CleanTechLaw: Developments in Renewable Energy Law and Cleantech Policy

North Carolina Definitively Defeats Effort to Repeal Renewable Energy Policy

2013-05-23T06:40:00.000-07:00

A bill to repeal the US state of North Carolina's Renewable Energy and Energy Efficiency Standard (REPS) has stalled in a committee of the North Carolina House of Representatives, failing to win the support of some members of the Republican Party.

A companion bill, S 365, has stalled in the Senate Commerce Committee, after being passed out the Senate Finance Committee through a questionable vote. Both bills failed to meet the May 16th, 2013 “cross-over” deadline for this session of the legislature, and thus are dead in the water.

Support by Republicans key North Carolina Sustainable Energy Association (NCSEA, Raleigh, North Carolina) has stressed the bipartisan nature of the opposition to the bills. H 298 and S 365 were part of a national effort to repeal renewable portfolio standards (RPS) in 19 states by the right-wing American Legislative Exchange Council (ALEC).

The News & Observer (Raleigh, North Carolina, US) has reported that members of right-wing advocacy group Americans for Prosperity (Arlington, Virginia, US) attended the committee and expressed anger at Republican legislators' refusal to bring S 365 to a vote.

Dissent within the Republican Party?

The effort's defeat may be symptomatic of a lack of consensus within the Republican Party over renewable energy policies.

Republican politicians at the federal level have fiercely attacked President Obama (D) over his clean energy policies, as part of a broader attack on policies to limit greenhouse gas emissions and environmental law in general.

However, policies to support renewable energy at the state level enjoy the support of some Republicans, including governors, legislators, mayors and regulators in North Carolina, California, Georgia and New Jersey.

At the federal level Senator Chuck Grassley (R-Iowa) criticized former Presidential Candidate Mitt Romney in 2012 for calling for a repeal of the production tax credit, an important support for the wind industry.

Source

US Senate Bill Would Open MLP Business Structure to Renewable Energy

2013-05-22T23:53:00.000-07:00

Legislation recently introduced in the US Senate seeks to level the energy playing field between fossil and renewable energy projects. The bill, titled the Master Limited Partnerships Parity Act, would allow investors in renewable energy projects access the corporate structure of master limited partnerships.

The business structure offers tax significant tax benefits to investors, this is now available to investors in fossil energy projects only.

The bipartisan bill was introduced by Senators. Chris Coons, D-Del.; Jerry Moran, R-Kan.; Debbie Stabenow, D-Mich.; and Lisa Murkowski, R-Alaska, on 24 April. The bill was referred to the Senate Committee on Finance

Information released by Sen. Coons’ office explains that a master limited partnership MLP is a business structure that is taxed as a partnership, but its ownership interests are traded like corporate stock on a market.

A primary reason MLPs are attractive to private investors is that income they generate is taxed only at the shareholder level, since it is treated as a partnership for tax purposes. The profits of C corporations are taxed at both the corporate and shareholder level.

US law has limited the availability of MLPs to investors in energy portfolios for oil, natural gas, coal extraction and pipeline projects. According to a statement published by Sen. Coons, these types of fossil-based energy projects are able to access capital at lower costs. In addition, they are more liquid that traditional financing approaches, which makes them effective at attracting private investment. A fact sheet released on the legislation stresses that the measure could unleash significant private capital into the energy market by simply adjusting the US tax code.

Information published by Sen. Coons’ office notes that MLPs must generate a minimum of 90% of its income from qualified sources.

These qualified sources currently include real estate or natural resources, such as Crude Oil, Nat Gas, Petroleum Products, Coal, Timber, and other minerals.

The MLP Parity Act would expand this definition to include technologies qualified under certain sections of the existing tax code, including closed and open loop biomass, renewable thermal, municipal solid waste, and biochemical production. The legislation would also allow biobased fuels, such as cellulosic biofuel, biodiesel and algae-based fuels to qualify under the definition.

“The bipartisan Master Limited Partnerships Parity Act levels the playing field to help clean and renewable energy projects compete fairly with traditional energy projects,” Coons said. “This market-driven solution supports the all-of-the-above energy strategy we need to power our country for generations to come. Our legislation will unleash private capital, create jobs and modernize our tax code. That’s why it has earned broad support from Republicans and Democrats in Congress, as well as academics, outside experts, business leaders and investors.”

The bill has been endorsed by a variety of trade associations, including the Advanced Biofuels Association, Advanced Ethanol Coalition, American Biogas Council, Biomass Power Association, and Growth Energy.

The Biotechnology Industry Organization issued a statement applauding the introduction of the bill.

“The US faces the challenge of reducing its costly dependence on foreign oil and competing in a $2.4-T worldwide clean energy market,” said Jim Greenwood, BIO president and CEO.

“This legislation will level the playing field between renewable fuels and fossil fuels in tax policy that shapes private investment decisions. We are especially pleased that this legislation includes renewable chemicals, for the first time establishing tax parity for this growing sector. This will clear a path for innovation that drives employment and economic growth and reduces dependence on foreign Crude Oil,” he said.

Source

Ratepayers Save Under Ohio’s Green-Energy Law

2013-05-22T04:30:00.002-07:00

The “green” energy provisions of a 2008 state energy law have saved consumers $170 million, according to Ohio State University findings that run counter to the argument that the law’s requirements have contributed to an increase in bills.

The study, sponsored by a green-energy trade group, says customers’ electricity bills were 1.4 percent lower than they would have been without the law, a difference of about $170 million from 2008 to 2012. That translates to a little more than a dollar per month for a typical household.

“It appears to be a win-win for the ratepayers and for the Ohio economy,” said Joseph Fiksel, a co-author of the study and executive director of OSU’s Center for Resilience. His research center looks into ways that industrial systems can be made more efficient and environmentally friendly.

The report’s sponsor is Advanced Energy Economy Ohio, a group that opposes a legislative push to revise the state energy policy. The 2008 law, Senate Bill 221, said utilities must meet annual benchmarks for energy efficiency and renewable energy.

According to the study, the energy-efficiency requirement is responsible for all the savings, canceling out a small increase in costs related to the renewable-energy rules.

Under the energy-efficiency rules, utilities provided incentives for customers to cut their power use by installing new lighting systems and making other changes.

While cutting costs, the new rules also spurred $660 million in public and private investment and led to 3,200 new jobs, the report says.

Critics say there is no way that the 2008 law has led to a net savings, although they have not seen this study, which will be released to the public today.

“It boils down to a question: If this stuff is so cheap, then why do you have to subsidize it?” said Jonathan Lesser, president of Continental Economics, a New Mexico research firm.

He was among the experts who testified last month before an Ohio Senate panel about Senate Bill 221. His firm provides testimony across the country about the merits of free-market energy policies.

Even though the study was financed by Advanced Energy Economy, the underlying economic model was developed for another project, Fiksel said. In other words, the parameters of the study were not designed to come up with a result that the sponsor would like, he said.

“The takeaway message is that investing in renewable energy and energy efficiency is an economic stimulus,” he said.

That’s a message that Advanced Energy Economy hopes lawmakers will hear. Ted Ford, the group’s president and CEO, said in a statement that the findings will “be a helpful resource to policymakers as they consider possible changes to the law.”

Source

State May Start Funding Energy-Storage Projects for Solar and Wind

2013-05-21T07:12:00.000-07:00

For the first time, New Jersey’s clean energy program is proposing that it hand out money to energy-storage projects, which are viewed by many experts as a crucial element in helping technologies like solar and wind become more successful.

In a straw proposal developed in the Office of Clean Energy at the New Jersey Board of Public Utilities, the staff is suggesting that the state allocate between $5 million and $10 million over the next four years for energy storage. The proposal says it may award up to $2.5 million in state fiscal year 2014. Over four years, the total could rise to $10 million.

Because the sun doesn’t always shine and the wind doesn't always blow, energy storage is viewed as key to promoting cleaner ways of producing electricity.

Energy storage is still under development. Given the intermittent nature of solar and wind, it is viewed as crucial to making clean energy competitive with conventional technologies like natural gas and coal-fired plants.

The proposal comes at a time when the state is slashing funding for renewable energy, proposing just $7.5 million in the 2014 budget to finance solar, biomass, onshore wind, and water energy.

Nevertheless, the state has aggressive goals to have 22.5 percent of its electricity produced from renewable energy sources by 2020, a target many environmental groups think should be more ambitious.

New Jersey has been a leader in promoting the development of solar installations, ranking only behind California and Arizona in the number of systems it has installed.

The state is also aggressively trying to promote the development of offshore wind, establishing a goal of 1,100 megawatts by 2020. Both goals would be bolstered by the creation of effective energy storage facilities that would make their systems more reliable in providing electricity to the power grid.

The state’s efforts to promote energy storage mirror those goals, although some energy companies question how far the technology has advanced.

The proposal also comes at a time when the state’s clean energy program has suffered from repeated diversion of funds, which have been used to balanced the budget in recent years. Since Gov. Chris Christie has taken office. he and the Legislature have diverted more than $600 million in clean energy funds. Another $150 million is targeted for appropriation in the latest budget proposed by the administration.

Source

Nepal Striving for a Strong Renewable Energy Policy

2013-05-20T06:50:00.000-07:00

The government introduced a revised subsidy policy back in February to increase the spread of renewable energy technologies in Nepal. In revising the existing subsidy policy and recognising the importance of alternative energy sources such as wind in the national energy mix, it has helped spell out some clear priorities. The report cites rural electrification as a major national energy policy concern and underscores the importance of harnessing locally available resources in meeting the rural energy needs. The design of the subsidy rate under the revised renewable policy aims to cover 40 percent of total costs of installations from subsidy, 40 percent from soft loans and remaining 20 percent from direct users or beneficiaries such as community or households.

The level of subsidy received by each household or community depends on the remoteness of the settlement or the community, which is consistent with the aim of rural electrification. However, the revised subsidy policy also violate some fundamental economic principles and contain mixed signals and messages which need to be refined in order to translate theory into practice.

The revised subsidy policy assumes that all VDCs are equally suitable for harnessing all forms of renewable energy. Hence the policy ignores the differences in comparative advantage among communities in terms of resource endowments and availability. It would make more economic sense if the level of subsidy is made dependent on the technology type favourable for each VDC in order to make the best use of the locally available resources. This is to say that it is economically desirable to install wind turbines in only those places where there is ample wind supply.

The existing subsidy regime provides flat incentives to install a wind turbine in really windy areas in Mustang as well as less windy areas more favourable for other forms of renewable energy. How can such subsidy policies promote the best use of locally available resources? A detailed feasibility and resource mapping study on the potentials of different renewable energy technologies across VDCs can be the starting point for a rational renewable subsidy policy design in Nepal. The government, as the central planner, is naturally expected to invest more in these assessments and studies.

The capital costs of each renewable technology are not documented in the revised policy report. The level of subsidy should reflect the true capital costs of the technology, coupled with additional costs tied to the remoteness of the VDCs. The additional costs can include the costs of transporting the technology. The cost estimates of renewable energy technologies vary across studies and can be problematic for trial technologies like wind in the Nepali context. The capital costs of solar power installations has also fallen dramatically in the international market, although it is still debatable if the fall can be attributed to true market maturity of the technology or to artificial price setting. Learning by doing also implies that the cost of acquiring and installing these technologies falls and should be adequately reflected in the level of subsidy allocated by technology type. This will at least require an annual appraisal or review on the level of subsidy determined by technology type coupled with an assessment of the effectiveness of the policy.

Only 12 percent of Nepali population has access to electricity from renewable energy sources, where around 23 MW of electricity is generated from micro hydro schemes, 12 MW from solar PV system and less than 12 KW from wind energy. There is a need to prioritise the established renewable technologies for their quick adoption which will in turn greatly improve rural electricity access. It is not clear whether the revised subsidy policy prioritises these technologies. However, it provisions for the amount of subsidy to increase with the size of the technology, a sensible approach which will help reap the benefits of the economy of scale.

Moreover, the subsidy policy accommodates a range of renewable technologies and aims to promote diversity in generation. It goes without saying that promoting diverse energy technologies can improve the security and resiliency of the electricity system. In this connection, waste-to-energy technologies also need to be recognised as renewable energy sources and made eligible for subsidies. For waste-to-energy technologies can be a good solution for the management of the growing volume of municipal solid waste. The process will help generate valuable energy from useless waste.

The subsidy design also places greater importance on access to credit and cheap loans in order to finance technology installations in rural areas. This will require reforms in the financial sector as well as policy-level coordination between the financial and energy sectors. Hence, the revised subsidy policy also clearly hints that the success of energy sector reform depends on synchronisation of associated reforms in the economy.

Community empowerment and involvement is a must to improve electricity access in rural areas. Community-based financial arrangements such as cooperatives can play a vital role in financing rural electrification. However, the success of the revised policy will largely depend on the subsidy delivery mechanism. Corruption issues are hard to tackle in the Nepali context. Developing countries like Nepal may also find it hard to sustain the subsidy system due to limited national fiscal capability. Lessons of successful rural electrification from countries like Peru, Chile, South Africa and Thailand can provide useful insights to design a proper subsidy delivery mechanism in Nepal.

The revised subsidy policy has the potential to be a smart renewable energy subsidy regimen. Like I said earlier, a smart subsidy mechanism for rural electrification should lead to an optimum utilisation of locally available resources. The revised policy also sends a clear message to policymakers that current scope of renewable energy sources in Nepal is limited to rural electrification and any talks of their mass integration in the transmission grid shall remain a fantasy for the foreseeable future. I believe this is a sensible approach.

The author is a Research Associate in Energy Economics and Policy at Heriot-Watt University, Edinburgh

Source

Ghana’s Energy Plan Ambitious – US Energy Advisor

2013-05-17T06:38:00.000-07:00

A senior US energy advisor has lauded Ghana for having an ambitious plan for the development of its energy sector, he says by putting in place all the necessary energy policies such as the renewable energy policy, it is time for implementation to drive energy sector growth.

“Ghana has an ambitious energy plan and its time for implementation,” Raffi V. Ballian, Senior Renewable Energy Advisor at the US State Department told ghanabusinessnews.com in an interview May 14, 2013 in Accra.

Mr Ballian praised the level of energy access in Ghana and indicated that Ghana was selected as a pilot Sustainable Energy for All (SE4All) country because of the progress that has been made, despite the immense challenges.

According to the revised national energy policy document in 2009, the Ghana government’s fundamental goal of development agenda as enshrined in the Growth and Poverty Reduction Strategy (GPRS II) is to grow the economy to a middle income status of $1,000 per capita by 2015 and also to reduce poverty amongst Ghanaians.

“To achieve the projected GDP of $1,000 per capita, Ghana’s total energy supply is expected to grow significantly,” the document said.

It however noted that the challenge is how to increase the energy supplies and also expand the energy infrastructure in order to achieve the development targets as Ghana is well endowed with a variety of energy resources including biomass, hydrocarbons, hydropower, solar and wind as well as the capacity to produce bio-fuels and nuclear energy.

In response to the priority developmental objectives of the Ghana government, the country’s vision for the energy sector is to develop an “Energy Economy” that would ensure secure and reliable supply of high quality energy services for all (both urban and rural) Ghanaian homes, businesses, industries and the transport sector while making significant contribution to the export earnings of the country, the policy document stated.

At a discussion forum held at the US Embassy in Accra to identify possible solutions to Ghana’s primary energy challenges, Mr Ballian noted that local capacity is a critical element in having skills for future energy projects.

On which way to go for Ghana in terms of use of energy sources, Ballian said both traditional and renewable energies are capital intensive and it “depends on what the consumers want” and can afford to pay.

He was of the opinion that energy programmes funded by donor agencies and countries help but those are “not sustainable”.

On renewable energy transformation, Ballian said Ghana and many other countries have priced themselves out of it due to prohibitive customs tariffs.

He explained that a low cost renewable project developed for the poor faces customs tariffs rather when importing them hence the price of the renewable initiative meant for the poor goes higher.

Source

FERC Jurisdiction and Renewable Energy: What Developers Should Be Thinking About

2013-05-06T11:51:00.000-07:00

By Ben Falber
Cleantech Law Partners

The Federal Energy Regulatory Commission (“FERC”) recently proposed reforms to the interconnection regulations for small generators – those with a capacity of 20 MW or less. These reforms are meant to make the interconnection process for solar and wind faster and cheaper. Details on the proposed rules and how to participate in the currently open comment period can be found here.

It is essential to both know the rules and when the rules apply. Understanding how energy is governed – whether by federal, state, or local entities – is essential for crafting a financially successful endeavor. “Indeed, interconnection problems and delays are the single greatest impediment to the successful installation of distributed energy equipment and are holding back the greater development of distributed resources.”[1]

So, when will a small generation facility be impacted by FERC’s proposed reforms? When does FERC’s jurisdiction become relevant when entering into an interconnection agreement?

·FERC’s Interconnection Authority
The Federal Power Act (“FPA”) was passed in 1920 and amended in 1935. With the FPA, Congress gave FERC authority over the transmission of electricity in interstate commerce (across state lines) and the sale of that electricity at wholesale.[2]

Wholesale means selling for the purpose of resale.[3] A retail transaction is a sale to the end user.[4]

Broadly speaking, FERC has jurisdiction over a generator’s interconnection to the transmission grid - also known as the bulk power system. This includes transmission facilities that are, or might be, used in interstate commerce.[5] Once the electricity is sent out into the transmission grid, it will comingle with electricity being sent across state lines and sold wholesale.[6]

Generally, FERC does not have authority over local distribution facilities used solely in intrastate (in-state) commerce or used solely by the transmitter of the electricity.[7] States have authority over the siting and permitting of new generators and transmission lines.

· Wholesale vs. Retail for Qualifying Facilities (“QF”)
In 1978, the Public Utility Regulatory Policies Act (“PURPA”) created QFs as a category of energy producers. Generally, a QF is either a renewable energy facility with a maximum capacity of 80 MW[8] or a “productive and beneficial”[9] cogeneration facility.[10]

QFs receive a wide range of regulatory benefits.[11] For example, PURPA requires electric utilities, which were monopolies at the time of its enactment, to buy energy from QFs at competitive rates.[12]

If a QF interconnects to sell all of its power directly to the local utility or on-site customer, then interconnection is a state issue.[13] If a QF interconnects to sell, or affirmatively plans to sell, electricity to a third party, then FERC has jurisdiction over the interconnection.[14]

Successfully generating and transmitting electricity are two very different goals. For small renewable generators that have any intention of ever selling electricity beyond on-site or retail at the distribution level, FERC’s proposed reforms are an important development.

NOTES‫:‬
[1] Frederick R. Fucci and Natara Feller, Chapter Fifteen: Distributed Generation, in The Law Of Clean Energy: Efficiency and Renewables, 353 (Michael B. Gerrard ed., 2011).
[2] Federal Power Act (FPA), 16 U.S.C. §824(a) (2006).
[3] Id. § 824(d)
[4] Fred Bosselman, Joel B. Eisen, Jim Rossi, David B. Spence, Jacqueline Lang Weaver, Energy Economics And The Environment, 590 (3d ed. 2010).
[5] Michael Dworkin, Javier Garcia-Lomas Gago, Clay Francis, Paul Foley, Anna Skubikowsky, and Shain Milani, Chapter Twenty-Two: Energy Transmission and Storage, in The Law Of Clean Energy, supra note 1, at 536.
[6] Fred Bosselman, supra note 4, (citing FPC v Florida Power and Light Co. 404 US 453 (1972)).
[7] FPA, supra note 2, at § 824(b).
[8] 18 C.F.R. §§ 292.203(a), 292.203(c), 292.204 (2010).
[9] Id. at § 292.205(d)(1).
[10] Id. at §§ 292.203(b), 292.205.
[11] Frederick R. Fucci and Natara Feller, supra note 1, at 351.
[12] This refers to buying energy at “avoided cost,” the amount it would have cost a utility to produce the electricity itself. This has been limited somewhat by Section 1252 of the Energy Policy Act of 2005. Fred Bosselman, supra note 4, at 875.
[13] Order No. 2003, Standardization of Generator Interconnection Agreements and Procedures, 104 FERC ¶ 61,103, 18 CFR Part 35, at ¶ 812 - 813 (2003); Florida Power & Light Co. Order Deying Petition For Declaratory Order, 133 FERC ¶ 61, 121, at ¶ 61, 19 - 21 (2010).
[14] Order No. 2003, supra note 13, at ¶ 814.

Source Ben Falber, Cleantech Law Partners

Greenpeace for Revision of Renewable Energy Policy in India

2013-05-02T23:34:00.000-07:00

In the backdrop of a persistent power crisis and raging coal scam, Greenpeace today released its assessment report on Renewable Purchase Obligation (RPO) titled “Powering Ahead on Renewables: Leaders and Laggards”, which ranks performance of all the states on renewable energy supply and calls for revision of RPO mechanism based on equity principle.

RPO framework in its present form has failed to deliver its mandate and many powerful states including National capital Delhi have made the mockery of current framework. The Ministry of Power needs to make it mandatory with a provision of penal measures to ensure the implementation of RPOs directive.

In all, out of 29 states, 22 failed to meet their RPO targets which lead to loss of more than 25% electricity that was expected to be generated from renewable energy sources in 2012.

Very few states have demonstrated the leadership in implementing the RPO framework and fulfilling their obligation on renewables. The north eastern state of Meghalaya and Nagaland, the hill states of Uttarakhand and Himachal Pradesh and the southern coastal states of Tamil Nadu and Karnataka have clearly taken the lead in not only meeting their RPO targets but also generating over and above the targets.

Disappointingly, heavy energy consumer and a resourceful Union Territory like Delhi that could have set an example, is a straggler in terms of fulfilling its obligation. Despite a good potential for solar, the National Capital fared amongst the worst with not even one per cent achievement. Regulators failed to penalise or implement the directives of RPO in Delhi and in other key states like Maharashtra and Punjab, which fell short by about 50 per cent.

Notably, performance on renewable in the three major coal bearing states of Chhattisgarh, Madhya Pradesh and Jharkhand was contrasting with the former taking the lead and the latter two falling far behind.

Talking at a press conference, Abhishek Pratap, senior energy campaigner, Greenpeace India and lead author of the report said, “This report is an indictment of the whole policy framework around renewables and the dismissive attitude of the government towards it. RPO mechanism could have been a tool to bridge the demand-supply gap in the energy sector across the country. But the toothless mechanism combined with unambitious targets has failed to give any impetus to renewables in India. Delhi as the national capital should have been a trend setter. But it has set the trend in the reverse direction.”

The report, a joint effort of Greenpeace and Infraline Energy, highlights the inconsistency between national renewable energy targets set by National Action Plan on Climate Change and the RPO targets fixed by state electricity regulators. The overall cumulative targets set by various state regulators is 5.44 per cent, whereas the national target is set at 7 per cent resulting in a deficit of 1.56%, which translates into nearly 14,268 million units of electricity from renewable energy projects.

“The differential RPO targets derived for each state in the report are based on current and projected installed capacity of renewable energy, existing consumer profile, the state’s fiscal deficit, and state Gross Domestic Product. The report recommends the same criteria be used for setting new RPO targets that are ambitious, equitable and viable but mandatory for every state,” said Rohit Khatri, energy researcher, Infraline Energy.

The report further recommends fiscal and policy measures to promote renewable energy projects over conventional electricity . To improve the share of renewable energy in electricity grid for its distribution and supply and fight the pricing perception barrier, higher amount of renewable energy should be taken on priority basis from renewable-rich states and open up proper inter-state transmission.

“India’s international position on energy equity needs to be translated within the country as well. Rich states need to take higher responsibility on clean energy development to create space for poor states. There is a perception block that renewable energy is costly and not viable and hence cannot power India’s ambitions. To meet its growth objectives, provide energy to all and reduce energy inequity, India needs to reform its energy sector and prioritise renewable,” added Pratap

Source

Good News! North Carolina Votes to Keep Renewable Energy Policy

2013-05-01T14:21:00.000-07:00

North Carolina lawmakers voted down the bill which would have rolled back and then eliminated the state's renewable energy policy, the Renewable Portfolio Standard (RPS).

The vote on the bill, modeled on ALEC's Electricity Freedom Act, was 18-13 in the House Public Utilities Committee, making it unlikely that it will move to a House vote.

Economics won the day and this time it favored renewable energy. There's too much positive economic activity for lawmakers to vote it down, with over 100,000 green jobs in the balance and hundreds of solar companies now in the state. North Carolina is now 4th in the US for new solar installations because of the RPS.

North Carolina's law requires utilities source only 3% of renewables by 2014 and rises gradually after that, reaching 12.5% by 2021. Utilities can meet the targets through energy efficiency in addition to adding renewables or buying certificates.

The Affordable & Reliable Energy Act would have cut the 2021 target and eliminate it after that.

Rep. Mike Hager, (R-Rutherford), the sponsor of the bill and a member of ALEC, pulled it from the House Committee on Environment and instead placed in the House Committee on Public Utilities and Energy, where he thought it would get easy support since he chairs that committee.

Originally, he wanted to cut the 2021 target to a mere 3%, but when he felt resistance he raised it to 6%. In this last version, he kept the 12.5% target and eliminated the program after 2021.

Even that failed, thanks to six Republicans - including three of the most powerful legislators in the state House - who voted with Democrats.

"It was based off local issues back home," Rep. Tim Moore (R-Cleveland County) told the News & Observer. "I would have had a difficult time talking to a CEO who just brought 300 jobs to Cleveland County [and telling him] that I'm going to vote to eliminate this program that justified their investment."

Although solar has seen the most growth under the RPS, it covers all renewables, including biogas, which local farms are interested in. Solar is also popular with farmers.

A local developer is planning a 100 MW solar plant, the biggest in the east, and Apple now boasts the biggest corporate-owned solar PV and fuel cell system, there.

Conservatives are Furious

Hager could tweak the bill and continue pushing it and judging by the reaction of his base, that's possible.

"The vote in Raleigh was closely watched by national conservative organizations that had targeted North Carolina as the first domino in a national strategy of toppling green-energy policies in more than two dozen states," notes the News & Observer.

16 states are considering similar legislation right now, more than half the states that have an RPS.

16 conservative organizations, such as ALEC, American Conservative Union, Americans for Tax Reform and Heartland Institute, pushed hard to get the bill passed, even sending a letter telling lawmakers that it was their "moral obligation" to oppose government programs that interfere with free markets, reports the News & Observer.

And two people from Americans for Prosperity witnessed the vote to let lawmakers know "other states are watching."

When it was voted down, Dallas Woodhouse, North Carolina's director for Americans for Prosperity, said he could barely contain his anger.

"This was a horrible vote by Republicans, and they need to be held accountable," he told News & Observer. "And that's all I'm going to say."

Source

Russia Unveils Draft Renewable Energy Law

2013-04-30T14:05:00.000-07:00

Russia’s Energy Ministry submitted a draft renewable energy law to Prime Minister Dmitry Medvedev for approval on 15 April. It is aimed at supporting the deployment of renewable energy sources including solar, wind and hydroelectric power plants across the country.

If approved, RUB 85 billion (around US$2.8 billion, €2 billion) will be made available to support renewable energy projects in Russia. According to Deputy Prime Minister Arkady Dvorkovich, the draft was scheduled for approval on April 18. However, the deadline has now been shifted back until April 25.

The incentive scheme is expected to be implemented through power purchase agreements and will prioritize projects in line with a local content requirement. According to the draft, the new law guarantees a 14% return on investment. No specific details have been released regarding the tariffs for the individual technologies.

The draft law is one of the major provisions of the recently approved state program, "Energy Efficiency and Energy Development in Russia" for the period 2013 to 2020. It has been devised in an attempt to reduce Russia’s reliance on oil and gas.

The law has been based on the Russian Energy Ministry’s renewable energy program launched in 2009. Originally, the goal was for renewables to cover 1.5% of Russia’s electricity demand by 2010, 2.5% by 2015 and at least 4.5% or 11 GW of installed capacity by 2020. However, in 2011, only 8.5 billion kWh of energy – less than 1% of Russia’s total electricity output – was produced from renewables.

This underachievement was not unexpected, given that the industry suffered from extremely low investment attractiveness, reports Russian newspaper, Kommersant. It cites the lack of local legislation, compensation rules, grid connection and experience for production of equipment for renewable plants, as well as the high cost of electricity, as the major problems, which impeded the development of the renewables industry in Russia.

Consequently, the government is now said to be targeting around 2 to 2.5% of renewables, or 6 GW of installed capacity by 2020.

Local consumer associations and conventional energy producers have opposed the proposed law, specifically due to the investment volume and the subsidization of renewables, continues Kommersant.

According to the newspaper, they claim the incentive program could lead to weaken the position of solar thermal generation, and cause a significant rise in electricity bills. It is not unacceptable to subsidize renewables at the expense of other consumers, they reportedly argue.

Last October, it was reported that Russia was said to be considering the introduction of an auction, in order to select solar projects. At the time, it was expected that no more than RUB 50 billion would be made available until 2020.

Source

NC House Panel Halts Renewable Energy Law Repeal

2013-04-29T13:49:00.000-07:00

House Republicans on Wednesday helped sink a bill pushed by one of their own leaders that would have scaled back and later repealed requirements that North Carolina electric companies generate a set portion of power through efficiencies and alternative sources.

The House Public Utilities Committee, on an 18-13 vote, defeated a motion that would have phased out a landmark 2007 law and end the requirements by 2021.

The current law set no expiration date on the mandate that ultimately directs big electric utilities such as Duke Energy Corp. to generate an amount equal to 12.5 percent of its retail sales from efficiency efforts or renewable sources such as solar, wind and animal waste. Electric cooperatives and city-owned power companies have to reach 10 percent later this decade.

The bill sponsors, led by House Minority Whip Mike Hager, said it was time to remove what they called subsidies for the industries, because utilities can pass along part of the cost of complying with the law to home and industrial customers on their power bills. The bill would have capped the requirement at 10 percent for electric companies and 6 percent for cooperatives before phasing it out.

"If you oppose this bill you support a mandate and subsidy that will virtually last forever," Hager, R-Rutherford, told committee members. "I think we've got a fair bill here that soft-lands the industry."

But several Republicans — including the House Rules Committee chairman and two chief budget-writers — voted against the change, with at least one citing the jobs he said have come to his district because of the renewable energy portfolio standard. Renewable energy companies, environmental groups and large farming operations in the state argued the standard had contributed to creating jobs and encouraging clean energy investments in North Carolina.

Rep. Tim Moore, the rules chairman, said a German-based company that makes mounting systems for solar panels is bringing 300 jobs to his home of Cleveland County.

"I'm pretty well convinced that if it weren't for this program that those companies at least starting out wouldn't be there and it would result in a net loss in jobs in my county," Moore said after the meeting.

A subsidiary of North Carolina-based Prestage Farms, with 1,100 workers in the state, is close to completing plans for a system that converts poultry waste into gas in Bladen County, company spokeswoman Summer Lanier told the committee.

"Prestage would certainly see its large waste energy project halted without the support of (the 2007 law) as it is currently written," Lanier said, adding that the company "already has invested millions to help fulfill the utility companies' needs."

Rep. Jerry Dockham, R-Davidson, who also voted against the repeal, said the legislature should let the current standards take their course and that it would be wrong to change "horses in the middle of the stream right now. "

Several North Carolina and nationally-based conservative-leaning and free-market groups actively pushed for the repeal. A letter signed by 16 organizations and provided to committee members said the requirements in the 2007 law will artificially boost electric bills for consumers because solar and wind-based energy is more expensive to produce.

"It's ridiculous that the General Assembly would ever want to pick winners and losers," said Donald Bryson with the state chapter of Americans for Prosperity.

Elizabeth Ouzts with Environment North Carolina said the renewable standards have cost utility customers so far and ultimately will save consumers money. She praised legislators for turning back the bill, which is technically still alive but would probably need to be overhauled to be revived.

"We're going to try and patch it up," Hager said later Wednesday. He didn't know why he lost but said some lawmakers had been on the fence about the bill entering the meeting. He said it's a philosophically conservative bill that he hopes will sway some "no" votes back around to his side. The bill failed although the repeal date had been pushed from 2018 after it passed in another House committee by just one vote.

Source

MLPs Under Consideration to Finance VT Renewable Energy

2013-04-12T01:34:00.000-07:00

Vermont has introduced legislation intended to make renewable energy projects easier to finance.

Representative Peter Welch's Master Limited Partnership Parity Act would allow renewable energy companies to take advantage of master limited partnerships (MLP) -- a key financing tool used by the energy sector, which has driven investments in oil, gas, and coal projects for nearly 30 years.

An MLP is taxed as a partnership, but ownership interests are traded like corporate stock. Profit from publicly traded C corporations is taxed at both the corporate and shareholder levels, but because it is treated as a partnership for tax purposes, income from MLPs is taxed only at the shareholder level.

Currently, there are no laws under which renewable energy projects can take advantage of MLPs, but the bill will change that by expanding the definition of qualified projects.

"Expanding MLP financing to renewable energy projects will be a boost for the renewable industry and for a cleaner energy future. If oil, gas, and coal projects can take advantage of this important tool, there is no reason why renewable projects should be excluded," Welch said in a statement.

Source

GOP Fighting Over Renewable Energy Bill, While McCrory touting renewables conference

2013-04-10T01:06:00.000-07:00

The bill to end subsidies and the requirement that power companies develop alternative energy sources that is working its way through a divided GOP in the state House has an interesting future ahead of it -- especially since the governor's commerce secretary is promoting a renewables conference.

It squeaked through its first committee meeting Wednesday, and has an unusual three more committees to clear before going to the house. Then, if it gets that far, the bill faces an uncertain reception in the governor’s office.

Recently, Gov. Pat McCrory told WRAL-TV that he is discussing the renewable energy portfolio law with his energy policy advisers and with the state’s environmental regulation agency. McCrory said the state needs to send a clear message to alternative energy investors, which is what opponents of Rep. Mike Hager’s HB298 say.

It would be awkward if McCrory came out against renewable in light of the fact that his commerce department on Wednesday sent out a news release touting the 10th Sustainable Energy Conference later this month in Raleigh.

“The state’s clean energy sector has been identified as one of the top national growth trends, vaulting North Carolina into a top-tier state for clean energy jobs and lifting the entire Southeast with it,” Commerce Secretary Sharon Decker said in the press release.

Highlights of the conference include a Nobel Peace Prize winner, a leader of one of the state’s “most dynamic energy product innovaters,” the sustainability chief of one of the country’s top craft brewers, and the electric vehicle manager with Nissan LEAF in Tennessee.

Source

R.I. Renewable Energy Laws Among the Best

2013-04-08T13:40:00.000-07:00

While adapting to a changing climate is important, it’s perhaps even more important that we make a commitment to addressing the root causes of climate change. Scientists agree that many chemical compounds found in the atmosphere act as greenhouse gases. These gases allow sunlight to enter the atmosphere freely. When sunlight strikes the Earth’s surface, some of it is reflected back toward space as infrared radiation — heat.

Greenhouse gases absorb this infrared radiation and trap the heat in the atmosphere. Many gases exhibit these greenhouse properties. Some of them occur in nature — water vapor, carbon dioxide, methane and nitrous oxide — while others are exclusively human-made, such as gases used for aerosols. Levels of several important greenhouse gases have increased by about 25 percent since large-scale industrialization began some 150 years ago. During the past 20 years, about three-quarters of human-made carbon dioxide emissions were from burning fossil fuels. Switching to renewable energy is an important strategy for addressing the future trajectory of climate change.

Rhode Island has one of the most comprehensive — and best — packages of renewable energy laws in the United States. These laws have been enacted by the General Assembly during the past nine years and have, for the most part, worked out exactly the way they were intended. While it’s true that much more will need to be done if we are to reach our goals of reducing greenhouse gas emissions by 80 percent by 2050, it’s also true that Rhode Island is a national leader in renewable energy.

The following is a look at four major renewable energy statutes in Rhode Island:

The Renewable Energy Standard (RES) — called “Renewable Portfolio Standard” in some neighboring states — requires utility companies to obtain a certain percentage of their electricity from renewable energy sources. The RES was enacted in June 2004, and the percentage of electricity that must come from renewables increases annually, reaching 16 percent of load by 2019.

The mechanism that is used to monitor compliance is an ingenious one. Renewable energy generators get credits for every unit of renewable electricity they generate. These credits are called “renewable energy certificates” (RECs). Utilities show their compliance with the RES by buying enough RECs from renewable energy generators to satisfy the RES obligation year by year. In the event that there are just no RECs available on the market — because not enough renewable energy projects have been built — utilities can satisfy their RES obligation by making a so-called “alternative compliance payment” (ACP) to the state’s Renewable Energy Fund. That money goes toward new renewable energy projects.

In the nine years since the RES law was enacted it has worked well. In nearly every year, there were plenty of RECs on the market. Thus, renewable energy project owners actually had two separate streams of income: they sold electricity and they sold RECs.

This past year, however, there was a shortage of RECs, so National Grid made an ACP to the Renewable Energy Fund of nearly $5 million. The way the RES law is designed, renewable energy projects are helped when there are RECs to buy, because developers receive a second stream of income, and renewable energy projects are also helped when there are no RECs to buy, because ACP money goes to fund new renewable energy projects.

The 2004 RES has worked well, but had one big gap in it. Long-term contracts (LTCs) between a renewable energy developer and a utility are especially important to renewable developers, because LTCs help the developers get bank loans for their projects. Developers can literally “take the LTCs to the bank” and use them to collateralize loans to build their projects.

The 2004 RES didn’t require utilities to enter into LTCs, and National Grid was meeting its RES obligation by buying RECs only on the spot market. The General Assembly responded by enacting the LTC Statute in June 2009. That law obligates the utility to buy 90 megawatts of renewable energy with long-term contracts, not on the spot market. These 90 megawatts are in addition to the obligation created in the 2004 statute, and are to be completed over a four-year period.

The LTC statute also facilitates construction of two offshore wind projects off the coast of Rhode Island — a 10-megawatt demonstration project off Block Island and a possible, and much larger, 150-megawatt project further off shore. The 2009 statute differs from the 2004 statute in one other important way: the RES statute mandates the buying of RECs; the LTC statute mandates the buying of a so-called “bundled commodity” that includes both electricity and RECs.

Net metering occurs when an electric customer’s meter can run not only forward but also backward. Net metering is important to individuals and companies that have small renewable projects, such as solar panels on the roof of a home, because net metering often makes the difference between those projects being economically viable and non-viable.

Until 2011, net-metering law in Rhode Island was in shambles. For example, some renewable energy technologies qualified for net metering but, for no apparent reason, others did not; moreover, many portions of the law were so vague — or incoherent — that no one was sure what they meant, and there was even litigation challenging net metering by alleging that the Rhode Island law conflicted with federal law.

A new net-metering statute enacted in June 2011 fixed all those problems. The new law makes clear that net metering is available to all renewable technologies; it gives a generous price to renewable energy generators; and outlines exactly the boundaries between Rhode Island and federal law. Large institutions, such as universities, get to offset the electricity usage at an unlimited number of separate meters; and municipalities get to offset meters at disparate locations. For example, by erecting a single wind turbine, a municipality could offset the separate electricity meters at its town hall, fire station, police station, elementary school, middle school, and, say, three high schools. This is one of the most progressive net-metering statutes in the country.

The Distributed Generation Standard Contracts statute addresses and fixes an unexpected problem in the 2009 LTC statute. That statute worked well for large companies, such as Deepwater Wind, that wanted to develop and build large projects. But the LTC statute wasn’t so good at helping smaller developers that were unable to afford an army of lawyers to negotiate individual contracts with the utility.

The DG statute solved this problem. The statute carves out a portion of the long-term contracting obligation created in the 2009 LTC statute and sets that portion aside just for small, local projects, like a town that wants to put up a single wind mill. In order to prevent the need for that expensive army of lawyers, the DG statute creates a simple, standard contract for developers of small, local renewable energy projects.

Basically, the law says: If you have a small, local renewable energy project, you do not need to negotiate your own contract with National Grid; instead you can automatically get a standard, short, easy-to-understand two-page contract. The statute also sets a standard price for such small renewable energy projects — the price is set by a board and is designed to be high enough so that such small projects are economically viable, but low enough so that the public is not forced to overpay for renewable energy. The big, utility-scale projects can still be built; but the DG bill will now make it easier for smaller projects to also be built.

In the 15 months since the bill was signed into law, National Grid has held three separate sign-up periods. To date, 18 separate projects have signed up. Each of these 18 projects will be built here in Rhode Island. The proposed projects are in Providence, East Providence, Portsmouth, Lincoln, Westerly, Bristol, West Greenwich, East Greenwich, Hopkinton, Middletown, Cumberland, North Kingstown, North Smithfield and West Warwick.

Source

State Renewable Energy Policy Developments - March Recap

2013-04-03T12:40:00.000-07:00

Attacks on state renewable energy deployment policies continue in at least twenty-two states. However the news is not all bad with a near equal balance of states presenting opportunities to expand, strengthen or improve existing renewable energy policies. For fellow energy policy wonks out there, the North Carolina Solar Center posted this handy compendium of all state-level renewable and clean energy legislative developments taking place in 2013. Below is a brief March recap of the states where NRDC is actively defending, strengthening or improving policies to promote clean and renewable energy deployment.

Kansas: The legislature firmly defends the state’s renewable energy standard.

Kimi Narita, MAP fellow at NRDC, who lobbied in Topeka recaps the victory:

Exciting news out of Kansas! As I mentioned in a previous post, Kansas’s renewable energy portfolio standard (RPS) was under attack through two bills: House Bill 2241 and Senate Bill 82. The renewable portfolio standard ensures that Kansans receive a certain percentage of renewable energy like wind and solar, culminating in 20 percent renewable energy by 2020. The House bill would have completely repealed the 20 percent benchmark. The Senate Bill would have delayed targets by two to four years.

But Kansans didn’t stand for this. Today, the House voted 63-59 to send the House bill back down to committee for further review. The Senate rejected SB 82 by a 23-17 vote this evening.

All this in a state where Republicans have a supermajority in both chambers. There are 33 Democrats and 92 Republicans in the House; 8 Democrats and 32 Republicans in the Senate.

What this shows is that the RPS is not a partisan issue, it is a bipartisan issue.

For good measure, NRDC jointly published this rebuttal with the Kansas Energy Information Network (KEIN) to counter the Beacon Hill & Kansas Policy Institutes’ misinformed study that RPS opponent advocates used to base their arguments upon.

We must remain vigilant, though, for the remainder of the Kansas legislative session to make sure that RPS foes don't get away with slippery or hidden legislative tactics to retry their poor measures.

Ohio: The threat of clean energy opposition looms large.

From my blog two weeks ago:

The ALEC coalition hopes to of put the future of Ohio's Alternative Energy Portfolio Standard (AEPS) in doubt. This Tuesday, March 19th, the Ohio Senate Public Utilities Committee will hold its second hearing on the status of the Ohio AEPS. ALEC-member groups, Heartland Institute and the Competitive Enterprise Institute have been invited to testify alongside two renewable energy groups the Solar Electric Industry Association and the Mid-Atlantic Renewable Energy Coalition.

NRDC published this quick reference rebuttal to the Beacon Hill & American Tradition Institutes’ inaccurate study on the Ohio AEPS.

We will remain vigilant to any language that could be introduced into two 'placeholder' bills, SB-58 and SB-34, which could undermine the efficacy of the AEPS.

North Carolina: An attempt to ‘freeze’ one of the state’s hottest economic growth sectors.

As reported by Herman K. Trabisch of Greentech Media:

North Carolina House Bill 238 “would essentially freeze the existing 12.5 percent [renewable portfolio] standard at the present 3 percent except for existing contracts.”

Yet, the North Carolina RPS contributed $1.4 billion in investment in clean energy projects between 2007 and 2012 (a 13-fold increase) while creating or saving more than 20,000 jobs and holding electricity rates steady.

We will be active in North Carolina for the remainder of the 2013 legislative session to extinguish RPS threats in HB-238 along with any other bills that would undermine the RPS.

Missouri: The state’s renewable energy standard and the will of the people are threatened.

Kimi Narita's update on the state of affairs Missouri:

Back in 2008, an impressive thing happened in Missouri. Missourians voted by a 2-1 margin for Proposition C, which created the Renewable Energy Standard. Now, the Renewable Energy Standard and the will of the people are at risk.

The Standard requires that investor-owned utilities gradually increase renewable electricity generation over the years so that by 2021, Missouri’s energy mix will contain 15 percent renewable energy coming from sources like solar energy, wind, biomass, and small-scale hydropower facilities.

Because of utilities’ resistance to complying with the Standard, Missourians have not seen as much of the economic benefit of the Standard as they should expect by now. However, one notable exception is the solar rebate program. To encourage the development of solar energy in the state, the Standard states that utilities are to provide a $2.00 rebate per installed watt for customer-based new or expanded solar projects, making solar more affordable. As a result, Missouri solar installations have increased from 101 kW in 2009 to more than 7.8 MW in 2012. In all, the solar industry in Missouri now employs more than 1,800 Missourians, and Missouri is home to 61 solar companies.

NRDC published this rebuttal to the Beacon Hill Institute’s maligned study on the Missouri Renewable Energy Standard.

The bill that currently threatens the efficacy of the state's popular RPS law is HB-44, which would literally 'water-down' the RPS by allowing existing, already-paid-for, legacy hydroelectric power generation to be eligible for renewable energy credit,

Arizona: Proposal to ‘alter’ Arizona’s landmark renewable energy standard is withdrawn.

Reported on by Herman K. Trabisch of Greentech Media:

Solar advocates in Arizona are celebrating a victory -- Republican Arizona Corporation Commission (ACC) veteran Gary Pierce has withdrawn his proposal to alter the state’s Renewable Energy Standard and Tariff (REST) and reduce the 15 percent renewables by 2025 requirement on Arizona’s investor-owned utilities.… Solar champion Gabby Giffords’ successor in the U.S. Congress, Representative Ron Barber (D-AZ), pointed out that a REST cutback would cost the state renewable energy jobs.

We will remain on watch in Arizona to push back against any other attempts - in the ACC or the legislature - that could undermine the state REST.

New York: Governor Cuomo pledges to transform New York’s energy system into one that is resilient, reliable, affordable and clean.

Kit Kennedy provides a comprehensive look at what NRDC is doing to advance clean and renewable energy in New York. Below is an excerpt of her full post:

In the wake of Superstorm Sandy, New Yorkers have risen to the challenge of rebuilding damaged homes, communities and infrastructure. Still, almost six months after the storm, there’s much more to be done. As we rebuild, we need to think not only about whether and how to reconstruct what we lost but also about how to make New York State more resilient to climate change. We need to decide how to curb global warming emissions so that we reduce the severity and frequency of extreme weather events like Sandy.

To examine these issues, last year, Governor Cuomo set up three commissions, involving a broad range of stakeholders. (I was one of them.) That process led to a robust set of recommendations on climate resilience and mitigation. In addition, NRDC provided the Governor with a thorough blueprint for action, with proposals addressing issues from public health to clean energy. The Governor adopted many of these recommendations, calling for a suite of bold, new initiatives on clean energy and climate in his State of the State address in January.

The big question, of course, is how we can get there from here. The answer is this: We need to engage in the hard work of mustering the political will and putting in place the right policies and resources. New York State already has a strong record on renewable energy and energy efficiency. By moving fast to adopt the Governor’s new initiatives, and by taking the additional steps outlined here, we can vastly decrease our reliance on dirty energy sources and move to a future dominated by clean energy.

California: The U.S. renewable energy jobs leader is preparing to institute new market opportunities to effectively and efficiently meet the challenges of scaling up renewable energy production using zero-carbon, economic value-enhancing policy measures.

On the jobs front, I showed in an earlier post:

California emerged as the top clean job-producing state with over 26,000 jobs announced from 38 projects that were tracked by E2. At least 15 of the projects tracked were for solar power generation, promising to create as many as 4,000 jobs.

As more renewable energy generation comes online to displace old, inefficient and dirty fossil-fueled generation, a new electricity market valuing reosurce flexibility and other value-enhancing capabilities will need to be implemented. My colleague Carl Zichella provides a helpful overview of what we mean by resource flexibility and what California is doing to make it happen.

In conjunction with strong and smart national renewable energy policies, state standards are crucial engines of growth for our economy and jobs, energy security and our environmental well-being.

Source

Analyst: U.S. Renewable Energy Policy Is Superior To Europe's Policies

2013-03-04T06:11:00.001-08:00

One energy analyst is challenging the commonly held belief that European nations' renewable energy policies are more progressive than those in place in the U.S.

"Whisper it quietly," says Jonathan Lane, head of consulting for power utilities at research firm GlobalData. "The U.S. has a more progressive renewable support policy than Europe. In the U.S., the major federal support scheme for renewables - the production tax credit - provides a tax break for renewable generators of $0.022/kWh for 10 years."

In many European countries, renewable energy subsidies are loaded onto customers' electricity bills - usually through a tax, or sometimes via an electricity retailer obligation - a policy Lane calls "perverse."

"Whilst this approach confers the advantage of keeping tax subsidies out of the electricity sector, with the competitive market setting the price for consumers, the reality is that it is government intervention pushing prices upwards," he explains.

In fact, Lane says Europe should actually look to the U.S. as an example for successful energy policy.

"As energy prices become more politically charged across the world, Europe should take a look at the U.S," he says. "The problem with Europe's policy is growing fuel poverty. Electricity and gas prices increase rapidly against a recessionary backdrop, with little or no wage growth and high food and road fuel inflation.

"This can't be considered fair, and the complaints are getting louder," Lane says. "The reason that governments subsidize renewable generation is a social good - aimed at reducing carbon emissions and reducing fossil-fuel import dependency - and it makes far more sense for these goals to be delivered via general taxation. Under the U.S. system, those most able to pay for renewables do so. Under the European system, those least able to afford it pay."

Source

FERC Proposes Reforms to Benefit Interconnection of Renewable Resources, Including Solar

2013-03-03T06:07:00.000-08:00

By Natara Feller, Esq. and Benjamin Falber

The Federal Energy Regulatory Commission (“FERC”) is proposing four reforms to better facilitate connection of small renewable generation facilities – particularly solar facilities - to the power grid. On January 17, FERC issued a Notice of Proposed Rule Making (“NOPR”) on interconnections for facilities of 20 megawatts or less. This is excellent news for local, small scale solar and wind generation.

The proposed modifications to FERC’s small generator interconnection procedures are intended to reduce the time and cost to process interconnection requests, particularly those of solar generators. The 4 proposed reforms:

1. Help applicants better evaluate their interconnection options: Small facilities may request a report from transmission providers on system conditions at a point of interconnection before submitting a formal interconnection request. For a fee of $300, a transmission provider would be required to make available, within 10 days, information on the capacity, existing generation, voltage, circuit distance, and other technical elements.

2. Increase the threshold for the Fast Track Process from 2 MW to 5 MW facilities: The Fast Track Process has applicants go through a technical screening that detects safety or reliability issues. The Fast Track Process is an alternative to the Study Process, which is more costly and involves a scoping meeting, a feasibility study, a system impact study, and a facilities study.

3. Offer interconnection options, even if there are safety or reliability issues: the Transmission provider would be required to offer to:

• Make changes to the transmission system at the customer’s expense, or

• Hold a supplemental review at the customer’s expense, or

• Evaluate the interconnection under the Study Process.

4. Provide small renewable generators an opportunity to be heard: Under the proposed changes, small renewable generation facilities will be given the opportunity to review and provide written comments on transmission upgrades before final plans are made in order to ensure that all interests are heard.

Notably, in addition to the generation capacity limit, eligibility for Fast Track review is based on sufficient line voltage at interconnection and a limit on circuit distance from interconnection to substation. If the project fails any of the Fast Track screens, but the Transmission Provider nonetheless finds that there no safety or reliability issues, the Transmission Provider will provide a Small Generator Interconnection Agreement (SGIA).

According to Commissioner Norris, state and local policies, including renewable portfolio standards, have significantly increased the growth of solar, and other types of renewable energy sources. The proposed reforms are both necessary and responsive to the significant increase in small renewable resources as well as to the interconnection of renewable distributed energy.

Opportunity to Submit Comments and Technical Workshop

Comments on the NOPR are due June 3, 2013. FERC also announced that it will hold a workshop before the end of the comment period to discuss the technical aspects of the NOPR. Cleantech Law Partners is in the process of building a coalition to submit comments in this proceeding. If you are interested in joining, please contact Natara Feller, Director of CLP’s FERC Practice Group at nfeller@cleantechlawpartners.com

Debate over renewable energy funding solutions

2013-03-01T06:18:00.000-08:00

Renewable energy is quickly becoming the way forward for U.S. energy supply. The benefits of renewable energy, such as improved national and economic security, have wide-ranging appeal. But this technology is expensive, and politicians, utilities, analysts and manufacturers all have their own opinions about how to pay for it.

Tax credits have traditionally been a main tool in mitigating the high costs of renewable energy development. But the recent Production Tax Credit (PTC) extension is widely expected to be temporary solution.

This debate over renewable energy policy and funding is becoming increasingly divisive, as justifying cost-benefit and business value is not always easy. But finding a solution is an important step towards a more secure energy future. Renewble energy can enhance energy security, grow jobs, improve the environment and help spur more efficient energy technologies.

"Why wouldn't you pursue something that has all these attributes," said John Norris, a commissioner with the Federal Energy Regulatory Commission (FERC).

Norris was part of a recent American Council of Renewable Energy (ACORE) discussion on ways to elevate renewable energy policy to the next level.

The Commissioner said that external production costs as the biggest remaining barrier to renewable energy expansion. The good news, however, the price points of renewable energy technology are dropping.

"The curve is just coming down dramatically," Norris said.

Effectiveness of tax credits

Outside of federal policy, global markets are beginning to embrace growing consumer support for renewable energy.

Douglas Holtz-Eakin, president of the American Action Forum, identified some other problems with tax credits. Specifically, he highlighted that they are uncoordinated, contribute to technical and budget inefficiencies, and do not offer the same subsidy levels for each renewable energy source.

"Decisions are being driven by the tax credits and not by business fundamentals. And, in the end, that means you are wasting the nation's scarce natural resources in the pursuit of a policy," he said, speaking at the ACORE Forum. "That always sets the policy up for attack."

Further, whenever taxpayer dollars are involved, people are going to take a close look any tax credit or incentive, often to the point of being hyper-critical and missing potential policy benefits.

"Whatever the merits of your policy goals, it's not a very survivable political strategy," Holtz-Eakin said.

As a result, the energy industry needs to find other ways to support the burgeoning renewable energy market. So what can take the place of tax credits in spurring renewable energy forward?

New financing solutions

Connecticut Senator Chris Coons last summer introduced legislation he hoped would extend Master Limited Partnerships (MLP) to wind, solar and biofuels projects. MLPs allow projects to raise money through the stock market while avoiding corporate income tax, and are currently available to oil, coal and natural gas projects.

Another popular idea is to transition financing away from federal sources.

"It's clear to us that we need smart policies going forward to break down barriers to the flow of capital from public markets," said David Danielson, assistant secretary for energy efficiency and renewable energy at the Department of Energy.

Outside of federal policy, global markets are beginning to embrace growing consumer support for renewable energy. This should be encouraging for the industry.

"As a policy matter, what the capital markets really care about are that [renewable energy] can compete on a cost basis with whatever rationalization or justification you want," said Jeffrey Holzschuch, chairman of the Institutional Securities Group at Morgan Stanley.

With a little creativity, even players in less ubiquitous industries like geothermal and hydropower should be able to find support for their projects.

"There are opportunities out there for every one of you in the market. You just have got to go get the right player," said Marc Gerken, president and CEO of American Municipal Power.

Cathy Snyder, vice president for Energy & Environment at Lockheed Martin, said that the financial support is hard to secure with renewable technology still perceived as volatile.

''Investors want to fund a sure thing. And often times [renewable energy projects] just aren't sure things, and that's the reason it's the government's role," she said.

As a solution, she argued that the Government should work to get mid-level technologies ready for big-time commercial use.

Taking all these ideas into account, federal policy is likely to remain the keystone of this discussion.

"We should have a national energy policy," Norris urged. "We are going to do this much less efficiently than we could be doing it if we had a coherent and aggressive and definitive -- maybe even if it's not exactly right -- national energy policy. That's the thing that makes me pull my hair out."

Source

Renewable energy law could be adopted this month in Poland

2013-03-01T05:56:00.000-08:00

Poland’s new renewable energy law is expected to be adopted by the government by the end of March. However, due to the EC notification process, it is not anticipated to enter into force until mid-2014. Meanwhile, mandatory certification for imported biomass has been suggested.

In the coming days, Poland’s Ministry of Economy is scheduled to present a revised bill for renewable energy funding to the Cabinet. Following the adoption of the draft law by the Cabinet – expected by the end of March – it will be sent to Parliament, where only minor changes should be made.

In parallel, a notification will be brought before the European Commission (EC). Since this process could last up to 8 months, it is believed that Poland’s new renewable energy law will not enter into force until mid-2014, however.

The Polish Government has been struggling for months to adopt its new renewable energy law. A major sticking point has been the level of support to be paid to co-firing from solid biomass in coal-firing boilers, which in Poland accounts for almost 50% of all renewable energy, and around 3 million tons of which is imported annually.

According to Christian Schnell, partner at the Warsaw-based legal firm, DMS Legal, the Environment Minister announced last Monday that there should be mandatory certification for imported biomass.

The EC is also said to be working on a policy for the sustainability of biomass, which includes a certification requirement. A first draft is scheduled to be presented in the second quarter of the year, reports the European Biomass Association. This would then settle the controversial co-firing of biomass, says Schnell, if only for lack of available resources.

The stock of solid biomass in the country is only about 5 million tons per year and is also urgently needed for the pure biomass combustion plants. In Polaniec, in south east Poland, GDF Suez has built a 190 MW power plant, which alone already requires half of the country’s consumption of solid biomass at maximum operation.

Co-firing is mainly responsible for the sharp drop in green certificate prices. These co-incineration plants are mostly operated by the major energy companies in Poland, particularly PGE and Tauron, GDF Suez and EDF.

According to the parliamentary subcommittee on energy, certificate prices have been manipulated on the electricity exchange, states Schnell. Furthermore, the big energy companies, in particular, PGE and GDF Suez, are currently putting pressure on the government to increase quotas for coming years, in order to create more space in the support system for co-firing. Simultaneously, with a nod to falling certificate prices, biomass importers are forcing significant discounts.

Currently, around 15 terawatt hours of renewable energy are produced in Poland. Of this, co-firing of solid biomass in coal power plants accounts for at least 6.5 terawatt hours. Around 2 terawatt hours are also generated from older hydro plants.

Since all of these systems received green certificates, there is currently an oversupply, because the state set renewable energy quotas too low and clearly below the guidelines laid out in the National Action Plan, says Schnell.

In addition, since 2011, this oversupply has been reinforced by speculation on rising certificate prices, because the replacement fee rises faster than the inflation rate and these costs can be passed on to consumer prices. As such, it was worth it for power companies to pay the replacement fee instead of to buy green certificates, since increasing certificate prices could be expected the following year.

Of the current oversupply of certificates of around 5 to 6 terawatt hours, more than half account for this price speculation, says energy regulator URE.

Since early 2012, a gradual decline in certificate prices had been seen, but they sharply decreased at the end of November. While the replacement fee is currently sitting at 286.74 Zlotys (around €61.92, or US$91.88), the price has fallen from a level of around 200 Zloty at the end of November to 100 Zloty in mid-February. At the middle of last week, prices increased to around 130 Zloty.

On the power exchange, only 20% of the volume of green certificates is traded, with the remaining amount sold within state corporations, in particular, under special agreements. Here, market prices fluctuate between 100 and 300 Zloty per certificate.

The Ministry of Economy wants to now put a stop to the market manipulation and introduce a requirement for certificate trading on the exchange.

There are various ways to both prevent consumer electricity prices from rising too high and from market manipulation, including either lowering or excluding hydro and co-firing plants from the support system. Currently, the Minister of Economy, with support from the Finance and Environment Ministers, favors a model, whereby old hydro plants should be removed from the law, and the co-firing of biomass receives just 0.3 green certificates per MWh, instead of 1 certificate until 2017.

Since the marginal costs for co-firing of biomass, depending on plant type, account for between 100 and 140 Zloty, means the end of co-firing for biomass, even with a certificate price similar to the compensation fee. This could result in a considerable deficit of green certificates in 2014 when the certificate overhang is reduced to between 5 and 6 terawatt hours.

As such, significant market opportunities could arise for both wind and, in particular, photovoltaic plants. The Secretary of the Treasury is said to be against this solution, however, says Schnell.

Source

What is Next for Renewable Energy Project Financing?

2013-02-28T23:55:00.000-08:00

By Brian Seaman

Cleantech Law Partners

The Treasury § 1603 program was authorized in 2009 as part of the American Recovery and Reinvestment Act, and supported $38.6B of investment in renewable power development, and 16.9 GW of new installed renewable energy . But with the 2011 expiration of the program – and the associated grants of up to 30% of qualifying project costs – developers, investors, and environmentalists are looking to the federal government to make minor, common-sense changes to current tax code to accelerate private investment in the renewable energy industry. The most promising changes which have been proposed would affect existing investment vehicles like Master Limited Partnerships and Real Estate Investment Trusts.

MLP’s combine the tax benefits of a limited partnership with the liquidity of publicly traded securities. Tax benefits are realized by passing tax liabilities directly to the partners (shareholders) rather than first through a corporation; and the liquidity results from the fact that MLP’s can be traded on public exchanges. The current market capitalization of energy MLP’s is in excess of $160B, but under the current tax code their income must be derived from at least 90% eligible natural resources which is inexplicably limited to oil, natural gas, coal, timber, and mineral production, and the associated pipelines and refining facilities.

Even as the cost of solar panels and wind turbines has dropped steeply over the past four years, this limitation on the availability of private capital to fund renewable projects has been a drag on the growth of the renewable energy industry.

In response to criticism from both environmental advocates, and the business community, Senator Christopher Coons (D-DE) sent a bi-partisan letter to President Obama, and introduced the Master Limited Partnership Parity Act to the Senate , in an attempt to enact minor legislative changes to the tax code to expand MLP investment to renewable energy and release billions of dollars of private investment. Unfortunately the Senate never took action on the bill and it died in committee when the new Congress was sworn in on January 3rd, 2013 .

In contrast to MLP’s, there is optimism about the proposed extension of REIT’s to renewable energy investments because of the support of influential investors like Garvin Jabusch, who manages the SierraClub Green Alpha Portfolio, and because Congressional action is not needed . A REIT, like a MLP, avoids the double taxation of traditional corporate structures. REIT’s pass their income to investors as dividends which are treated as ordinary income provided at least 75% of their income is secured from investments in real property. While there is a strong case to be made that solar assets are part of real property as currently defined under the tax code, most REIT managers have demonstrated a reluctance to use their capital to invest in renewable, and specifically solar, energy .

Seizing a potential investment opportunity, the Renewable Energy Trust Capital, Inc. has pressed the IRS for a Private Letter Ruling to determine whether REIT’s can own solar assets. A response from the IRS is expected in the near future, and if favorable it is expected that Renewable Energy Trust Capital, Inc., and its partner TrueSouth Renewables, will be the first to offer Solar REIT’s as an investment vehicle.

Additionally, there will be environmental benefits of a favorable ruling by the IRS. By some estimates, existing REIT’s control enough rooftop acreage in the United States to generate 15,000 megawatts of solar power and reduce the emissions of those properties by up to 50%, or 30 billion pounds of carbon dioxide . In fact, a recent investment in solar energy at retail properties by Kimco Realty shows that such arrays may be able to produce up to 80% of the power required by a building’s occupants .

A final opportunity for reducing the cost to raise capital for renewable energy projects is the securitization of renewable energy investments. Such a product may be another important tool to increasing available capital for renewable energy projects, but questions remain about how the proposed securities will be rated. In light of the recent and numerous scandals regarding the ratings of mortgage backed securities, both banks and rating agencies have been reluctant to release any methodology, or timeline, to support the release of securitized renewable investments.

Source: Ben Seaman, Cleantech Law Partners

Estonia to Retract Pledge on Wind Energy Subsidy Limits

2013-01-10T23:04:00.001-08:00

Estonia will keep an annual cap on the volume of wind energy eligible for subsidies, retracting a pledge to a renewable energy lobby last year, to lower power costs and limit the amount of subsidized output, Economy Minister Juhan Parts said.

Wind energy subsidies will be capped at the current total output of 600 gigawatts per year in the amended electricity market legislation under consideration in Parliament, Parts said in an interview in Tallinn yesterday. In July, it agreed with the Estonian Renewable Energy Association to remove the ceiling in exchange for cutting the size of the support.

The renewable energy subsidies, paid for by consumers through their energy bills, will be linked to the market price of electricity and decline 15 percent to 20 percent once the new system is adopted and gets clearance for state aid from the European Commission. Total savings for consumers will be as much as 300 million euros until 2020, the Cabinet said last October.

“There is an alternative view in the market that the annual cap makes sense, but that the existing and planned investments should be treated more equally than the solution offered by the renewable energy association,” Parts said. “We’re certainly not worsening the investment environment. This bill has to be viewed in the context of market opening, while the 2007 law was based on closed market ideology.”

An increase in subsidies in 2007 led to new investment by companies including Fortum Oyj (FUM1V), the second-largest Nordic utility, and Nelja Energia OU, majority owned by Norway’s Vardar AS.

Power Output

Estonian wind parks produced an estimated 450 gigawatts of electricity last year, the Estonian Wind Power Association said on its website last month. Output will probably exceed the 600- gigawatt ceiling already this year after two new windparks were completed, it said. Changes to subsidies for existing plants will force investors to seek legal action, it added.

The European Renewable Energies Federation lobby group said last February any retroactive move would violate European Union law.

The Baltic country liberalized the remaining two-thirds of its power market this month, with electricity prices for consumers seen rising by about 20 percent as Estonia must start buying carbon emission permits for its power production, according to state-owned Eesti Energia AS.

That may boost average inflation this year by as much as 0.9 percentage points, the central bank said last month.

Renewables Consumption

Electricity from renewables made up 13.5 percent of Estonia’s consumption in the third quarter of 2012, compared with 13 percent a year earlier, grid operator Elering AS said Oct. 31. Sixty-one percent of output from renewables came from biomass and biogas, while wind and hydroenergy made up 37 percent and 2 percent, respectively, it said.

“We can’t accept that the electricity price will exceed the level proposed by the government’s draft, this is a red line for us,” Parts said. “Also, the government has to keep the control over the overall level of subsidized renewables, this is another red line.”

Source

Photo

RWE's Renewables Unit Calls For More Reform of German Energy Policy

2013-01-10T09:07:00.000-08:00

Germany urgently needs to press ahead with reforming its energy market, but a series of elections, including general elections in the autumn, could mean standstill for much of 2013, said utility RWE AG's (RWE.XE) renewable energies chief Thursday.

Speaking to journalists at the company's head office in Essen, Hans Buenting, managing director of RWE Innogy GmbH, said that the government's top priority in terms of energy policy this year should be a reform of the renewable energies law to help contain the spiraling costs of subsidizing "green" technologies like wind and solar power.

However, asked how much progress he expects to see on the energy policy front in 2013 as lawmakers across the political spectrum are gradually entering campaign mode, Mr. Buenting said: "Personally, I don't think we will see much progress ahead of the general election."

Mr. Buenting warned that more action is required to avoid massive cost overruns and secure continued support from the population for Germany's ambitious energy revolution, which includes plans to exit all nuclear power production over the next decade and a massive expansion of renewable energies.

"In its present form, the renewable energies law isn't sustainable...," in light of rapidly rising costs for the support of "green" technologies.

The law is the center-piece of Germany's strategy to source at least 35% of electricity consumption from "green" technologies by 2020 and at least 80% by the middle of the century. It regulates fixed prices that operators of renewable power facilities are guaranteed for their output. The subsidies are slapped on retail power prices, which means that consumers are paying the costs of the country's energy revolution.

The system has come under increasing fire from consumer groups and industry alike, who fear that private incomes and profits could severely suffer if power prices continue to rise.

RWE's Mr. Buenting also said that legislation aimed at speeding up the expansion of power grids and the construction of grid connections for planned large-scale offshore wind farms, which passed by lawmakers late last year, may require more adjustments to provide further incentives to invest in renewable projects.

For instance, liability issues for delayed grid connections for offshore wind farms have been addressed in a bill passed in December, which RWE says has considerably improved planning capabilities for investors.

Mr. Buenting criticized, however, that the liability rules only compensate an offshore wind farm operator for up to 90% of lost revenue if a grid connection is delayed or damaged.

In consequence, RWE is still considering possible legal action to claim compensation, if the damages caused by significant delays to hooking up the planned offshore wind farms to the German power grid exceed the payments under the new liability rules, Mr. Buenting said.

Mr. Buenting also said that considerable delays to connecting German offshore wind farms to the power grid have forced RWE Innogy to review its medium-term profitability targets.

So far, the company targeted 500 million euros ($653 million) in operating profit by 2014, but Mr. Buenting said that delays to grid connections and falling power prices across Europe due to the weakening economy could mean the target will be reached later than planned.

Mr. Buenting declined to elaborate on the matter, adding that RWE will provide more details at its annual press conference March 5.

He also said that he expects RWE Innogy to have delivered on its 2012 profit guidance for an operating profit at around the 2011 level of EUR181 million.

Source

Photo

Senators introduce wind moratorium bill

2013-01-09T11:16:00.000-08:00

State Sens. Robert Hartwell, D-Bennington, and Joseph Benning, R-Caledonia, say they will introduce a bill this legislative session that would establish a three-year moratorium on wind projects with a production capacity of more than 500 kilowatts.

Hartwell and Benning say they drafted the bill in response to increasing public pressure from their constituents who want to slow down the Vermont Public Service Board’s (PSB) permitting process for renewable energy developers, and to allow for more participation and consideration of municipal guidelines and time to assess health and environmental concerns raised by constituents.

However, Gov. Peter Shumlin has said that, while he acknowledges there has been local opposition to some large-scale wind projects, he is strongly opposed to a moratorium on wind power development.

Benning and Hartwell disagree, and believe the state should take time to assess how these projects are sited. They want to see if such projects are cost-effective and environmentally appropriate for Vermont.

“We shouldn’t permit ourselves to be pressured by corporate, mostly out-of-state entities, while we take that time,” said Hartwell.

“We shouldn’t be allowing our cherished mountains, our cherished history to be destroyed while we take that time,” he said. “We shouldn’t involve ourselves in social upheaval while we take that time.”

“For that reason, a bipartisan effort ... is being made to make sure we back up the train, set the reset button and redefine a conversation with Vermont’s history and environmental pro-activism involved in the discussion.”

Their proposal comes one year after the Senate shot down a similar draft legislation Benning sponsored, which called for a two-year moratorium on wind projects that are 2.2 megawatts or greater.

Benning and Hartwell’s proposal also calls for stripping the PSB of its power to permit in-state electric generating plants and would give that jurisdiction to district environmental commissions and local land use authorities, except in the case of net metering systems.

This component of the draft bill appears to runs against the grain of a bill Rep. Tony Klein, D-East Montpelier, chair of the House Natural Resources and Energy Committee, plans to put forward, which would call for a larger regional — rather than local — approach to planning and permitting such projects.

Both Klein and House Speaker Shap Smith are opposed to a moratorium.

Many of Vermont’s most influential environmental groups also oppose the proposal, including the Vermont Public Interest Research Group (VPIRG), the Conservation Law Foundation, 350Vermont, the Vermont Natural Resources Council, the Citizens Awareness Network, the Vermont chapter of the Sierra Club, and many others.

Opponents of the wind moratorium say that such a measure would be a step backwards in Vermont’s push to be a global leader in environmental stewardship and renewable energy.

After Tropical Storm Irene and other benchmark weather disasters, VPIRG Director Paul Burns said Vermont should be part of the climate change solution and not the problem. Others argue that a moratorium would be bad for business and be irresponsible for a state that prides itself on local ways of life.

Residents and groups in favor of the moratorium — like Luke Snelling’s Energize Vermont and Annette Smith’s Vermonters for a Clean Environment, or VCE — argue that construction of large-scale wind is not so clean. They argue that leveling mountaintops and cementing long platforms for towering turbines is ruining Vermont’s mountains and harming its wildlife.

They also point to widespread local opposition to projects around the state, from Green Mountain Power’s 21-turbine project in Lowell to a proposed 20-turbine project on Grandpa’s Knob ridgeline in Rutland.

Locally, three meteorological test towers (MET) slated for Grafton and Windham will be going up as soon as the weather permits, according to developer Atlantic Wind LLC, who got the nod from the PSB on Dec. 20 to move forward.

Atlantic Wind LLC told Windham residents last summer, if MET towers are successful, there could be at least 15 wind turbines, and perhaps as many as 50, on a 5,000-acre ridge-top site that straddles Grafton and Windham, owned by Meadowsend Timber LLC.

Some of the issues that the new bill could address the town of Windham’s town plan that was overruled by board’s ruling in favor of the developer. Windham’s arguments against Atlantic Winds LLC project were based on their 2007 town plan which prohibits commercial wind projects but, in a quirk of timing, allows MET towers.

The town plan was written just as Act 30, Section 248a was being revised, adding Section 246, specifically to shorten the permitting process for the smaller MET towers application permitting process.

“I see problems regarding the PSB decision in Windham,” Benning said. “The PSB considers MET tower permits separately from wind plant permits. The impact of a MET tower is miniscule in comparison to a full-scale wind generator, so it never surprises me to see these permits routinely granted.”

Windham resident and state Rep. Carolyn Partridge commented that she had not seen the language of the Benning and Hartwell bill.

“If there is a problem with the process (of permitting), we need to look at the process,” she said.

Benning said that MET towers “should be considered for what they are — the first step in a two-step process that results in massive degradation of a mountaintop’s physical environment.

“The second step is the inevitable construction of massive wind towers that routinely follows MET towers. While it is also supposed to consider Act 250 criteria, [which] normally [would] be used by local district environmental commissions to require developers to meet that criterion, the PSB is only required to give ‘due consideration’ to that criteria.

“This is resulting in real mountaintop environmental destruction taking a back seat to any renewable benefit goal perceived by the PSB,” Benning concluded.

Of their bill, Benning said, “If our studies conclude that this high-priced, intermittent power is worth the environmental destruction and social upheaval it is causing, then a three year time out will not mean the end of the world. If, on the other hand, our studies show this particular tool is the wrong one for Vermont, then our time will have been well spent.”

Since October, the Vermont Energy Generation Siting Policy Commission has been mandated to hear comments and concerns from utilities, renewable energy developers, and Vermont residents during sessions held in Montpelier, from October and continuing through Jan. 11. The commission then heads into deliberations which are scheduled to conclude Feb. 5, releasing their findings shortly thereafter.

How the Hartwell-Benning bill, if passed, will affect commercial wind projects that are in various stages of development and completion, is as yet unclear.

The Governor’s Siting Commission’s findings will be released in February.

Source

Photo

A Late Christmas 'tax extender' gift for Renewable Energy

2013-01-08T07:53:00.000-08:00

The US Senate's "fiscal cliff" package wasn't exactly eight maids a-milking--the traditional gift for the eighth day of Christmas--though it did apparently resolve the impending "milk cliff". Of greater relevance, the "tax extender" portion of the American Taxpayer Relief Act of 2012 passed by both the Senate and House of Representatives represented a gift to renewable energy producers and developers worth around $18 billion.

Two-thirds of that is attributable to the extension and modification of the Production Tax Credit (PTC) for wind and other renewable electricity projects. Renewable energy technologies have gained another year of generous support from US taxpayers. What remains to be seen is whether this win represents a last hurrah for the current US approach to renewable energy subsidies as lawmakers focus on shrinking an increasingly unsustainable federal budget deficit.

Based on the analysis of the bill provided in the Wall St. Journal, other energy-related beneficiaries included producers of cellulosic and algae-based biofuels, blenders of conventional biodiesel and other alternative fuels, purchasers of 2- and 3-wheeled electric vehicles, as well as various energy efficiency investments including efficient homes and appliances. Renewables should also benefit from other provisions of the bill, including a one-year extension of 50% bonus depreciation on project investments and a two-year extension of the 20% R&D tax credit.

Of course the problem with all of this is that it sets up additional cliffs at the end of 2013 and 2014, and thus perpetuates the expiration-anxiety roller-coaster that has confounded both manufacturers and investors in these technologies. Part of the blame for that rests with the process by which the Congress drafts and enacts such legislation. However, it's also a function of the unwillingness of current beneficiaries to shift their lobbying efforts to support realistic and predictable phaseouts of these subsidies, in light of renewables' improving competitiveness with conventional energy and the magnitude of future US fiscal problems. Considering that the current PTC for wind power is worth the equivalent of about 90% of today's futures price for natural gas, a proposal by the wind trade association for a six-year phaseout ending at 60% strikes me as too much like St. Augustine's plea for chastity.

The high-pressure negotiations to avert the fiscal cliff provided a poor venue for producing genuine tax reform, while giving supporters of the status quo a golden opportunity to attach measures such as these "extenders" that couldn't be amended before the expiration of the current Congress. The non-partisan Congressional Budget Office estimated that this bill actually increased federal spending by a net $330 billion over 10 years and added nearly $4 trillion to the deficit, compared to going over the cliff. It's not clear that the even higher-stakes debt-ceiling debate slated for early in the new Congress will be any more conducive to solving these challenges. But whether then or later in the session, it's going to become harder to avoid some form of tax reform and spending discipline that considers all energy subsidies in the context of their direct costs and indirect revenues. I'll be surprised if the current subsidies for renewables can escape again without major adjustments to reduce their high effective cost per unit of energy produced and increase their long-term bang for the buck.

Source

Photo

United States: Renewable Energy Tax Provisions In The Fiscal Cliff Legislation – The "American Taxpayer Relief Act Of 2012"

2013-01-07T10:36:00.000-08:00

The House of Representatives last night approved H.R. 8, the "American Taxpayer Relief Act of 2012" (the "Bill"), by a vote of 257-167. The Bill was approved earlier in the day by the Senate by a vote of 89-8. Still pending signature by the President, the Bill addresses various expiring tax cuts and pending budgetary requirements, together commonly referred to as the "fiscal cliff." This Client Alert addresses several of the provisions of the Bill that are relevant to ongoing and future projects in the renewable energy space.

Energy Tax Extenders-PTC and ITC

Apparently responding to industry arguments that a one-year extension of the December 31, 2012 "placed in service" requirement for wind energy facilities would be of limited utility due to the lead time required to develop and build these facilities, Section 407 of the Bill extends the production tax credit under Section 45 of the Internal Revenue Code of 1986, as amended (the "Code"), and the 30% investment tax credit available pursuant to Section 48 of the Code to otherwise qualifying wind facilities for which construction begins before January 1, 2014. In addition to wind energy facilities, this "beginning of construction" requirement replaces the prior placed in service requirement (previously set at January 1, 2014) for several other types of qualified facilities, including closed and open-loop biomass facilities, geothermal facilities, landfill gas facilities, trash facilities, qualified hydropower facilities, and qualified marine and hydrokinetic renewable energy facilities. Consequently, any such otherwise qualifying facility (or the electricity generated and sold from any such facility) construction of which began before January 1, 2014 will be eligible for the investment tax credit or production tax credits regardless of when the facility is placed in service.

Notably, the Bill does not modify the current placed in service eligibility requirements under Sections 45 and 48 of the Code for small irrigation power facilities, solar energy facilities, refined coal production facilities or Indian coal facilities. However, Section 406 of the Bill extends the available production tax credit period for Indian coal facilities placed in service before January 1, 2009 from seven years to eight years.

Business Tax Extenders-Depreciation

Section 331 of the Bill extends the special first-year allowance, commonly referred to as "50% bonus depreciation," to qualifying property placed in service before January 1, 2014. In addition, certain "long production-period property" and aircraft will be eligible for 50% bonus depreciation if placed in service before January 1, 2015.

Section 315 of the Bill extends the increased limitation for the expensing of certain depreciable property under Section 179 of the Code. Under the Bill, an aggregate cost of up to $500,000 may be taken into account as a deductible Section 179 expense for qualifying property placed in service in 2013. The $500,000 limitation is subject to reduction if the total amount of qualifying property placed in service in 2013 exceeds $500,000. For taxable years after 2013, the applicable limitation is $25,000, which is subject to reduction if the total amount of qualifying property exceeds $200,000.

Section 313 of the Bill reintroduces the special accelerated depreciation periods for business property used on an Indian reservation. For qualified Indian reservation property placed in service on or before December 31, 2011, Section 168(j)(2) of the Code provided special recovery periods that were shorter than the otherwise applicable MACRS periods. Section 313 of the Bill provides that Section 168(j) will apply to property placed in service on or before December 31, 2013, explicitly including qualified Indian reservation property placed in service in 2012.

Budget Provisions-Sequestration

Section 1001 of the Bill modifies the sequestration provisions of the Balanced Budget and Emergency Deficit Control Act of 1985 (Pub. L. 99-177), as amended in particular by the Budget Control Act of 2011 (Pub. L. 112-25) (the "BCA"). The BCA requires a mandatory sequestration, commencing within 15 days following the adjournment of the present Congress, to eliminate any budget-year breach of specified discretionary spending limits. The Bill provides that, notwithstanding any other provision of law, this "after-session" sequestration for fiscal year 2013 will be implemented on March 27, 2013.

In addition, the BCA requires that, unless an approved budget achieves a deficit reduction of greater than $1.2 trillion, discretionary spending limits, discretionary appropriations and direct spending must be further reduced. These reductions were previewed in a report published in September 2012 by the Office of Management and Budget ("OMB") pursuant to the Sequestration Transparency Act of 2012 (Pub. L. 112-155). That report suggested that funding for payments under Section 1603 of the American Reinvestment and Recovery Tax Act of 2009 may be reduced by 7.6%, without answering significant questions as to how such cuts would be implemented. The Bill provides that this sequestration, previously required to be calculated by OMB and ordered by the President for fiscal year 2013 on January 2, 2013, is delayed until March 1, 2013. The Bill therefore does not prevent sequestration, but provides additional time to reach a budget deal and avoid the damaging effects highlighted in the OMB report.

Source

Photo