Upcoming Webinar: Impact of State RPS's and the Prospect of a Federal RPS on What Utilities are Doing in Terms of Purchasing the Output of Wind Farms - January 27, 2010
With 3/5 of the States having Renewable Portfolio Standard in place and the prospect of a Federal RPS, many utilities are seeking to become first time purchasers of the output from wind projects. And utilities with a history of purchasing wind are seeking additional resources. In 2009, the presenters collectively worked on over 40 wind power purchase agreements for projects located throughout the United States, enabling them to present a comprehensive overview of the impact of these developments. A number of first time purchasers have been using the RFP process as a vehicle for educating themselves about wind, and often experience difficulty in translating PPA terms that are appropriate for base load resources into PPA terms that work for intermittent resources like wind. Through various PPA terms, utilities are increasingly seeking to place the risk of non-compliance with the RPS on the wind project developer. These developments can result in PPA terms that are very problematic for the financing of the project. This webinar will explore these recent developments, including issues related to output and availability guarantees, allocation of curtailment risk for long-distance transmission to load, wind integration charges, delay damages, conditions precedent, termination rights and the measure of damages.
Moderator:
Edward D. Einowski, Partner, STOEL RIVES LLP
Panelists:
Teresa Hill, Partner, STOEL RIVES LLP
William H. Holmes, Partner, STOEL RIVES LLP
Jennifer H. Martin, Partner, STOEL RIVES LLP
Marcus Wood, Partner, STOEL RIVES LLP
To register: http://infocastinc.com/index.php/conference/255
San Diego Gas & Electric Issues RFO for Renewable Resources
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
California PUC Proposes Criteria to Evaluate the Viability of Proposed RPS Projects
Under California’s Renewable Portfolio Standard, investor-owned utilities only have until 2010 to procure 20% of their power from renewable sources (although certain flexible compliance measures do apply). There are concerns that the rapidly-approaching deadline is leading utilities to sign power purchase agreements with projects that are not viable and may never achieve commercial operation. To help prevent this going forward, the California Public Utilities Commission Energy Division has proposed project viability criteria to evaluate each project bidding into California’s RPS program. Utilities would be required to score potential RPS projects based on developer experience in project financing, RFOs, and facility ownership and operation; technical viability; and project-specific viability criteria such as equipment procurement, project development lead time, transmission lead time and cost of transmission interconnection, site control, permitting, and pricing structure. The project viability score could be taken into account in PPA approval by the CPUC and in gaging whether to excuse utilities that fail to meet RPS goals. Scoring projects based on viability criteria has the potential to affect who successfully participates in the RPS solicitation process and the types of technologies that are selected as RPS projects. Comments on the CPUC proposal are due on February 27, 2009. Read more about the proposal in my colleagues’ recent Renewable Energy Law Alert.
Michigan Passes Renewable Portfolio Standard
On September 18, 2008, the Michigan legislature sent the state's first Renewable Portfolio Standard to the Governor's desk for signature. The package mandates "10 percent of the state's energy come from renewable sources by 2015, regulatory reform that protects Michigan ratepayers and allows utility companies to build new electricity generation in Michigan, and a requirement that utilities meet an additional 5.5 percent of Michigan's annual electricity demands through energy efficiency by 2015." AWEA estimates that Michigan is one of the top twenty states in terms of wind energy potential.
The RPS package, however, has its skeptics. The Detroit News published an editorial that criticized the RPS for imposing a high financial burden on customers - for example, all customers must immediately begin paying a monthly surcharge to allow the utility to recover the incremental cost of complying with the utility's renewable energy plan, although utilities aren't required to take any concrete steps until 2012.
Michigan joins Ohio, which passed its RPS last spring, as the latest Midwestern state (and the 28th state nationwide) to pass an RPS.
