify their projects for the Section 1603 cash grant. Developers continue to try to understand the complexities surrounding the grant requirements, especially the determination of when projects are considered to have met the “beginning construction” requirement.
On August 24, I'll moderate a Law Seminars International (LSI) Telebriefing on Section 1603, featuring Stoel Rives partner Greg Jenner and Victoria McDowell, the Compliance Program Manager, Section 1603 Program, U.S. Department of the Treasury.
The TeleBriefing will take place from 10 AM – 11 AM Pacific Time/ 1 PM -- 2 PM Eastern Time. During the briefing, attendees will learn how to meet the “beginning construction” test and receive clarification from the Treasury Department on project requirements. We'll also discuss the fate of projects that fail to qualify for the cash grant.
Registration is available online through Law Seminars International.
The Electric Power Research Institute (“EPRI”) recently released the smart grid white paper: “Needed: A Grid Operating System to Facilitate Grid Transformation.” The white paper dissects the first two distinct phases in grid operating systems and then calls for the creation of the 3rd. In order to support the “tectonic changes” already happening in the power system, EPRI offers to help fund, facilitate and catalyze the development of the architecture and functional specifications for Grid 3.0. Without this development, EPRI argues, “the full value of a lot of individual technologies like electric vehicles, electricity energy storage, demand response, distributed resources, and large central station renewables such as wind and solar will not be fully realized.”
In the Grid Operating System 1.0 as dubbed by EPRI, Edison and Westinghouse first faced the challenge of balancing generation against load in primitive grid operating systems of the 1800s. Grid Operating System 2.0 came about as a result of several evolutionary steps in the power markets including: 1) the transition to balancing multiple generators with a network of loads, 2) the coordination of the several large interconnected power grids across the U.S. in the 1960s, and then more recently 3) the introduction of wholesale electricity markets which shifted systems from managing dozens to hundreds of transactions a day. The Grid Operating System 2.0, or energy management system, was a computer-based operating system developed to manage supply and demand between many market participants, multiple bulk power generators and many interconnections. While Grid 2.0 became quite sophisticated and allowed system operators to monitor and control the system in real time, it was developed for a society dependent on central station power plants and primarily a one-way flow of electricity on the grid.
Although tomorrow’s power system will still depend heavily on central station power plants, it will also increasingly include renewable generation, electric energy storage, distributed generation, electric vehicles, and the increasing deployment of smart meters, phasor measurement units, sensors and electronic communication. Namely tomorrow’s grid will need to manage a widely distributed system with many disparate components, increasing participants and a two-way flow of electricity and information.
The report calls for the development of the system architecture to be based on open-source design and outlines key components that it must include:
- Hierarchical geospatial data acquisition and maintenance architecture;
- The integration of traditional utility operating data with non-traditional data such as smart meters;
- Advanced protection and control functions to prevent degradation;
- State measurement and look ahead capability;
- Cyber security;
- Technology to enable active participation by consumers;
- The ability to accommodate all generation and storage options
- Cost benefit tradeoffs to consumers by allowing bids for competitive services;
- Asset optimization;
- The capacity to self-heal or respond to and mitigate system disturbances;
- Infrastructure more resilient to attack and natural disaster; and
- The capability to effectively integrate local energy networks.
The report authors argue that the industry has a unique opportunity to develop this system through the collaborative engagement of stakeholders, rather than regional transmission operators separately contracting with different vendors. EPRI offers to engage a diverse set of stakeholders, including some of the best minds in the industry, to develop a 24-month vision of the systems architecture and requirements.
Visit our website for the latest calendar of events. Upcoming highlights include:
Compressed Air Energy Storage (CAES): Lessons Learned from Natural Gas Tolling
July 21 – WEBINAR
Stoel Rives Partners Bill Holmes, Ed Einowski and Marcus Wood will serve as the exclusive faculty this 90-minute webinar, part of the “Law of Renewable Energy Series” presented by Stoel Rives and EUCI.
Renewable Energy in the Pacific Northwest
August 4-5 – Seattle, WA
Join partners Steve Hall, Tim McMahan (conference co-chair) and Michael O'Connell for sessions on "Getting Renewable Power to Market," “Working with Tribes: Lessons from Case Studies in Their Roles as Developers and Commercial Partners,” and “Best Practices for Engaging with Leasing and Permitting Agencies,” among others.
GEA National Geothermal Summit
August 16-17 – Reno, NV
Attorneys John McKinsey, Jennie Bricker, Tami Boeck, Michael O'Connell and Allison Smith are heading to Reno, Nevada for the first annual National Geothermal Summit, presented by the Geothermal Energy Association. Stoel Rives is proud to be a Gold Sponsor at this event.
Renewable Energy in the Midwest States: New Policy, Business and Legal Developments
August 25-26 – Minneapolis, MN
Join Minneapolis-based partners Mark Hanson and Greg Jenner for sessions on "Special Legal Issues for Biofuels Development," and "Commercialization and Financing Structures: What Will Future Deals Look Like?"
National Hydropower Association Alaska Regional Meeting
August 30-31 – Girdwood, AK
Greg Jenner will speak on tax incentives for development of renewable energy, development alternatives, and DOE funding.
Utility Scale Solar Summit 2011
September 13-15 – San Diego, CA
Stoel Rives is proud to be a Platinum Sponsor at this Infocast event, and serve as Chair of the “Solar Project Development Briefing.” Join attorneys Howard Susman, Morten Lund, Greg Jenner, Ed Einowski, Jennifer Martin, David Quinby and Seth Hilton in sunny San Diego. We are pleased to offer a 15% registration discount, use code 115321.
September 20-22 – Washington, DC
Visit Stoel partners Bill Holmes, Ed Einowski and Graham Noyes at booth #819 in the Exhibit Hall. We’ll also be participating in sessions covering wind and energy storage topics.
You’ll see Stoel Rives sponsoring and/or speaking at Turbines, Towers & Vessels in Rhode Island, Northwest & Intermountain Power Producers Coalition (NIPPC) Annual Meeting in Washington, Transmission West Summit in San Diego, ACORE’s REFF West in San Francisco, CanWEA Annual Conference in Vancouver, Solar Power International in Dallas, and many more this fall.
The Montana Supreme Court has reversed a December 2010 district court decision that found that the developers of the Montana-Alberta Tie Line merchant transmission project do not possess eminent domain authority under Montana law and therefore could not take private land from a nonconsenting landowner. In its reversal, the state Supreme Court cited House Bill 198 that passed during the 2011 Montana legislative session, which bill grants eminent domain authority to any person issued a certificate under the state's Major Facility Siting Act. The Supreme Court noted that because the legislation applies retroactively to persons issued a certificate after September 30, 2008, and the MATL developers received their certificate on October 22, 2008, HB 198 now expressly provides eminent authority to MATL's developers. The district court must now reconsider its earlier decision in light of HB 198.
On a related note, Concerned Citizens Montana is driving a citizens' referendum to repeal HB 198. If the petition receives enough signatures, Montana voters will decide HB 198's fate in 2012.
On June 3, the California Energy Commission (“CEC”) issued a Notice of Intent to Implement 33 Percent Renewables Portfolio Standard (“RPS”). The new 33% RPS was signed into law by Governor Brown on April 12, 2011. The legislation for the first time expanded the RPS to publicly-owned utilities (“POU”), and tasked the CEC with, among other things, monitoring POU compliance with, and developing regulations to enforce, the new 33% RPS.
The Notice also encourages all regulated entities, including POUs, to participate in the California Public Utilities Commission (“CPUC”) proceeding addressing the new RPS, Rulemaking 11-05-005, “so that, where appropriate, the [CEC] and CPUC may coordinate program development.”
The Notice states that the CEC will implement the new RPS through two processes: (1) amending the RPS Eligibility Guidebook through the existing amendment process so that it conforms with the new legislation, and (2) initiating a rulemaking proceeding to address POU compliance. Although the new RPS legislation set a target date of July 1, 2011 for the CEC to adopt regulations for POU compliance, pending legislation (Senate Bill 23) may extend that deadline to July 1, 2012.
On June 6, the CEC also noticed a staff workshop for June 17, 2011 to introduce the scope and a tentative schedule for the rulemaking proceeding concerning POU compliance, and to solicit comments from interested stakeholders. Written comments may also be submitted to the CEC by July 1, 2011.
Washington UTC Issues Important Policy to Determine Eligibility of Renewable Energy Resources Under State EIA
For those interested in qualifying energy projects as “eligible renewable resources” under the Washington Energy Independence Act (EIA), the Washington Utilities and Transportation Commission (WUTC) issued on June 7, 2011 an important new policy statement that provides processes by which utilities and developers may obtain either a non-binding or binding opinion regarding the eligibility of those resources. Most importantly, these determinations may be obtained while projects are still in development, thereby easing the way for financing, formation of partnerships, and investments in research and development.
First, the Commission Staff has joined with staff of the Department of Commerce to establish an informal technical working group to provide non-binding technical analysis for guidance as to whether their proposed technology or resource is an “eligible renewable resource” under the EIA. Because the opinions of the Commission Staff are not binding on the Commission, and the Auditor, not Commerce, determines compliance for COUs, the technical working group will only provide technical analysis, not a binding legal opinion.
Second, for those entities that seek a more formal, binding opinion on the eligibility of their proposed project, there is an option under the Washington Administrative Procedure Act. Under the Act, any person may petition the Commission for a declaratory order with respect to the applicability to specified circumstances of a statute or rule enforceable by the Commission, such as RCW 19.285 or WAC 480-109-007. Persons with standing to file such petitions may include investor-owned utilities and entities that propose to sell projects, project output, or RECs from projects to investor-owned utilities.
For more information, see the full policy statement from the WUTC website or contact any of the Seattle-based Stoel Rives energy attorneys listed below:
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.
Stoel Rives attorney Jay Eckhardt will give a presentation on April 21 addressing the proposed new FTC Green Guides. The presentation will focus on new FTC guidance and interpretations concerning renewable energy claims and carbon offset claims, as well as claims concerning renewable materials, and the use of green seals and certifications. Going beyond the Guides - the presentation will also review the broader enforcement environment. The program is sponsored by the Sustainble Future and Antitust & Trade Regulation Sections of the Oregon State Bar, and the Green Business Initiative at the University of Oregon School of Law.
For event details and logistics, click here. Admission to the live event in downtown Portland, Oregon is free. A telephone number and passcode will be provided for attendees unable to attend in person.
For more information on reguation of environmental marketing, see the Stoel Rives Green Guides Resource Page.
Renewable Energy Projects: Keys to Drafting Power Purchase Agreements
Thursday, March 31, 2011
1:00 – 2:00 p.m. (Eastern)
Join Stoel Rives Partner, Bill Holmes, as he presents this exclusive, 60-minute webinar on Thursday, March 31.
The power purchase agreement (PPA) is the most critical component of a renewable energy project, and essential to project finance. Knowing how to properly draft and negotiate PPAs will not only alleviate tension between buyer and seller, but will protect your client by equitably allocating future risks that can arise in this ever-changing business and legal environment. This webinar also features a live Q&A session, where you can get expert answers to your specific PPA questions.
Key highlights and learning objectives:
• How to draft and negotiate PPAs: critical terms and provisions for the buyer and seller
• Keys to allocating risks of RPS compliance, curtailment, change of law, and more
• Strategies to proactively address common disputes between developers and purchasers
• Key considerations for drafting dispute resolution clauses for PPAs
This crucial webinar is not to be missed. Click here to register.
FERC Seeks Comments on Regulatory Reforms for Merchant Transmission and Generator Interconnection Capacity
The Federal Energy Regulatory Commission ("FERC") is seeking comments from energy industry participants on regulatory reforms that address how FERC should regulate merchant transmission development and generator interconnection (or lead) lines. Specifically, FERC desires comments on how it should balance the requirements of open access transmission and the needs of project developers.
Merchant transmission and generator interconnection issues have caused a surge of contested FERC proceedings in recent years. In 2009, merchant transmission developers, for instance, were granted the ability to place transmission capacity with anchor tenants prior to making capacity available through an open season. The anchor tenant model was a significant shift in merchant transmission regulation, but, to date, merchant transmission developers have struggled to maintain meaningful anchor tenant arrangements. As a result, more recent filings at FERC have pushed the boundaries of the anchor tenant model, and FERC now seeks to determine through public comment how its open access policies could be further changed to incentivize merchant transmission development.
Generator interconnection lines have also been a popular subject at FERC of late—specifically whether and how interconnection line owners should be granted priority rights to interconnection capacity. This issue is particularly relevant for renewable energy developers who are planning to build generation projects in phases and will rely on having interconnection capacity available to serve later phases when they come online. To maintain priority over competing interconnection requests, FERC has asked generation developers to show they have established milestones for developing the generation phases that seek priority (and to demonstrate progress toward meeting those milestones). Such filings are generally confidential, and thus interconnection line owners from the outside looking in have not been given much insight into what is required to establish priority. FERC's precedent on the issue has also created dissimilar treatment of interconnection owners who are affiliated with open access transmission providers.
On March 15, 2011, FERC staff held a technical conference where the invited speakers shared a wide range of opinions on these issues. With respect to merchant transmission, speakers supported (i) creating a new section to the Open Access Transmission Tariff ("OATT") that would specify the rules for developing merchant transmission and the ancillary services obligations of those developers, (ii) placing AC merchant lines under existing incumbent transmission provider OATTs, (iii) allowing more incentives for anchor tenants, and (iv) having FERC back away from regulating these projects in their early stages. Those who spoke about priority to interconnection capacity shared opinions that included (x) requiring interconnection developers to give public notice of their development intentions and allow others to bid on capacity (a "speak now or forever hold your peace" approach), (y) requiring all interconnection owners to develop and maintain an "OATT light"—a pared down version of the full OATT, and (z) advocating for less regulation of interconnection lines altogether. FERC staff also questioned whether and how FERC should regulate transmission service over interconnection facilities that are shared or jointly owned (e.g., through a Joint Ownership Agreement, Shared Facilities Agreement, or Common Facilities Agreement) directly by generation developers, or indirectly through an affiliate that owns and operates an interconnection line.
Written comments on these issues are due to FERC no later than April 21, 2011.
The Oregon Department of Fish and Wildlife (“ODFW”) posted the final draft rules and draft conservation strategy related to the greater sage-grouse. After years of negotiation and numerous public meetings on the ODFW’s approach, the final drafts are open for public comment. On April 22 they will be presented to the Fish and Wildlife Commission for consideration for adoption.
In March of last year the US Fish and Wildlife Service (“USFWS”) determined that protection of the greater sage-grouse was warranted under the federal Endangered Species Act (“ESA”) but was precluded from listing by the USFWS’s need to take action on species facing more immediate or severe threats. The species is now a candidate for listing, but it is uncertain if or when a formal ESA listing may occur. Oregon, through ODFW’s approach to sage-grouse conservation, joins other western states (e.g., Wyoming) in taking preventative state action, at least in part, to preclude the need for an eventual federal listing.
Both the USFWS determination and the ODFW’s conservation strategy identify energy, and renewable energy development specifically, as posing threats to the specie. The ODFW’s conservation strategy points out that there is great potential for geo-thermal, solar and wind energy in most sage-grouse regions in Oregon, but the same windswept ridges that make for great wind facility siting, for example, may also be important sources of accessible winter forage for sage-grouse.
Among other things, the draft rule would formally adopt the ODFW’s Core Area Approach to Conservation and directs the ODFW to maintain maps of sage-grouse core areas. The rule stops short of directly equating sage-grouse core areas with habitat categories under the Fish and Wildlife Habitat Mitigation Policy. By referencing the ODFW’s conservation strategy, the rule instead outlines micro-siting guidance for development projects (e.g. a wind facility) proposed in identified core areas. As part of the siting process, the ODFW recommends that sage-grouse habitat in core areas be classified as “irreplaceable, essential habitat” and impacts on such Habitat Category I areas avoided. In past iterations of the core area maps, much of eastern Oregon, and southeastern Oregon in particular, was identified as being home to sage-grouse core areas.
As we approach the beginning of a new year, financing options for energy projects (both conventional and renewable) under the current economic conditions continue to be a challenge and a focal point for the energy industry. In order to gear up for financing opportunities in 2011, I, along with my colleagues Marcus Wood, Graham Noyes and Adam Kobos, will be heading to the Big Easy for Projects & Money 2011. Stoel Rives is proud to be a Gold Sponsor at this engaging conference, where Capital Providers, Project Developers and other dealmakers in the financing community will gather together to share information, discuss deal leads and capitalize on new market opportunities.
Projects & Money incorporates its comprehensive market updates with networking opportunities, introductions to new project developments, and interactive multimedia components. Presentations from industry professionals provide an inside look at some of the most ground-breaking deals of 2010, examine the trends they reveal, and provide a better understanding of what it takes to make deals happen.
Stoel Rives attorney Graham Noyes will present "DOE's Loan Guarantee Program: Crucial Financing Mechanism or a Costly Distraction?" on Tuesday, January 11, at 1:30 p.m. during the Pre-Summit Briefing.
On Wednesday, January 12, Partner Marcus Wood will moderate the discussion panel, "Transmission Outlook," at 2:15 p.m. during Track II: Project Sector Outlooks.
Hope to see you there!
To learn more about the conference or to register online, please visit: http://www.infocastinc.com/index.php/conference/416
Projects & Money
When: January 11-13, 2011
Where: Harrah's New Orleans – New Orleans, LA
On Tuesday, December 7, 2010, U.S. Commerce Secretary Gary Locke, together with several other government agencies, announced a Renewable Energy and Energy Efficiency Export Initiative.
The Initiative brings together the Trade Promotion Coordinating Committee Working Group on Renewable Energy and Energy Efficiency, the Export-Import Bank of the United States, the Overseas Private Investment Corporation, the U.S. Trade and Development Agency, and the Office of the United States Trade Representative. This coordinated effort is the first of its kind.
The goal is to promote and increase renewable energy and energy efficiency exports as part of a cohesive program during the next five years. The U.S. Government plans to offer new financing products for exporters and facilitate market access, among other things.
See http://export.gov/reee for the report released on Tuesday by the Commerce Department.
The Oklahoma legislature passed three bills (H.B. 2973, S.B. 1787, and H.B. 3028) in 2010 that affect the renewable energy industry. Two have already gone into effect and the third will go into effect on January 1, 2011. A summary of each bill is included below.
The Oklahoma Wind Energy Development Act (the “Act”), H.B. 2973, becomes effective on January 1, 2011 and will be codified in Okla. Stat. tit. 17 §§160.11-17 (2010). The Act includes the following:
- Decommissioning: Decommissioning requirements apply to any wind energy facility entering into or renewing a power purchase agreement (PPA) on or after January 1, 2011. If energy is not being sold under a PPA, the requirements apply to wind energy facilities which commence construction on or after January 1, 2011. The requirements include:
- Restoration: Owners of a wind energy facility must remove wind energy equipment (to a depth of 30”) and restore land surfaces to substantially the same pre-construction condition (excluding roads) within 12 months of abandonment of a project or the end of the useful life of the equipment.
- Cost Estimate and Posting of Financial Security: After the 15th year of operation, facility owners must file a professional estimate of the decommissioning costs together with a financial security (either a surety bond, collateral bond, parent guaranty or letter of credit) to cover such costs. Those failing to so file may incur an administrative penalty of up to $1,500/day.
- Payment Statements and Access to Records: Any owner or operator making payments to landowners based on the amount of electrical energy produced is required to deliver a statement to the landowner, within 10 business days of payment, explaining the payment calculation and a means for the landowner to confirm its accuracy. Landowners have the right to inspect owner/operator records to confirm the accuracy of payments for up to 24 months following payment. Records must be made available for review within the state of Oklahoma.
- Insurance: Owners or operators are required to obtain commercial general liability insurance policy with limits consistent with prevailing industry standards (or a combination of self insurance and excess liability insurance policy), which name the landowner as an additional insured and certificates of insurance must be delivered to landowner prior to commencing construction of the facility.
No Severance of Wind and Solar Rights. Wind and solar right severance was restricted in another Senate bill out of the same session, Oklahoma S.B. 1787. The bill restricts the permanent severing of rights to the airspace above the surface estate for the purpose of developing and operating commercial wind and solar energy conversion systems. Thus wind and solar resource leasing arrangements (broadly defined to include easement and option arrangements) must be made with the legal owner of the surface estate. The bill confirms that wind and solar agreements run with the land and outlines provisions for recording the interest. The bill will be codified in the Okla. Stat. tit. 60 §820.1 (2010) and became effective July 1, 2010 .
15% Renewable Generation Capacity by 2015. The Oklahoma Energy Security Act (the “OES Act”), H.B. 3028, sets a goal that 15% of all installed electric generation capacity within the state be generated from renewable energy sources by 2015. Qualifying renewable energy resources include: wind, solar, photovoltaic, hydropower, hydrogen, geothermal and biomass (including crops, residues, animal waste, MSW and landfill gas). Demand side management can be used to meet up to 25% of the overall 15% goal. Notably the OES Act does not include any provision for the use of renewable energy certificates (RECs) to meet the goal.
Expand Transmission in SW. To better facilitate wind-energy development, the OES Act also directs the legislature to work with the Southwest Power Pool to develop a plan to expand transmission capacity in Oklahoma.
Develop Natural Gas and Add Fueling Stations. Noting the opportunity to develop Oklahoma’s abundant natural gas resources, the OES Act sets natural gas as the preferred choice for any new fossil fuel based electric generation capacity until January 1, 2020. It also sets a goal to develop public CNG fueling stations every 100 miles along the interstate highway system by 2015 and every 50 miles by 2025. The OES Act became effective November 1, 2010 and will be codified in the Okla. Stat. tit. 17 §§801.1-7 (2010).
On June 8, 2010, Utah Governor Gary Herbert launched a formal planning process for the Utah Energy Initiative. Over the past several months the members of the Utah Energy Initiative Task Force and various subcommittees have conducted public hearings and a series of meetings to gather input for purposes of drafting a 10-year strategic energy plan. The Energy Initiative Task Force issued a draft report on November 3, 2010. Written comments on the draft report are due by November 10, 2010 and should be submitted to email@example.com. A public hearing at which public comment will be accepted will be held on November 10, 2010 from 5:00 to 7:00 p.m., at the Senate Building (State Capitol complex east building), Room 215, Salt Lake City, Utah.
The energy plan outlined in the report contains the following themes:
- Economic Development and Energy Jobs
- Energy Development and Environment
- Energy Efficiency, Conservation and Demand-Response
- Transportation and Air Quality
- Transmission, Infrastructure and Transportation
- Developing and Applying Technology and Science
Summary of key points in the report:
- Economic Development and Energy Jobs:
- Conventional energy and mineral resources have historically served as the backbone of Utah's energy production -- however, Utah also possesses an array of renewable resources
- The study raises both a concern and an opportunity: energy-focused counties, and by extension the state, need to have strategies in place to adequately balance their reliance on energy as an economic and employment driver
- As the cost of renewable energy continues to decline, regulatory reforms which encourage renewable energy development and use, once the cost tipping point is reached, will grow Utah's economy
- Utah must show an unwavering commitment to the future energy economy that includes balancing fossil fuel development with development of renewable and alternative energy
- Energy Development and Environment:
- Utah's energy portfolio should include fossil fuels, alternative fuels, renewable resources, and energy efficiency
- Future energy projections place significant demands on natural gas production in Utah and may require importation of additional natural gas supplies from neighboring states
- Electricity generation in Utah is undergoing a transition from predominantly coal-fired generation to a more diverse portfolio of natural gas and renewable resources
- Utah has vast untapped renewable energy potential, but policy, economic, and regulatory barriers currently impede widespread market adoption
- Nuclear power generation deserves additional evaluation, but will not be available for electricity generation in this 10-year strategic plan
- Energy development can occur in concert with protection of our air, land, water, and wildlife resources
- Energy Efficiency, Conservation and Demand-Response:
- Models and studies recognize energy efficiency as a cost-effective energy resource
- Constructing buildings to current or above energy code standards reduces the occupant's energy costs and puts downward pressure on utility rates by deferring investment in new energy generation that would otherwise be needed to meet rising demand
- A barrier to widespread adoption of energy efficiency and conservation is the lack of public awareness and understanding about energy, energy-efficiency technologies, practices and programs
- In many situations, incentives are sufficient to encourage businesses and residential consumers to pursue individual energy-efficiency measures, but barriers remain for obtaining significant energy savings on a whole-house or whole-building basis
- New home and new commercial building design and construction should be energy efficient
- Strategies are needed to advance energy efficiency in Utah's industrial sector
- Utah's regulatory framework is most effective in focusing its efforts on reducing overall energy consumption, managing peak loads through best practices, and supporting energy-efficiency and demand-response programs, consumer education, and utility rate design to promote energy efficiency and conservation
- Transportation and Air Quality:
- Utah needs to improve vehicle technology/efficiency and alternative fuels (refueling) infrastructure
- Fuel consumption and air pollution can be reduced through more efficient traffic flow, using engineering and technology to effectively manage all modes of traffic and maximizing the effectiveness of our transportation systems
- Changing behavior is difficult, but communication strategies and tactics that provide awareness and education, supported by incentives, marketing and promotions can succeed in reducing unnecessary travel, particularly the number and duration of solo-driver trips
- Assist communities in choosing land-use options that reduce per-capita energy consumption, improved air quality, and make it easier for people to get from one place to another
- Changes in fuel prices can change behavior
- A better balance of regional travel choices between auto, public transit, bicycling and walking is imperative
- Transmission, Infrastructure and Transportation
- Electric and natural gas transmission is a key part of any state's overall energy policy, but it is the most difficult component of the energy delivery system to construct
- The current lack of transmission capacity in Utah could prevent the state from reaping the economic and environmental advantages of developing renewable energy projects within our borders
- With the projected increase in travel and population, there is a need to expand the state transportation system, as defined in the Utah Long Range Plan
- Need to develop a state level position to propose alternatives to current regulation and funding sources to encourage transmission line and pipeline construction in areas that promote economic development or renewable resource development
- The state needs a clear process for siting and permitting transmission infrastructure projects as part of its State Energy Plan
- Various linear infrastructure projects create competition for scarce corridors that creates a greater impact on citizens
- Public interest multiple infrastructure corridors cannot be secured without funding and right-of-way acquisition
- Infrastructure should be built in a way to minimize environmental and social impacts
- Encourage strong energy efficiency, demand-side management measures and distributed generation to minimize the need to build additional transmission
- Developing and Applying Technology and Science:
- Enhance the state's energy research facilities and continue to attract world-class researchers to the state
- Align the state's main research universities - University of Utah (U of U), Utah State (USU) and Brigham Young University (BYU) -- into a powerful energy research and development triangle
- Connect this "research triangle" with industry, national laboratories and regional universities to effectively commercialize new energy technologies and develop Utah's conventional, alternative and renewable energy resources
- Empower Utah's education system to expand its ability to train, attract and retain the skilled talent necessary to grow Utah's energy economy
- Utah's energy industry research and development leads in such fields as geomechanics, new material technology and clean coal technologies
- The eight Utah College of Applied Technology (UCAT) campuses, community colleges, and other higher education institutions offering energy-related technical training, fill an essential role in developing and maintaining a technically-trained Utah workforce
The Idaho Public Utilities Commission (PUC) has issued a straw man proposal that lays out plans to revise the surrogate avoided resource (SAR) methodology used to calculate avoided cost rates for wind generators. The "avoided cost" is the price paid to Qualifying Facilities that are selling power to Idaho utilities under the Public Utility Regulatory Policies Act (PURPA).
The PUC included six cost categories in the wind SAR: capital costs; fixed and variable O&M costs, transmission costs; tax credits; wind integration; and forecasting costs. The PUC assumed transmission costs of $1.90/kw-month, production tax credits at $0.021/kWh, a $0.00 REC premium, and wind integration at $6.50/MWh. With those inputs and others, the PUC arrived at 20-year levelized wind rates for a 2010 project as follows:
|Utility||Wind SAR||Gas SAR|
The PUC proposed that where the Wind SAR is higher than the Gas SAR, a wind developer may choose whether to sell power at the wind or gas rate. If the wind developer opts for the latter, it retains ownership of RECs. If the wind developer opts for the former, RECs go to the utility. However, when the Gas SAR is higher than the wind SAR, wind developers would only be eligible for the wind SAR, meaning that the utility would automatically receive RECs under a PPA. Non-wind projects would be entitled to the gas SAR when the gas rate is higher, and RECs would remain with developers.
The PUC is accepting written comments on the straw man proposal until November 23, 2010.
Sens. Jeff Bingaman (D-NM) and Sam Brownback (R-KS), with Sens. Byron Dorgan (D-ND), Susan Collins (R-ME), Tom Udall (D-NM), Mark Udall (D-CO) and others joining, announced today that they will introduce a stand-alone Renewable Electricity Standard (RES) bill. The bill will require sellers of electricity to obtain the following milestones in adding renewable energy resources or energy efficiency:
2012-2013 - 3%
2014-2015 - 6%
2017-2018 - 9%
2019-2020 - 12%
2021 - 2039 -15%
Renewable resources that can be used toward compliance will include wind, solar, ocean, geothermal, biomass, landfill gas, incremental hydropower, hydrokinetic, new hydropower at existing dams, and waste-to-energy. For utilities that are unable to meet their RES targets, the bill proposes to charge a compliance payment at a rate of 2.1 cents per kilowatt hour, with such amounts then being used for renewable energy development or to offset consumers' bills.
A first step, yes. But a small one.
Follow the link to learn more:
I am proud to announce the publication of two white papers that focus on the issues of transmission development and broader issues facing renewable energy. These white papers were written by attorneys at Stoel Rives and were prepared at the request of the Energy Foundation, a partnership of major foundations interested in sustainable energy. The Energy Foundation was launched in 1991 by The John D. and Catherine T. MacArthur Foundation.
Both papers focus on the challenge of developing U.S. transmission infrastructure and capacity, particularly in the West. In The Way Forward: Why Transmission Right Sizing and Federal Bridge Financing Hold the Key to Western Renewable Resource Development, the authors (Marcus Wood, Pam Jacklin, and myself) consider economy-of-scale and environmental impact concepts and their application to the sizing of transmission facilities. The authors also argue for a significant overhaul of current financing and cost recovery mechanisms in order to provide a pathway for greater development of renewable energy resources. You can download a copy of The Way Forward by clicking here.
In Uncork That Transmission Bottleneck: A Legislative and Technological Roadmap for Tapping the West's Vast Renewable Energy Resources, the authors examine broader issues affecting renewable energy development. This white paper proposes a number of policy goals that could drive transmission development in the West and on a national level. You can download a copy of Uncork That Transmission Bottleneck by clicking here.
We hope that you enjoy these papers.
On August 12, 2010, Energy Secretary Steven Chu announced a new loan guarantee solicitation for renewable energy manufacturing projects. The Commercial Technology Renewable Energy Manufacturing Projects solicitation (the "Solicitation") is supported by the American Recovery and Reinvestment Act (the "Recovery Act") through Section 1705 of the Loan Guarantee Program and is focused primarily on providing new green energy jobs and the deployment of renewable energy technologies that reduce greenhouse gas emissions.
The solicitation specifically identified "Eligible Projects" to include renewable energy manufacturing projects or facilities located in the United States that:
- Manufactures Commercial Technology products that support the generation of electricity or thermal energy from renewable resources;
- Has Project Costs greater than seventy-five million dollars ($75,000,000);
- Is able to obtain a credit rating equivalent of "BB" or better from Standard & Poor's or Fitch, or "Ba2" or better from Moody's, as evaluated without the benefit of any DOE guarantee or any other credit support;
- Will create or retain jobs in the United States; and
- Otherwise meets all applicable requirements of Title XVII, including Section 1705, the Solicitation, including all attachments and all applicable requirements of the Recovery Act.
The Solicitation also provided, for illustrative purposes, examples of the types of Eligible Projects that may qualify, which include the following:
- wind energy component or systems manufacturing facilities;
- solar photovoltaic (PV) component or system manufacturing facilities;
- concentrated solar power component or system manufacturing facilities;
- hydropower component or system manufacturing facilities;
- geothermal component or system manufacturing facilities;
- other geothermal power cycle component or system manufacturing facilities; or
- ocean wave, tidal, and river current (e.g. hydrokinetic) component or system manufacturing facilities
Of primary importance for any potential applicants under this Solicitation is the timeline for making application and the requirement that projects commence construction no later than September 30, 2011. Specifically, the Solicitation consists of a two-step process with rolling deadlines. The first Part I deadline is September 30, 2010, and the first Part II deadline is November 30, 2010. Final Part I applications are due November 30, 2010 and final Part II applications are due January 31, 2011. Applicants are strongly encouraged to get their applications in early -- particularly in light of the commence construction deadline. In addition, the DOE will make available up to $750 million to pay the credit subsidy costs of loan guarantees issued through this solicitation.
It should be noted that the DOE recently implemented a number of improvements to its loan guarantee program that will help facilitate a more efficient application process through the launch of a "user-friendly" online application portal. The application portal can be accessed directly from the DOE's loan guarantee program website. According to the DOE, this on-line application system is designed to:
- guide the applicant through the development and submission of a loan or loan guarantee application;
- assist the applicant in determining basic program eligibility;
- assist the applicant in preparing an application suitable for DOE review;
- highlight areas of the applicant’s proposal that may require additional information; and
- provide the applicant with guidance on how to prepare a stronger application.
With a swift 13-page order today, FERC rejected Puget Sound Energy’s proposed wind integration rate, stating that the rate was not shown to be “just and reasonable” under section 205 of the Federal Power Act. “Changing system conditions, such as an increasing amount of wind generation described by Puget, present unique challenges that may require novel solutions. However, such solutions must fit the problems they are intended to solve, and the Commission must ensure that ratepayers are protected from rate proposals—such as the one proposed by Puget here—that are not shown to be related to the actual, demonstrable costs incurred in providing service.”
To determine the rate, Puget had used a proxy rate calculated using hypothetical capacity costs from a hypothetical generator. Puget chose its proxy from a group of five commercially available peaking units in the area. FERC stated that although it will allow for the recovery of legitimate and verifiable opportunity costs, Puget’s proposed rate was not a “reasonably accurate representation of the opportunity costs Puget incurs” in providing wind integration service. Because FERC cannot permit Puget to over-recover its costs in providing the service, the rate was rejected. Puget will undoubtedly be back to FERC with a rate that attempts to be consistent with FERC’s order.
Click here to read the order.
On June 30, 2010, the U.S. Department of Energy ("DOE") launched its Technology Commercialization Portal (the "Portal"). The Portal is an online resource that provides a mechanism for investors, entrepreneurs and companies to identify new technologies coming out of DOE laboratories and other participating research institutions. Relevant technologies include:
- Advanced Materials
- Biomass and Biofuels
- Building Energy Efficiency
- Electricity Transmission and Distribution
- Energy Analysis Models, Tools and Software
- Energy Storage
- Hydrogen and Fuel Cell
- Hydropower, Wave and Tidal
- Industrial Technologies
- Solar Photovoltaic
- Solar Thermal
- Vehicles and Fuels
- Wind Energy
The Portal contains marketing summaries about the various DOE technologies that are available for licensing. Each marketing summary describes a technology's applications, advantages, benefits and state of development. Further, the Portal also provides access to information on patents and patent applications that have been created using DOE funding since 1992.
The Portal is located at http://techportal.eere.energy.gov/
The Nevada State Office of Energy (“NSOE”) announced on March 16, 2010, that is it has issued a Request for Proposals (“RFP”) for renewable energy projects under the $8M+ Revolving Loan Program. Projects must be no more than 60kW in size for solar PV and 20kW maximum for wind turbines and solar thermal. Loan terms will be less than 15 years and interest rates three percent or lower. Applicants may apply for a minimum of $200,000 and a maximum of $1,645,000, and must be able to enter a loan contract prior to June 30, although projects may begin after that date. It is the intent of the RFP to approve a minimum of five applications. The solicitation may close at any time upon determination by the Director of the Nevada State Office of Energy that a sufficient number of qualified applications have been received to satisfy the needs of the RFP. If the RFP fails to produce a sufficient number of eligible applicants the Director may consider granting loans exceeding the published maximum amount.*
Interested parties should go to http://energy.nv.gov/recovery/RevolvingLoan.htm or contact Robert Nellis, Energy Program Manager at (775) 687-1850 x7304 for more information.
*Request For Proposal No. 0001 for ARRA Revolving Loan Program For Renewable Energy Systems Release, dated March 15, 2010.
Federal tax benefits, such as the Section 1603 Grant, investment tax credits and production tax credits, continue to be an important driver in financing renewable energy projects. Several of my colleagues will be discussing these tax benefits and other incentives related to project financing in a webinar hosted by Infocast on Wednesday, March 31, 2010 at 1:00 p.m. Eastern. Here is full description of the topics that will be discussed, the speakers and a link to the Infocast website for registration:
The section 1603 grant program created by the American Recovery and Reinvestment Act of 2009 recently entered its second year. Section 1603 has transformed the renewable energy industry from one in the doldrums to an industry revitalized. But what does the future hold for section 1603 and will recent legislative efforts to limit the grant program create a new uncertainty in renewable energy financing?
Unfortunately, section 1603 is set to expire at the end of 2010, except for projects that have commenced construction. Recently, the prospects for extending section 1603 were dimmed when Senator Charles E. Schumer (N.Y.), and three other Democratic senators, sponsored a bill that would place limitations on receipt of the grant. Developers, lenders, investors and their counsel all need to know whether and how they can fit under section 1603 and, if they can, how to optimize their deal structures, including the interface between the section 1603 grant and the Department of Energy Loan Guarantee Programs and any related NEPA compliance issues. Those who, for whatever reason, cannot qualify for section 1603 need to understand what comes next: PTCs, ITCs, or maybe some variation on 1603, and how those transactions should be designed.
Please join Infocast and Stoel Rives for a 90-minute webinar and panel discussion on project financing of renewable energy projects to maximize the benefit of tax and other incentives that may be available. Stoel Rives is a Chambers-rated leader in renewable energy law.
Edward Einowski, Partner, STOEL RIVES LLP
Erica Egan, Senior Vice President, Corporate Finance, HELABA
Gregory Jenner, Partner, STOEL RIVES LLP
Kevin Pearson, Partner, STOEL RIVES LLP
Gary Barnum, Partner, STOEL RIVES LLP
NV Energy issued its Spring 2010 Request for Proposals seeking new renewable resources. NV Energy hopes to use the RFP to meet its RPS requirement of serving 12% of retail load with renewable energy in 2010. Bidders should also be aware that NV Energy's non-refundable bid deposits have changed: projects 10 MW of larger must submit a $10,000 deposit ($7,500 if the same facility was bid into the 2009 RFP); projects under 10 MW must submit a $5,000 deposit ($3,500 if the same project was bid into the 2009 RFP). Responses to the RFP are due April 16.
Details regarding NV Energy's Spring 2010 RFP can be found by clicking here.
Here's a new opportunity for renewable energy developers. The Southern California Public Power Authority has issued a request for proposals seeking renewable energy generation "with supporting infrastructure(s) as structured projects through (i) facility ownership; or (ii) power purchase agreement with ownership option(s), in one or more facilities." SCPPA is a California joint powers authority that plans to purchase an undivided equity share in facilities, issue tax-exempt debt financing, and sell output at cost to its municipal utility members. SCPPA will also consider straight or pre-pay power purchase agreements that include a facility purchase option.
Responses are due May 28, 2010. Follow the link for the solicitation materials: www.scppa.org/Downloads/RFP/Renewable_Energy_Projects_052810.pdf
FERC Determines That Battery Storage Devices Qualify as Transmission Facilities. Is the Door Open for Other Energy Storage Devices?
In late January, FERC issued an order in response to a filing by Western Grid Development LLC that asked FERC to declare that Western Grid's proposed battery storage devices are transmission facilities eligible for certain rate incentives. Western Grid described its battery technology as 10 to 50 MW sodium sulfur batteries that would be installed at strategic places on the California ISO transmission grid in order to provide voltage support and protect against transmission overloads. In a description that seemed significant to FERC, Western Grid stated that its batteries would only enhance transmission reliability at the California ISO's direction, and that the batteries would not operate or participate in energy markets or provide electricity for commercial sale.
FERC examines energy storage devices on a case-by-case basis because storage devices don't fit squarely within the traditional transmission, distribution, or generation categories of assets. In this case, FERC gravitated to the notion that the battery devices would not provide capacity or energy to be sold in the energy market, and that Western Grid would not retain any revenues outside of the transmission access charge (unlike generators). For these and other reasons, FERC distinguished Western Grid from similar filings (see Nevada Hydro II--pumped storage), and determined that Western Grid's technology will act enough like transmission assets to warrant eligibility for transmission rate incentives. FERC's approval of rate incentives, however, was conditional upon the California ISO approving Western Grid's projects in the transmission planning process.
Although FERC repeated numerous times that its decision was based on the "specific circumstances and characteristics" of Western Grid's projects, the order shows potential for energy storage devices. If such devices can show that they act sufficiently like traditional transmission assets (like capacitors), they may be able to obtain very valuable transmission rate incentives. Whether this opens the door for compressed air energy storage and pumped hydro (but see Nevada Hydro II) is still up in the air, but rest assured that these questions will be at FERC before too long.
U.S. Supreme Court Rules that Third-Parties Challenging Energy Contract Rates Must Clear the Mobile-Sierra Hurdle
Today, the U.S. Supreme Court issued an important ruling clarifying how the Federal Energy Regulatory Commission (FERC) must apply the Mobile-Sierra doctrine. The Mobile-Sierra doctrine informs how FERC should evaluate whether a contract rate for energy is just and reasonable, and the doctrine provides that FERC's sole concern should be whether the contract rates being challenged adversely affect the public interest--a high hurdle. Until today, some people questioned whether the Mobile-Sierra doctrine was limited to parties to a contract, and whether non-contracting parties bringing a challenge would be held to a lower standard. The Court, however, made clear that the Mobile-Sierra doctrine should apply to any party (including FERC) challenging whether energy rates are just and reasonable, stating that a presumption that applies to contracting parties only, but not anybody else, fails to establish the contractual stability that Mobile-Sierra aimed to secure.
To read more about today's U.S. Supreme Court decision, click here.
The Colorado Division of Property Taxation will hold an important open public meeting Thursday, January 14, 2010, to discuss the "tax treatment of transmission lines". Details of the proposed options will be posted on the Division's website under the "state assessed tab." In the notice provided by the Division, the agenda for the meeting will include addressing the following questions:
- Is the value of the transmission lines accounted for anywhere using the current valuation methodology?
- If not, how should this be accounted for?
- Pick up locally.
- Add to the value of the renewable energy facility determined by the state.
- Increase the capital cost threshold to account for the transmission line.
While the details of the proposed tax treatment have not been disclosed publicly, it is currently unclear how this will impact new and existing transmission lines, including gen-tie lines from renewable energy projects. The Division has provided a remote access opportunity to participate in the meeting. For those interested in attending in person, the meeting will be held at the Division of Property Taxation Office, 1313 Sherman Street, Room 419, Denver, Colorado 80203. It is anticipated that key parties involved in the development of renewable energy projects will be in attendance, along with representatives from the Interwest Energy Alliance.
To the degree that the proposed change in tax treatment increases the taxes borne by existing facilities--most of which have already entered into power purchase agreements--the experience underscores a topic that developers ought to consider when negotiating long term PPA's: if a tax or other charge imposed after the PPA's effective date materially increases a project's cost burden, does the developer have the right under the PPA to pass any or all of the costs onto the buyer? If not, does the developer have any right to renegotiate or terminate the PPA so as to reprice it to account for the unexpected tax burden? Or must the developer absorb the cost for its own account?
Utility pro forma PPAs rarely allow the developer to pass such "change of cost" risks through to the buyer, but the Seller should nonetheless carefully consider such risks (e.g., changes in taxes or integration charges) and its willingness to absorb all of those risks over the life of a long term PPA--it is sometimes possible to negotiate a sharing of unexpected costs that arise after the effective date of the PPA, especially if the utility offtaker is in a position to resist the imposition of such costs.
In an earlier blog post, Debra Frimerman reported that the U.S. Department of Energy was seeking applications for grants to help promote the construction and operation of pilot, demonstration, and commercial scale integrated biorefinery projects. Today, DOE announced the selection of 19 projects to receive up to $564 million in grant money authorized by the American Recovery and Reinvestment Act.
Notable awards include the following:
· $81 million to Bluefire LLC for a Mississippi project to produce up to 19 million gallons of ethanol fuel annually from woody biomass, mill residue, and municipal solid waste.
· $50 million to Sapphire Energy, Inc. for a New Mexico project to produce algal fuels using the Dynamic Fuels refining process.
· $23 million to Clearfuels Technology Inc. for a Colorado scale project to produce renewable diesel and jet fuel from woody biomass.
A complete list of awards is available here.
Public Service Commission of Utah Investigates Third-Party Power Purchase Agreements For Renewable Energy Generation
On October 12, 2009, the Public Service Commission of Utah ("PSC") joined the ranks of several other states in the west, including Oregon, when it established a docket to investigate whether, and the extent to which, certain third-party arrangements for renewable energy generation are subject to the PSC's jurisdiction. www.psc.utah.gov/utilities/misc/miscindx/0999912indx.html, Pursuant to the notice, the PSC may consider the following issues:
- Whether the third-party is a public utility under Utah law;
- Whether the third-party is a public utility under Utah law when arrangements are entered into primarily as a financing mechanism for distributed renewable energy generation systems whereby a third-party owns the renewable generation equipment, which is installed on a utility customer's premises, there is a long-term contract with the customer to supply a portion of that customer's electricity use, and payments are based on kilowatt-hours;
- Whether the third-party is a public utility under Utah law when (i) there is a single relationship between the third-party owner of the generation and a customer or (ii) there are multiple customers taking power from the same third party;
- Whether the third-party is a public utility under Utah law when arrangements involve the leasing of distributed generation equipment from non-utility lessors to lessees that are also retail customers of utilities.
Comments and/or legal briefs regarding the above issues must be filed with the PSC by November 16, 2009. A technical conference to discuss the specific terms and conditions surrounding third-party financing arrangements and other issues will be held on November 23, 2009, at 1:30 p.m. to 4:00 p.m., Fourth Floor Hearing Room Room 401, Heber M. Wells State Office Building, 160 East 300 South, Salt Lake City, Utah.
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).
Show Me the Money: State Energy Programs for Seven States and Territories Awarded $119 Million from the American Recovery and Reinvestment Act ("Recovery Act")
On August 14, 2009, the Department of Energy ("DOE") State Energy Program ("SEP") announced that more than $119 million in funding from the Recovery Act to support energy efficiency and renewable energy projects has been awarded to Alabama, American Samoa, the District of Columbia, Illinois, Maryland, North Dakota and Wyoming.
Here is a summary of how the monies will be used by each of the states and territories:
- Alabama has been awarded $22,228,000 in federal stimulus funds. Alabama will utilize the Recovery Act SEP funding to promote energy efficiency of businesses (with a particular focus on the automotive supplier industry), schools, and correctional facilities and the development of renewable energy resources in the state. The state will also use funds to create a new "energy revolving loan fund" to stimulate the creation and retention of jobs and increase the generation of renewable energy by providing low-interest loans for new and existing industries in the state. The loans will be used for the installation of renewable energy systems and the implementation of energy efficiency measures. After demonstrating successful implementation of its plan, Alabama will receive nearly $28 million in additional funding, for a total of more than $55 million. Click here for more information regarding Alabama's state energy program and use of Recovery Act funds.
- American Samoa was awarded $7,420,000 in federal stimulus funds. American Samoa will utilize the Recovery Act SEP funding to expand the use of renewable energy across the territory, as well as to supplement weatherization funds to improve home energy efficiency for low-income residents. Specifically, the territory will install a 1,000 kW photovoltaic solar-energy array near the Tafuna Power Station, 19 smaller 28 kW solar arrays on the roofs of government and other buildings, and a solar water heating system at the LBJ Tropical Medical Center. American Samoa is also interested in expanding its use of wind power, and will use Recovery Act funds to set up eight anemometers to measure and quantify the territory's wind potential. After demonstrating successful implementation of its plan, the territory will receive more than $9 million in additional funding, for a total of $18 million.
- The District of Columbia was awarded $8,808,800 in federal stimulus funds. The District of Columbia will utilize the Recovery Act SEP funding to improve energy efficiency in government buildings and support numerous public energy education initiatives. Specifically, the state will use funds to replace existing mechanical and electrical equipment at various DC properties with new energy efficient equipment and controls. After demonstrating successful implementation of its plan, the District will receive an additional $11 million, for a total of more than $22 million.
- Illinois has been awarded $40,528,400 in federal stimulus funds. Illinois will utilize the Recovery Act SEP funding for energy efficiency retrofits and the biofuels industry. Specifically, the state will provide grants to support new biomass manufacturing capacity or retrofits to existing facilities that will help reduce operating expenses and the environmental impact of biofuels manufacturing. The state will also use the Recovery Act SEP funds to provide grants to various entties including schools, public buildings, and industrial facilities to improve energy efficiency in new and existing buildings, facilities, equipment, and processes. After demonstrating successful implementation of its plan, Illinois will receive more than $50 million in additional funding, for a total of more than $101 million. Click here for more information on Illinois's state energy program and use of Recovery Act funds.
- Maryland has been awarded $20,708,880 in federal stimulus funds. Maryland will utilize the Recovery Act SEP funding to promote clean and efficient energy usage in the transportation, residential, commercial, and industrial sectors. The state will also provide grants to support cost-effective and environmentally responsible building retrofits, along with innovative public-financing programs such as the EmPOWER financing initiative that will enable property owners to leverage private capital in order to implement efficiency improvements. Other uses for the funding will focus on supporting educational and workforce training efforts that will help familiarize the state's workforce with important sustainable energy approaches. After demonstrating successful implementation of its plan, Maryland will receive $26 million in additional funding, for a total of more than $51 million.
- North Dakota has been awarded $9,834,000 in federal stimulus funds. North Dakota will utilize the Recovery Act SEP funds to promote various energy efficiency and conservation efforts, including providing energy education resources for North Dakota's agricultural and industrial sectors that will help farmers, ranchers, contractors and building tradesmen reduce their energy use. The state will also lead by example by improving energy efficiency of state buildings and installing renewable energy systems at state facilities. Funds will also be used to create a statewide energy efficiency and renewable energy rebate program, in partnership with investor-owned and municipal utilities and rural electric cooperatives. In addition, the state will establish an Emergency High Efficiency Furnace Rebate Program, which will assist victims of the 2009 spring floods with the incremental cost of installing a high efficiency furnace to replace standard efficiency furnaces and heating systems. After demonstrating successful implementation of its plan, North Dakota will receive over $12 million in additional funding for a total of more than $24 million.
- Wyoming has been awarded $9,976,400 in federal stimulus funds. Wyoming will use its Recovery Act SEP funds to promote energy efficiency in buildings and homes across the state. The state will make grants to governmental and tribal entities, nonprofit organizations, and others for the purpose of retrofitting existing facilities to improve their energy efficiency by a minimum of 25%. Wyoming will also use the Recovery Act funds to provide rebates to help middle-income homeowners that are not eligible for low-income weatherization assistance to increase energy efficiency of their homes. In addition, Wyoming will provide rebates of up to $5,000 to homeowners for installing residential renewable energy systems, including solar photovoltaic, wind and geothermal systems. After demonstrating successful implementation of its plan, the state will receive more than $12 million in additional funding, for a total of nearly $25 million.
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
Interested parties have 30 days to provide comments to the proposed rule. Comments may be submitted in the following manner:
- Through the Federal Rulemaking Portal
- Email to firstname.lastname@example.org
- Postal Mail / Hand Delivery / Courier to:
David G. Franz, Director, Loan Guarantee Program Office
Office of the Chief Financial Officer
1000 Independence Ave., S.W.
Washington, D.C. 20585-0121
More information may be had by contacting David Franz at the above address or by calling 202-586-8336
The following RFPs for renewable energy and RECs came to my attention today.
1. Dayton Power and Light Company is seeking to acquire up to 313,000,000 kWh of eligible RECs by 2013 in order to meet Ohio's RPS requirements. Deadline for submissions is August 7, 2009. Click here for more information.
2. The Western Area Power Administration is seeking RECs on behalf of certain WAPA regional offices and federal agencies. Deadline for submissions is August 7, 2009. Click here for more information.
3. Southern California Edison seeks to acquire energy from eligible renewable resources. Click here for more information.
4. AEP Ohio is looking to acquire 30,000,000 kWh of eligible RECs to use toward compliance with Ohio's RPS requirements. Interested parties must submit a Notice of Intent to Bid by July 31, 2009. Click here for more information. AEP Ohio also has an active RFP for renewable energy, which you can learn about here.
5. Puget Sound Energy seeks to acquire 30,000,000 kWh of eligible RECs. Interested parties must submit a Notice of Intent to Bid by July 31, 2009.
6. Bryan Texas Utilities hopes to acquire up to 10 MW of utility-scale solar energy and the associated RECs generated within ERCOT. The deadline for submissions is August 24, 2009.
7. Seattle City Light is looking to acquire 50 MW of new renewable resources to meet Washington RPS requirements. Submission deadline is August 28, 2009. You can find more information here.
8. The US General Services Administration seeks to acquire 40,000,000 kWh per year of RECs for the Architect of the Capitol and other federal agencies. Submission deadline is September 1, 2009. You can find more information here.
On July 16, 2009, the Federal Energy Regulatory Commission (FERC) issued a Policy Statement on smart grid technologies, providing guidance on future smart grid interoperability standards and establishing an interim incentive rate policy that applies to near-term smart grid deployments (even those used in pilot or demonstration projects). Notably, FERC identified four technologies as being key to smart grid development: (1) digital devices and software that provide system operators with the near real-time ability to react to bulk power system conditions; (2) demand response; (3) electric storage devices, such as batteries and pumped storage, that will help integrate new resources into the grid; and (4) electric vehicles. FERC intends that these technologies will inform both the smart grid standards development process as well as the Department of Energy's release of stimulus funds available under the American Recovery and Reinvestment Act.
In addition, FERC established an interim rate policy that, once certain showings are made, will provide public utilities with the ability to recover the costs of FERC-jurisdictional smart grid technologies and the legacy systems being replaced. The interim rate policy also allows public utilities to apply accelerated depreciation to smart grid deployments and recover the full cost of smart grid technologies that are later abandoned or made obsolete. Public utilities seeking incentive rate treatment must file an appropriate application with FERC before it adopts smart grid interoperability standards.
For more information on FERC's Policy Statement, click here for our recently-released client alert.
If you would like to read the Policy Statement itself, click here.
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.
The recent blog posting (available here) regarding Exxon's $600 million investment in biofuels served as a reminder to me that comments are due soon (August 3, 2009) on the Department of Energy's draft "National Algal Biofuels Technology Roadmap" (the "Roadmap").
The Roadmap was prepared by a working group commissioned by DOE. The working group was commissioned to assess the current state of algae technology and to determine the next steps toward commercialization. For more information, see my earlier blog.
To submit comments, complete the "Algal Road-Mapping: Request for Information (RFI) Response Form" and submit it as an attachment to an e-mail message addressed to algaeRFI@go.doe.gov
Further, Gary Hunt has reported (available here) that Prize Capital, LLC has issued a $10 million algae fuel prize to encourage the development of advanced algal fuels. For more information about this contest, click here.
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.
From our colleague Christina Asavareungchai:
Today, the Department of Energy announced more than $141 million in Recovery Act funding to six states and territories under its State Energy Program (“SEP”). Here is how the funds will be used in Hawaii, Maine, Nebraska, New Mexico, the Northern Mariana Islands, and Texas:
Hawaii will use its SEP funds to directly finance high-performance buildings, retrofits, and other energy-saving measures, in addition to training professionals in the building and design industry about energy efficiency. After demonstrating success in the execution of its plan, Hawaii will receive additional funds of nearly $13 million, for a total of almost $26 million.
Maine will use its SEP funds to improve energy efficiency across multiple sectors. The funds will facilitate the establishment of more energy-efficient building codes, as well as the expansion of programs that aim to improve the energy efficiency of businesses and homes. After demonstrating success in the execution of its plan, Maine will receive additional funds of more than $13 million, for a total of over $27 million.
Nebraska will use its SEP funds to promote energy efficiency and renewable energy. The state will establish more efficient building energy codes, offer energy efficiency training, and fund programs that offer low-interest loans to the commercial and industrial sector. After demonstrating success in the execution of its plan, Nebraska will receive additional funds of more than $15 million, for a total of over $30 million.
New Mexico will use its SEP funds to offer financial incentives for the purchase of fuel-efficient vehicles, alternative fuels, and investments in related infrastructure. The state will also fund building retrofits, energy audits, the establishment of energy codes, and the expansion of the Weatherization Assistance Program. After demonstrating success in the execution of its plan, New Mexico will receive additional funds of nearly $16 million, for a total of almost $32 million.
The Northern Mariana Islands will use its SEP funds to improve the energy efficiency of its buildings, establish energy efficiency policies, and educate the public about energy efficiency. After demonstrating success in the execution of its plan, the territory will receive additional funds of more than $9 million, for a total of over $18 million.
Texas will use its SEP funds to establish a revolving loan program for improving energy efficiency at public facilities and to offer competitive grants to state agencies, schools, hospitals, and communities for the implementation of renewable energy technologies. Texas will also use its funds to provide training for green jobs and to launch an educational campaign designed to teach the public about the link between energy conservation, reduced emissions, and job creation. After demonstrating success in the execution of its plan, Texas will receive additional funds of $109 million, for a total of almost $219 million.
Stoel Rives attorneys Geoff Revelle and Jerry Chiang have written a detailed analysis of how foreign investors and companies can take advantage of China’s $4 trillion RMB stimulus package. Enacted in November 2008, the package focuses on 10 sectors of the Chinese economy, including rural infrastructure and health care, with the goals of creating jobs and increasing China’s GDP.
Revelle and Chiang note that while the main beneficiaries of the stimulus funding are government-owned or privately-owned Chinese companies, opportunities for foreign companies will still emerge in areas such as high-tech products and value-added services that Chinese firms cannot provide. In his analysis, Revelle provides an overview of investing in China, a review of the major sectors of the Chinese economy targeted by the stimulus package, and best practices recommendations for foreign companies interested in China's stimulus funding.
Revelle has also prepared a PowerPoint on the topic, which can be found at http://www.stoel.com/showarticle.aspx?Show=5678.
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).
Eligible energy efficiency, renewable energy, and clean energy projects may be eligible for SEP funding between $500,000 and $2 million.
Eligible energy efficiency projects are those that use technologies that have been deployed at commercial scale that result in the reduction in energy consumption through increases in the efficiency of energy use, production, or distribution, and high-efficiency cogeneration. Ineligible projects are those that are eligible for Recovery Act Funding for community wide urban residential and commercial energy efficiency upgrades as described in (i) Chapter 379, Laws of 2009; (ii) Low income weatherization projects and programs which are eligible for funding through the state’s low-income weatherization program; (iii) Loans support to financial institutions for energy efficiency projects as described in Chapter 379, Laws of 2009; (iv) state energy efficient appliance rebates; and (v) green jobs training as described in Chapter 536, Laws of 2009.
Eligible renewable energy projects are those that are located in Washington and use existing commercial scale technologies that generate liquid fuels, process heat or electricity using algae, bark, biodiesel, biomass, biosolids, food waste, fresh water, gas from sewage treatment facilities, landfill gas, geothermal, pulping liquors, sawdust, solar, hydrokinetics, wind, wood chips and various other waste products. Ineligible projects include those that use the following feedstocks: municipal solid waste, wood from old growth forests, and chemically treated wood.
Eligible clean energy innovation projects include are those that offer innovative new technologies or service delivery models for energy efficiency, renewable energy, or other areas of clean energy. Projects must have a solid chance at commercial scale deployment within two to three years. Ineligible projects include carbon sequestration projects, lab scale projects, and those excluded under federal SEP guidelines.
Interested parties must file a notice of intent to apply by July 27, 2009 at 5:00 p.m. Pacific.
Full applications are due on August 17, 2009 at 5:00 p.m. Pacific.
Information workshops will be held on July 13, 14, 15, and 16. Click here for the specific dates and times. I will be attending the July 13 workshop in Everett, WA. An informational webinar will also be held on July 23.
Today, the U.S. Department of the Treasury (the "Treasury") and the U.S. Department of Energy (the "DOE") announced an estimated $3 billion for the development of renewable energy projects around the country. Funded through the American Recovery and Reinvestment Act ("ARRA"), the program will provide direct payments in lieu of tax credits in support of an estimated 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities.
ARRA authorized the Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009. A company can only apply for payment after the renewable energy property has been placed in service. Previously these companies could file for a tax credit to cover a portion of the renewable energy project's costs; under the new program, applicants would agree to forgo tax credits down the line in favor of an immediate reimbursement of a portion of the property expense. This direct payment program allows for an immediate stimulus in local economies.
In recent years, the tax credit has been widely used. As an example, in 2006, approximately $550 million in tax credits were provided to 450 businesses. However, the rate of new renewable energy installations has fallen since the economic downturn, as projects have had a harder time obtaining financing. The Treasury and DOE expect a fast acceleration of businesses applying for the announced energy funds in lieu of the tax credit.
To expedite implementation of the program, the DOE and Treasury have made the terms, conditions, guidance, and sample application available at www.treas.gov/recovery/1603.shtml. The Treasury and DOE are not accepting applications yet, but these available forms will allow companies to prepare applications and expedite the implementation of the program when the government is ready for submissions on August 1, 2009. The DOE and Treasury have 60 days to process the application once submitted.
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.
The United States officially joined the International Renewable Energy Agency (“IRENA”) last week, increasing the number of countries participating in the organization to 136, including several African countries, the Middle East, Europe, Australia, Greenland, India, Japan, and parts of South America. The new agency will engage governments in making a rapid transition toward using renewable energy in their respective countries.
The United States is also expanding its international efforts north of the border. Last week, DOE hosted the first U.S.-Canada Clean Energy Dialogue Roundtable, with clean energy leaders from private industry and from the U.S. and Canadian governments present, to discuss how the two nations can work together to develop clean energy technologies and combat climate change. Specific areas for further bilateral cooperation under the Clean Energy Dialogue include renewable and energy efficiency technologies, carbon capture and sequestration, and smart grid technologies.
Today, the U.S. Department of Energy (“DOE”) announced new funds of up to $10.5 million to inform and educate local governments nationwide about solar energy. As part of the Solar America Cities program, a joint effort with 25 cities dedicated to increasing their use of solar energy, the DOE has assembled educational materials about the benefits and value of solar energy. The DOE will now work with outreach organizations to share these materials and tools with local government officials, with the aim of speeding up the implementation of solar energy. The application deadline is October 15, 2009, with selections expected to be announced no later than December 15, 2009.
For more information, click here for our recent Energy Alert.
Today, San Diego Gas & Electric (SDG&E) issued a Request for Offers seeking eligible renewable resources that the utility will use to meet its California Renewable Portfolio Standard requirements. Respondents may submit one or more of three alternative proposals:
- Power Purchase Agreement (PPA). Respondents are asked to propose a 10, 15, or 20-year PPA for capacity and/or energy, but SDG&E will nevertheless consider proposals with shorter or longer durations. Eligible Resources must be delivered to a point within California and must be begin deliveries sometime between 2010 and 2013.
- PPA with Buyout. Respondents offering PPAs may also submit an option price that SDG&E may exercise to purchase the resource as well as associated environmental attributes, land rights, permits, and other licenses upon conclusion of the PPA term. This alternative is limited to resources located in San Diego County, parts of Orange County within SDG&E's service territory, or Imperial Valley areas. Like respondents offering under the PPA alternative, respondents interested in offering resources under the PPA with Buyout alternative must begin delivering energy and/or capacity between 2010 and 2013.
- Turnkey Facilities. Respondents to the RFO may also propose to develop and construct a new renewable energy generation facility that SDG&E will acquire. SDG&E is proposing the same locational requirements that apply to PPA with Buyout projects.
A limitation that applies to all respondents is that resources located in SDG&E's service territory must be no smaller than 1.5 MW, and resources outside of SDG&E's service territory must be no smaller than 5 MW.
This RFO may be a great opportunity to transact with SDG&E as it endeavors to comply with California's ever-increasing RPS standards. SDG&E will hold two pre-bid conferences: one in San Diego on August 5, 2009, and the other in El Centro on August 12, 2009. Those interested in attending a pre-bid conference should register by July 31.
For more information, click here: SDG&E 2009 RFO Info
Show Me the Money: Minnesota, South Carolina, and South Dakota State Energy Programs Received $51.4 Million from the American Recovery and Reinvestment Act (ARRA)
On June 24, 2009, the Department of Energy (“DOE”) announced more than $204 million in ARRA funding to ten states for their State Energy Programs (“SEPs”).
Here is a summary of how the monies will be used in Minnesota, South Carolina and South Dakota:
Minnesota has been awarded $21.7 million in federal stimulus funds for retrofitting existing public buildings and homes, renewable energy and energy efficiency programs and to develop new training opportunities. Minnesota’s SEP will award grants to small, medium, and large businesses to help provide for the design, financing and installation of various energy efficiency improvements and retrofits. The state will also administer grants to work with utilities to develop programs that leverage ARRA funds to promote energy efficiency with customers, such as low-interest loans and grants. After demonstrating successful implementation of its plan, Minnesota will receive more than $27 million in additional funding, for a total of more than $54 million. This money is in addition to the $132 million the state will receive for weatherization grants for low-income households.
South Carolina has been awarded $20.2 million in federal stimulus funds. South Carolina’s SEP will utilize the funding to provide grants and loans to improve energy efficiency in public school districts, public colleges and universities, and state agencies to reduce the burden of energy bills for taxpayers, while creating jobs and reducing greenhouse gas emissions. South Carolina also intends to provide financial assistance to various industrial, commercial and small business entities to support energy efficiency and renewable energy projects. This financial assistance, along with education and training programs included in the SEP, will help create clean energy jobs in the state and make business and industry more economically stable. After demonstrating successful implementation of its plan, the state will receive more than $25 million in additional funding, for a total of over $50 million.
South Dakota has been awarded $9.5 million in federal stimulus funds. South Dakota’s SEP will use its funding to support the Energy Efficient Government program and to provide revolving energy loans to state institutions. The programs will promote energy efficiency efforts while reducing energy costs in state owned buildings, which will directly benefit state residents. The state’s energy office will administer the funds, provide technical guidance, and assure accountability and transparency for the state institutions who apply for the two programs. These programs coordinate with South Dakota’s energy goals to promote and encourage energy conservation, energy efficiency, renewable energy and alternative fuels. After demonstrating successful implementation of its plan, the state will receive more than $11 million in additional funding, for a total of more than $23 million.
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.
The Naval Air Warfare Center has issued a presolicitation for geothermal investigations at Eastern Lava Mountains, Almond Mountain, and Southern Slate Range Naval Air Weapons Station China Lake, California.
The investigations shall be conducted in two phases. The first phase consists of a geologic field study, fault trenching, thermochonologic sampling and analysis, and geologic modeling. The second phase will be for resource refinement, drilling support, and other exploration.
The final request for proposal is expected to be issued on June 22, 2009. For more information, contact email@example.com and reference solicitation # N6893609R0076
The Department of Agriculture ("USDA") is now accepting proposals for its Small Business Innovation Research Program ("SBIR"). SBIR has $18.5 million available to fund research projects that address important problems facing American agriculture. Research areas include, but are not limited to:
- Biofuels and biobased products;
- Air, water, and soils;
- Rural development;
- Aquaculture; and
- Animal Manure management
Individual awards can be as high as $90,000 and proposals are due September 3, 2009. For more information click here.
The Western Governors' Association ("WGA") gathered in Park City, Utah for its annual meeting, which was held on June 14-16, 2009. Attendees at the meeting included Governors Bill Ritter (Colo.); C.L. "Butch" Otter (Idaho); Brian Schweitzer (Mont.); Dave Heineman (Neb.); Bill Richardson (N.M.); Benigno Fitial, Northern Mariana Islands; Ted Kulongoski (Ore.); Mike Rounds (S.D.); Dave Freudenthal (Wyo.); and Jon Huntsman, Jr. and Lieutenant Governor Gary Herbert (Utah) , along with Canadian Premiers Ed Stelmach, Alberta; Gary Doer, Manitoba; and Brad Wall, Saskatchewan.
The morning session on Monday, June 15, 2009, was kicked off with the unveiling of the Western Renewable Energy Zones-Phase 1 Report, which was a product of a joint initiative between the WGA and the U.S. Department of Energy (the "WREZ Initiative"). The intention of the WREZ Initiative is twofold: (1) to identify Western Renewable Energy Zones in the Western Interconnection and (2) to facilitate the development of high voltage transmission to those areas with abundant high-quality renewable resources and low environmental impacts. Governor Schweitzer provided an overview of the WREZ Phase I report, which included a summary of the process for obtaining feedback from a diverse group of stakeholders to provide the analysis and tools for constructing a plan to facilitate the construction of new, utility scale renewable energy facilities and any needed transmission to deliver that energy across the Western Interconnection. The WREZ Initiative has developed a modeling tool for evaluating the relative economic attractiveness of costs of delivered renewable energy, including transmission costs, from specific renewable resource areas delivered to specific load centers.
With the WREZ Phase I Report as the backdrop, the Western Governors were joined by Secretary of Energy Steven Chu, Secretary of Agriculture Tom Vilsack, Secretary of Interior Ken Salazar, and FERC Chairman Jon Wellinghoff for an insightful and fulsome discussion on the current challenges faced by the Western states in developing renewable energy projects and building the necessary transmission infrastructure, along with policy recommendations to assist in overcoming those challenges through collaboration between the federal and state agencies.
Governor Freudenthal indicated that from his perspective, there were several major challenges to building transmission in the West, but that the largest hurdle was permitting transmission lines or other renewable energy projects on federal lands. Another issue of concern for Governor Freudenthal was in "right sizing" the transmission lines and how Stimulus monies could be used to jumpstart the process of transmission upgrades. Secretary of Interior Ken Salazar responded that the Department of Interior will be establishing renewable energy offices throughout the West, including one in Wyoming, that will be staffed by employees familiar with renewable energy project development. The goal is to be able to fast track renewable energy applications and to obtain quick decision making. Secretary of Energy Chu indicated that the Department of Energy would be announcing funding opportunities related to transmission, including:
- $80 Million for Regional and Interconnection Transmission Analysis and Planning
- $50 Million for Assistance to State Electricity Regulators
- Approximately $40 Million to Support Energy Assurance Capabilities for States
Secretary Chu also indicated that several of the federal agencies under his watch, including WAPA and BPA, are not moving in a timely manner in facilitating funding opportunities for renewable energy and transmission development. Secretary Chu expressly requested that the Governors contact him directly if any of these agencies are taking actions that will deter private investment in renewable energy and related transmission projects so that he can address these potential impacts immediately.
Overall, the presence of the three cabinet members from the Obama Administration, along with FERC Chairman Jon Wellinghof and Council on Environmental Quality Chairwoman Nancy Sutley at this conference was a strong indication of the Administration's desire to partner with the Western Governors to address the country's long-term energy challenges, create jobs, and to cut the country's carbon emissions by unlocking the enormous potential for renewable energy in the Western United States. The Western Governors passed Policy Resolution 09-1 (Energy Policy, Renewable Energy and Transmission for the West) with directives to WGA staff:
- To work with Congress, the Administration, and other appropriate entities to implement the policies contained in the resolution;
- To continue to implement the Western Renewable Energy Zones initiative and to report on the progress of the initiative at the next scheduled meeting;
- To work with the federal government as necessary to create and implement a long-term, comprehensive-energy policy that ensures that the WGA moves toward affordable and environmentally responsible energy security and independence;
- To work with WECC to establish future transmission scenarios;
- To work with Congress to extend the duration and amount of the U.S. Department of Energy (DOE) existing federal loan guarantee program and to expedite the issuance of loan guarantees in all energy sectors.
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.
The Western Governors' Association ("WGA") will hold its annual meeting in Park City, Utah on June 14-16, 2009. Based on a review of the Agenda posted to the WGA's website, the focus of the meeting will be on developing regional and global strategies for addressing important issues related to energy resources, climate change and water. I will be attending the annual meeting this year and reporting on the outcome of discussions on the following topics:
On June 14, 2009, there will be a panel discussion on policies and technologies to address water use in an era of declining water supplies due to climate change. Panelists include: Dr. Peter H. Gleick, co-founder and president of the Pacific Institute; Professor Eilon Adar, Zuckerberg Institute for Water Resources, Ben-Gurion University of the Negev; Doug Miell, Principal, Miell Consulting; Cameron J. Brooks, Ph.D., Director of Solutions and Business Development for IBM Corporation's Big Green Innovations initiative.
On June 15, 2009, Secretary of Agriculture Tom Vilsack, Secretary of the Interior Ken Salazar, Secretary of Energy Steven Chu and FERC Chairman Jon Wellinghoff will provide their perspectives on developing large amounts of clean energy in the West and the transmission lines needed to bring it to market. Following their remarks, they and the Governors will have the opportunity to discuss what cooperation is needed between states and the federal government to accelerate progress. An outline of discussion points that might be expected from the Governors during this session could include topics addressed in the letter dated May 1, 2009 from the WGA to the Senate Energy & Natural Resources Committee.
In addition, there will be a panel discussion on international, U.S. and regional strategies for addressing climate change. Panelists for this discussion include: Robert B. Zoellick, President of The World Bank; Joan Ruddock, British Member of Parliament and Parliamentary Under Secretary of State for Energy and Climate Change; Steven Chu, Secretary of Energy; and Nancy Sutley, Chair of the White House Council on Environmental Quality. Attendees at the conference will also have the opportunity to hear a briefing from Dr. Jane Lubchenco, Administrator of National Oceanic & Atmospheric Administration, on "Creating a National Climate Service."
On June 16, 2009, Susan Shirk, Director of the University of California Institute on Global Conflict and Cooperation, University of California, San Diego, will be a Keynote speaker, followed by a panel discussion on ways national and subnational governments can cooperate to expedite the deployment of new technologies and policies to address energy and climate change. Panelists include: Eric Heitz, President of The Energy Foundation; Susan Shirk, Director of the University of California Institute on Global Conflict and Cooperation; Charles Freeman, Freeman Chair in China Studies at the Center for Strategic and International Studies.
The meeting is being hosted by Utah Governor and Western Governors' Association Chairman Jon M. Huntsman, Jr., and his wife Mary Kaye and Lt. Governor Gary Herbert. Expected at the meeting are eleven Western Governors and three Western Canadian Premiers and 500 attendees including Obama Administration officials, other VIPs and industry and non-governmental leaders from around the West, across the country and around the world.
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.
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.
On May 27, 2009, President Obama announced that the Department of Energy ("DOE") would deploy $350 million from the American Recovery and Reinvestment Act ("Recovery Act") to be used to expand development, deployment, and use of geothermal energy throughout the United States. Four recent DOE Funding Opportunity Announcements ("FOAs") have been issued in conjunction with this announcement. The recently announced Recovery Act funding will support projects in five areas: (1) geothermal demonstration projects, (2) enhanced geothermal systems ("EGS") research and development, (3) innovative exploration techniques, (4) the creation of a national geothermal data system and a resource assessment and classification system, and (5) ground source heat pumps.
For more specific information, see this alert
In an earlier blog, my colleague, Debra Frimerman reported about the Rural Energy for America Program (REAP). REAP provides grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, make energy efficiency improvements and conduct feasibility studies for renewable energy systems.
REAP is a program under the Food, Conservation, and Energy Act of 2008 (the "2008 Farm Bill"). The 2008 Farm Bill also includes numerous other programs to help develop renewable energy in rural areas and promote the production of sustainable feedstocks for renewable energy production. Please see this recent alert for specifics.
The Roadmap was prepared by a working group commissioned by DOE. The working group was commissioned to assess the current state of algae technology and to determine the next steps toward commercialization.
DOE is specifically seeking feedback related to the following questions:
- What areas omitted by the Roadmap would be important in defining R&D needs as they pertain to the following topics?
a. Algae biology
b. Algae cultivation
c. Algae processing (harvesting and dewatering)
e. Fuel conversion
f. Fuel end-use
- Are there any additional, key areas that should be included or any areas that need further elaboration?
- Are there errors or misrepresentations of any information that need to be addressed?
- Is there over-representation of certain barrier areas relative to other areas that warrant editing?
To submit comments, complete the "Algal Road-Mapping: Request for Information (RFI) Response Form" and submit it as an attachment to an e-mail message addressed to algaeRFI@go.doe.gov
Comments must be provided by no later than 11:59 PM EDT on August 3, 2009.
Vermont has enacted into law legislation that establishes minimum rates to be paid by electric customers for certain renewable energy sources in long-term fixed-price contracts.
Key elements of the bill include a project size cap of 2.2 MW, for a total program cap of 50 MW, a specified contract term of 20 years (except solar contracts, which will be 25 years), and tariffs in the following amounts: wind energy projects less than 15 kW, $0.20/kWh; landfill and biogas, $0.12/kWh; solar, $0.30/kWh; and wind projects greater than 15 kW, hydropower, or other biomass, a formula using the state's average residential electricity rate. A regulatory examination of the tariffs will begin by September 15, 2009, with new rates to be set by January 15, 2010.
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.
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.
Energy Efficiency and Renewable Energy Loans and Grants Program
Washington’s SEP dedicates $38.5 million to a loan and grant fund for innovative renewable energy projects that use commercial or near commercial energy technologies. These funds may also be used for cost-effective energy efficiency projects. The goal of this program is to produce renewable energy or reduce energy consumption in a manner which leverages ARRA funds to create or retain as many jobs as possible. The first request for proposal (“RFP”) under this program should be issued in June 2009. CTED anticipates issuing up to 25 loans and 15 grants.
Community-Wide Urban Residential and Commercial Energy Efficiency Program
Washington’s SEP dedicates $14.5 million for the development and deployment of at least three large neighborhood based building energy efficiency projects. This will further the state’s policy goal of annually weatherizing twenty thousand homes and business over the next five years. The Washington State University Extension Energy Program will coordinate and collaborate with CTED on the design, administration, and implementation of the projects.
Energy Efficiency Credit Enhancement
Washington’s SEP provides $5 million toward credit enhancement mechanisms to generate high levels of leverage for energy efficiency projects that go beyond direct loans. CTED will create risk reduction mechanisms that allow financial institutions to lend to a broader pool of applicants with lower rates and longer loan terms. The risk reduction mechanisms include loan guarantees, loan loss reserves, credit enhancements, and leverage revolving loan funds.
The Farm Energy Assessments Program
Washington’s SEP directs $500,000 to increase on-farm energy efficiency. These funds will be used to create tools for farm energy analysis, and to train staff in the use of such tools. Afterwards, farmers will be provided with a tool to analyze current farm practices and proposed changes.
Clean Energy Leadership
Washington’s SEP will be carried with advice from the Clean Energy Leadership Council. The Clean Energy Leadership Council will consist of representatives from Washington’s major clean energy companies, supporting organizations, and the state’s legislature. The council will be co-chaired by the director of CTED. The Council will develop strategic recommendations to develop clean energy industries within Washington, review energy investments, and recommend potential clean energy programs and projects for possible federal funding through the SEP.
Last week DOE released a new funding opportunity announcement for up to $480 million for pilot-scale and demonstration-scale integrated biorefinery projects. An integrated biorefinery uses an “acceptable feedstock” to produce a biofuel or bioproduct as the “primary product.” Acceptable feedstocks include:
- Certain woody biomass
- Renewable plant materials so long as it is not generally intended for use as food
- Crop reside (cobs, stover, etc.)
- Yard and food waste
- Certain post-sorted MSW
The projects must be either pilot-scale (processing at least one dry tonne of feedstock per day) or demonstration-scale (processing at least 50 dry tonnes of feedstock per day).
The maximum award for a pilot-scale project is $25 million and the maximum award for a demonstration-scale project is $50 million. Generally, the cost share requirements from non-Federal sources are 20% for pilot-scale projects and 50% for demonstration-scale projects.
Applications are due June 30, 2009. Although not required, DOE suggests all prospective applicants submit a notice of intent to apply, which can be submitted through May 29, 2009.
On, May 5, 2009, President Obama announced federal efforts to increase investment and use of advanced biofuels. The President signed a Presidential Directive establishing the Biofuels Interagency Working Group, ordering the Department of Agriculture (“USDA”) to implement financing opportunities from the Food Conservation and Energy Act of 2008 (“FCEA”), and announcing additional Recovery Act funds for renewable fuel projects.
The Biofuels Interagency Working Group will be co-chaired by the Secretaries of Agriculture and Energy and the Administrator of the Environmental Protection Agency. The Biofuels Interagency Working Group will coordinate existing policies and identify new policies to support the development of sustainable next-generation biofuels production.
President Obama has directed the USDA to immediately begin restructuring existing renewable fuels investments in order to preserve industry employment and develop a comprehensive approach to accelerate the production of American biofuels. Further, the USDA has 30 days to begin deployment of renewable energy financing opportunities from the FCEA. Financing opportunities under the FCEA include loan guarantees and grants for research, development, construction and retrofitting of demonstration and commercial scale biorefineries.
President Obama also announced that $786.5 million from the American Recovery and Reinvestment Act (for more information on the American Recovery and Reinvestment Act please see Show Me the Money: The Law of the Stimulus) will be used to expand commercial biorefineries and jumpstart advanced biofuels research and development. The money will be divided as follows:
- $480 million for integrated pilot and demonstration scale biorefinery projects
- $176.5 million for commercial-scale biorefinery projects
- $110 million for fundamental research
- $20 million for ethanol research
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.
Among all the interesting presentations at this month's AWEA transmission and wind workshop, American Superconductor's presentation about developments with superconducting transmission lines was particularly noteworthy. Superconducting direct current lines offer greater efficiency, as well as siting and aesthetics benefits, but have historically fallen victim to much higher costs when compared to traditional overhead transmission lines. However, with talks of extra-high voltage "green superhighways" transmitting renewable energy from the nation's interior to load zones, it appears from American Superconductor that the costs of a 5 GW, 200 kV superconductor line are nearly equivalent to 765 kV overhead lines when built on a 1,000 mile scale. Perhaps we will see a superconducting pipeline instead of an extra-high voltage overlay.
For more information about the viability of superconducting transmission lines, look for American Superconductor's White Paper in the near future.
Earlier this week, I attended Climate Solutions’ Business Briefing on the Governor’s Proposed Climate Change Policy. Hosted by Gerding Edlen, the briefing offered a snapshot of the Governor’s legislative agenda for 2009 and beyond, and gave the sustainable business community the opportunity to offer feedback on what needs to happen to move the plans forward.
The Governor’s Climate Change Agenda (the “Agenda”) covers four major areas: greenhouse gas (“GHG”) reductions, renewable energy, sustainable transportation, and energy efficiency. Some highlights follow.
Greenhouse Gas Reductions
There are three major components to the GHG reduction plan: a cap and trade program, an emissions performance standard, and an authorization of the development of Environmental Quality Commission (“EQC”) regulations. Included in the proposed 2009 legislation is the authorization for Oregon’s participation in a regional cap and trade program. Once authorized, the plan calls for a statewide public process to gather input on how best to structure the program. The program design recommendations will be brought back to the 2011 Legislature for approval, with the regional program scheduled to go into effect in 2012.
In the renewable energy realm, the Agenda includes a solar feed-in tariff, a beefed-up Business Energy Tax Credit (“BETC”), and initiatives to help the state meet the Governor’s goal of 100% renewable energy for state government. Following Germany’s lead, which has had amazing success with the solar energy incentive program known as a “feed-in tariff”, the Governor’s proposed legislation will create a production incentive pilot program to help pay for the electricity produced by a solar project.
The Governor also plans to create a BETC Energy Fund to offer up-front project funding. As with the Cultural Trust program, this proposal will enable citizens to donate money into the fund and take a tax credit on the donation.
Thinking about buying a Prius? If you are hoping for a state tax credit, you may want to revise your wish list. The Governor’s plan calls for a shift toward vehicles that produce less carbon and that have not yet permeated the market, such as plug-in hybrids and all-electric vehicles. In addition, the Agenda would authorize the EQC to develop and phase in a low-carbon fuel standard, that will require fuel providers to lower the average carbon intensity of fuels sold by 10%. The plan also includes an Expanded Transportation Options program and the development of a least carbon planning model.
Because energy efficiency investments are such a cost-effective way to reduce both our energy demand and GHG emissions, a large chunk of the Agenda is devoted to this area. The Governor has put forth several proposals, such as the creation of energy performance certificates, the expansion of the BETC for energy efficiency investments, and the authorization of bonding authority for local governments to finance energy efficiency projects.
Proposed legislation seeks to establish a goal of net-zero emissions homes and buildings by 2030. As a start, the legislation seeks to increase energy efficiency in commercial and residential building codes by 30 percent and 15 percent, respectively. The Agenda also calls for expanding the BETC for industrial energy efficiency projects from 35 percent to 50 percent of the total project costs, up to $20 million.
The various pieces of the Governor’s Agenda will add teeth to existing state programs aimed at addressing climate change, and help keep Oregon at the forefront of innovation and entrepreneurship in the sustainable business realm.