Renewable Energy Memo

May 30, 2011

Taylor English Duma Renewable Energy Blog

Thank you for your support of RenewableEnergyMemo. To improve our ability to post new content, we’re now publishing all new posts at the Taylor English Duma Renewable Energy Blog.

Please update your blog rolls to link to the Taylor English Duma Renewable Energy Blog.

September 8, 2010

IRS Rules That Sale of RECs Triggers Income

Filed under: Uncategorized — Tags: , , , — Jonathan B. Wilson @ 12:34 pm

The IRS, in a recent private letter ruling (PLR 201035003) held that a sale of renewable energy certificates that creates value for the seller is income for tax purposes.

The private letter ruling was requested by a residential owner of renewable energy property that had sold renewable energy certificates to a local utility.  Under the taxpayer’s deal with the utility, the taxpayer was required to sell all of the RECs associated with a new solar PV system to the utility in exchange for payments. 

The IRS distinguished the utility’s payment for the RECs from indirect subsidies which are exempt from taxation under Section 136 of the Code.  Reasoning that the sale of the RECs was like a sale of property, the IRS determined that the gain on the sale would be taxable as income to the taxpayer.

February 13, 2010

Webinar: Renewable Energy in 2010

Please join Ken Driver, Rob Brubaker and Jonathan Wilson at 1pm eastern on Thursday, February 18 for a webinar entitled “Renewable Energy in 2010.”

In the first of a two-part series we will explore the challenges and opportunities posed by the renewable energy sector in 2010. Part 1 addresses a range of federal public policy initiatives that target renewable energy.

Renewable Energy in 2010, Part 1:

Federal Initiatives that Target Renewable Energy

Thursday, February 18, 2010

1:00 pm eastern; 90 minutes
 
In 2009, the federal government committed billions in potential grants and tax incentives for renewable energy projects, yet each incentive program carries with it a unique mix of costs and benefits.  At the same time, Congress, the agencies, and the courts are tackling environmental matters in a way that could impose major new costs on emitting greenhouse gasses, placing a premium on the renewable generation of electricity.  Finally, because many renewable resources are located far from consumers, the surge in renewable generation is posing a major challenge for the U.S. electric transmission system.  So far, progress has been slow, and without new planning, siting, and cost-allocation systems, the limits of today’s transmission system could delay future renewable energy projects. 

Program Faculty

Kenneth B. Driver (Moderator), Partner, Jones Day, Washington, DC

Robert Brubaker, Porter Wright Morris & Arthur LLP, Columbus, OH

Jonathan B. Wilson, Taylor English Duma LLP, Atlanta, GA

CLE Credit

1.5 hours of CLE credit in 60-minute states/1.8 hours of CLE credit in 50-minute states have been requested in states accrediting ABA teleconferences and live audio webcasts.*

NY-licensed attorneys: This non-transitional CLE program has been approved for experienced NY-licensed attorneys in accordance with the requirements of the New York State CLE Board for 1.5 total NY CLE credits.

The following states accept ABA teleconferences for CLE credit:
AL, AK, AR, AZ, CA, CO, FL, GA, IA, ID, IL, KY, LA, ME, MN, MO, MS, MT, NC, ND, NH, NM, NV, NY, OK, OR, RI, SC, TN, TX, UT, VA, VI, VT, WA, WI, WV, WY.

*States currently not accrediting ABA teleconferences: DE, IN, PA, KS, OH

Click here to view a map of MCLE states

January 9, 2010

NREL Publishes Primer on Community Wind Projects

The National Renewable Energy Laboratory at Berkeley has published a new paper on the application of federal incentives on community wind projects.  (Revealing the Hidden Value that the Federal Investment Tax Credit and the Treasury Cash Grant Provide to Community Wind Projects). 

The paper provides a helpful summary of the investment tax credit, the Treasury cash grant program and ways those incentives can be monetized and harnessed for locally-owned wind power projects.  Perhaps more importantly, though, the paper points out how the recession of 2008-09 may turn out to have been a blessing in disguise for community-owned wind projects.

Wind power grew dramatically during the middle 2000s, but most of these projects were investor-owned.  For-profit developers’ demands for turbines and qualified engineers often resulted in a shortage in those resources for more cash-strapped developers.  The downturn impacted many of these projects and resulted in an excess of supply over demand, allowing community-owned projects to begin to take up the slack.

The expansion of the investment tax credit and the availability of the Treasury cash grant have made it possible for community-based projects to get started with less upfront capital than in the past.

December 21, 2009

Renewable Energy Around the Web: December 21, 2009

Our weekly compilation of renewable energy news and information from around the Web. 

Renewable Energy in Scotland

A report from the Scottish National Heritage organization claims that Scotland is on target to exceeds its renewable energy goals and could achieve 300% of its goals by 2020 if pending programs are approved.  The report claims that 2,834 MW of renewable power is operational and another 3,739 MW of power has been approved with another 19,500 MW in the planning stages.  The combined output is more than three times the 8 GW need to meet Scotland’s 2020 target of 50% of electricity from renewables. 

Utilities Building Long Distance Transmission Lines

The California PUC gave its final approval for Southern California Edison to construct the last 173 miles of its 250-mile Tehachapi transmission project in Kern County.  The line is expected to transmit as much as 4,500 megawatts of electricity produced from wind, enough power for nearly 3 million homes.

The capital cost of high-capacity long distance transmission is often seen as a barrier to the development of renewable energy production because the cost can be so high and the time to delivery can take years.

In a related development, LS Power announced that it would build the LaSalle Transmission Project (“LaSalle”), a new 345 kilovolt (kV) transmission project connecting Illinois and Indiana. The project is intended to facilitate renewable energy development within the region.

LaSalle is expected to be an approximately 160-mile transmission line to connect three existing 345-kV substations operated by the PJM Regional Transmission Operator. These three substations are the Pontiac-Midpoint substation near Pontiac, Illinois; the Reynolds substation near Reynolds, Indiana; and the Dumont substation near North Liberty, Indiana. New substations may also be constructed along the transmission line to serve as points where additional wind could interconnect to the transmission system.

“LaSalle will be routed through some of the most promising areas in Illinois and Indiana for wind development – areas that currently have limited access to the high-voltage transmission system,” stated Sharon K. Segner, Director – Project Development with LS Power. “LaSalle will provide both a means for wind generation to connect to the transmission system and an outlet for the wind generation to be delivered to load.”

The project is being developed by Central Transmission, LLC, a new transmission company and member of the LS Power Group. The LS Power Group has active transmission development across the country representing over 1,000 miles of transmission planned to help deliver renewable resources to load. This includes Great Basin Transmission, a new transmission company in Idaho and Nevada developing a “shovel ready” 500+ mile 500-kV transmission line; and Cross Texas Transmission, a new transmission company in Texas developing over 200 miles of double circuit 345 kV as part of the Competitive Renewable Energy Zone Transmission Plan.

Renewable Energy Committee Studies State Incentives

The Renewable Energy Committee of the American Bar Association’s Public Utility Section is conducting a study of state-level incentives for renewable energy.  The Committee’s Fall 2009 Report outlined the key federal incentives and for its Spring 2010 Report the Committee will dig deeper into the incentives available at the state level.  Created by the Public Utility Section in 2009, the Renewable Energy Committee has nearly 100 members and brings together legal practicioners to study developments in the sector.

New Landfill Methane Plant in North Carolina

Methane Power announced the opening of a new landfill gas-to-energy plant in Durham, NC, the state’s fourth largest city.  Electricity generated by the Durham landfill energy plant is being sold to Duke Energy Carolinas under a power purchase agreement.

Methane Power Inc., the project developer, said the energy plant is powered by three of GE’s containerized JGC 320 Jenbacher landfill gas engines. GE’s Jenbacher landfill gas engines are generating 3.17 megawatts of renewable electricity for the regional grid by using the landfill’s methane gas, which is created by the decomposition of municipal solid waste. The facility is generating enough energy to support about 1,800 North Carolina homes.

North Carolina is one of 27 states with a renewable portfolio standard (RPS), which requires utilities to produce a certain percentage of electricity from renewable sources, including biogas. North Carolina’s RPS requires that by 2021, utilities must meet 12.5 percent of customers’ energy needs through energy efficiency savings or renewable energy production.

Copenhagen’s Effect on Renewable Energy

Will the recently-announced climate change deal at Copenhagen have an effect on the market for renewable power?  The popular investing blog, SeekingAlpha, things so.  SeekingAlpha writes:

“The result from Copenhagen boosted the renewable energy outlook; India’s Suzlon sees wind turbines shortfall in 2010 and in the coming years. The $53B wind turbine market means the current global capacity cannot meet the demand.”

“The wind energy market is heating up in China as well. Ealier this year General Electric set a joint venture with A-Power Energy Generation with an annual 2GW capacity in 2010. According to the CEO, GE sees China as leading the green energy trend already, and this will continue if the U.S. does not come up with a green energy policy. A-Power Energy Generation announced Wednesday that the company has signed a definitive agreement with US-REG and Cielo wind for a Texas 600MW wind farm project. ”

“Before this announcement, some investors were still skeptical. What makes this project golden is that A-Power has agreed to deliver wind turbines beginning in March 2010. In other words, revenue on wind turbines will starts to flow in Q1 of 2010. Of course, the company has already realized revenue from Chinese wind farms in Q4 2009, however this marks the first revenue in-flow from a Mega wind farm project that A-Power has signed. The company has many huge alternative energy projects from various countries and is ramping up its turbine projects quickly through a Joint venture with General Electric.”

On the other hand, most environmental activists have viewed Copenhagen as a bust, so any boost for renewables is likely less than would have been the result if world leaders had adopted a wider-reaching or more robust agreement. 

In that same vein, on the first tradng day after the Copenhagen announcement, the price of carbon trading permits in Europe fell, reflecting the decreased likelihood of restrictions on carbon emissions.  Bloomberg reported that the “nations attending the two-week Copenhagen summit that ended at the weekend agreed to voluntary, rather than binding, targets to reduce emissions. The accord isn’t enough to boost demand for permits, said Trevor Sikorski, an emissions analyst at Barclays Capital in London.”

December 16, 2009

Taylor English Duma Assists Client with $17 Million Renewable Energy Grant

Taylor English Duma LLP attorney Greg Sanderson recently advised a Washington state-based manufacturer in successfully obtaining a Treasury §1603 cash grant in excess of $17 million for a 55 megawatt biomass power plant. Sanderson is part of the Renewable Energy Finance team at the firm. 

The client manufactures bleached and unbleached kraft pulp and linerboard at its mill in the Tacoma, Washington area. The mill employs some of the most advanced paper recycling techniques available, and recycles some 500 tons of waste paper and boxes every day, turning it into high-quality packaging paper while improving the environment. The new power plant is fueled with biomass residues from mill operations and other regional sources. The plant co-generates green power that is sold into the public electrical power grid and steam that is used for paper manufacturing.

For the last two years, Sanderson has worked to obtain incentives for this biomass power project. The grant will cover 30 percent of the cost of the project. “Biomass” is any organic material obtained from terrestrial and aquatic crops, including wood and paper residue. The biomass material is a renewable fuel used by the power plant as an alternative to coal or petroleum products.

“The 2009 Recovery Act has made billions available to companies trying to build renewable energy facilities,” Sanderson says. “The policy is to promote domestic and renewable sources of energy.”

Sanderson is a member of the Taylor English Duma LLP renewable energy team. Taylor English lawyers represent renewable energy developers and investors to help them qualify for tax incentives and obtain project financing in debt and capital markets. Sanderson has been involved in more than 100 similar tax credit transactions supporting renewable energy. He has also served as a co-owner and financial officer of Power Management, Inc. and of W-T-E Development, LLC, private alternative energy firms that developed and financed over 30 energy projects in 14 states from 1995 to 2004.

“It is great to be able to complete a project like this and see it work,” Sanderson says. “It is rewarding because we are helping to produce electricity from renewable resources. Renewable biomass energy is produced locally, carbon neutral, and environmentally friendly. Our nation needs to develop more renewable sources to reduce our dependence on fossil fuels and imported oil.”

December 14, 2009

Renewable Energy Around the Web: December 14, 2009

Our weekly compilation of renewable energy news and information from around the web.

$600 Million for Biofuels

U.S. DOE Secretary Steven Chu and Agriculture Secretary Tom Vilsack last week announced the selection of 19 biorefinery projects to receive up to $564 million from the American Recovery and Reinvestment Act to accelerate the construction and operation of pilot, demonstration, and commercial scale facilities. The projects – in 15 states - should validate refining technologies and help lay the foundation for full commercial-scale development of a biomass industry in the United States. The projects should produce advanced biofuels, biopower, and bioproducts using biomass feedstocks at the pilot, demonstration, and full commercial scale.

Our friends at Biofuels Digest published a lengthy analysis of the awards and the process followed by the DOE.  It makes for interesting reading.  According to the analysis, the DOE published a Funding Opportunity Announcement in May of 2009.  After submitting lengthy written applications, there was a first cut and those who survived were invited to participate in a “GoToMeeting.com” online chat and presentation session.  DOE participants were never identified in the process, and never spoke directly on the conference call, but submitted questions online as they were identified as “Review #1″ and so on. 

As one successful recipient CEO was quoted to say, “what you win is the right to negotiate.”  Winning companies will now be able to negotiate the terms of their grants for a period of several months with the hopes of actually receiving cash in mid-2010.  While the ARRA intended for funds to get put to use in 2009, in this instance it wil have taken more like 1.5 years for the cash to actually be put to use.

EPA Issues GHG Endangerment Finding

Coming on the heels of the ClimateGate scandal, EPA Administrator Lisa Jackson last week finalized the EPA’s GHG endangerment finding, ruling that greenhouse gas emissions are an air pollutant under the Clean Air Act and are a threat to public health.   The endangerment finding is an outgrowth of the U.S. Supreme Court decision in EPA v. Massachusetts in which the Supreme Court held that the EPA’s authority to regulate air pollutants under the Clean Air Act extended to greenhouse gas emissions.

Speaking on Fox News Sunday, Oklahoma Senator James Inhofe suggested that the EPA would use the endangerment finding as a means of accomplishing through administrative ruling what it could not accomplish through legislation.  He reasoned that climate change legislation (whether in the form of the Waxman Markey bill or some other form) was unlikely to pass Congress during 2009 and that the Obama administration needed the legal support provided by the endangerment finding in order to make commitments at the Copenhagen talks on climate change.

EPA Delays Decision on E15 Waiver

On Dec. 1 the U.S. EPA announced that it will not make a final determination of the E15 fuel waiver until mid-2010. In March 2009, Growth Energy submitted a waiver to allow for the use of up to 15 percent ethanol in gasoline. Under the Clean Air Act, EPA was required to respond to the waiver request by Dec. 1, 2009.

The EPA has been working to evaluate the waiver request and has received a broad range of public comments as part of the administrative rulemaking process. In a letter sent to Growth Energy on Dec. 1, the agency said that to-date testing has indicated that the engines of newer cars will likely be able to handle ethanol blends higher than the current 10 percent limit. However, the agency will delay making a final decision on the fuel waiver until more testing data is available. On a positive note, the EPA also announced that it has begun the process to craft the labeling requirements that will be necessary if the blending limit is raised.

“As we are evaluating [the] E15 fuel waiver petition, we want to make sure we have all necessary science to make the right decision,” said the EPA in a letter addressed to Growth Energy Co-Chairmen Gen. Wesley Clark and Jeff Broin. “Although all the studies have not been completed, our engineering assessment to date indicates that the robust fuel, engine and emissions control systems on newer vehicles (likely 2001 and newer model years) will likely be able to accommodate higher ethanol blends, such as E15. However, we continue to evaluate the question of component durability when E15 is used over many thousands of miles and there is ongoing study being conducted by [the U.S. DOE] that will provide critical data on this issue.”

New DOE Loan Guarantee Rules

The DOE published its new rules for loan guarantee applications.  The new rules incorporate comments from industry participants and are intended to accelerate the loan guarantee process.   The new rules were effective December 4, 2009. 

American Bar Association Renewable Energy Committee

Our Renewable Energy Committee of the ABA’s Public Utility Section is meeting for the first time today on a conference call.  We’ll be charting a course for the coming year and planning some webinars and other projects.  Membership on the Committee is free to members of both the ABA and the Public Utility Section.  Check with the ABA website for more details.

September 28, 2009

Renewable Energy Around the Web: September 28, 2009

Our weekly compilation of renewable energy news and information from around the Web.

The Saudi Arabia of Biomass

Is North Dakota the Saudi Arabia of Biomass?  It was Shane Goettle, commissioner of the North Dakota Department of Commerce who used this colorful term to describe the state at a the Norther Plains Bioeconomy Conference on September 22 in Fargo, N.D.  Goettle said the state leads the nation in biomass production capacity and is the top producer of 16 different commodities. 

Goettle said that the state has several energy assets, including the largest deposit of lignite coal in the world, the fifth largest oil production state in the nation, and the leader in the nation of wind energy potential. “You would be heavy pressed to find a state that is more readily poised to engage in the country’s energy future,” he said. “The fact that we have such tremendous biomass potential is getting the attention of significant investors, companies and players in the world.”

The North Dakota legislature has created EmPower ND, a statewide energy policy commission to build on a comprehensive energy policy for North Dakota.

The goal of of EmPower ND is to grow all energy industries in the state—renewable and traditional. Goettle said the program is unique in nature. “We’ve got all of the energy industry leaders together to hammer out a policy they we can initially agree on, and go to the legislature and our government leaders to move all of North Dakota’s energy interests forward. It’s not easy work, but I’m very proud of this 14-member commission.”

So far, during 2009 the North Dakota legislature has passed nine pieces of energy legislation supported by EmPower, including tax breaks for renewable energy devices, income tax credits for soybean and canola crushing costs, a combined renewable energy and biomass incentive programs with $3 million in funding, and a biofuels blender pump incentive program with up to $2 million in funding.

Political Favors?

The Wall Street Journal reported last week that Fisker Automotive Inc., a start-up company based in California, will receive a $529 million government loan to build an $89,000 hybrid vehicle in Finland.  The announcement  follows a $465 million government loan to Tesla Motors Inc., which is hoping to manufacture a $109,000 British-built electric Roadster. Tesla is a California startup focusing on all-electric vehicles, with a number of celebrity endorsements that is backed by investors that have contributed to Democratic campaigns.  Fisker is reportedly backed by Al Gore.

The awards to Fisker and Tesla have prompted concern from companies that have had their bids for loans rejected, and criticism from groups that question why vehicles aimed at the wealthiest customers are getting loans subsidized by taxpayers.

“This is not for average Americans,” said Leslie Paige, a spokeswoman for Citizens Against Government Waste, an anti-tax group in Washington. “This is for people to put something in their driveway that is a conversation piece. It’s status symbol thing.”

DOE officials spent months working with Fisker on its application, touring its Irvine, Calif., and Pontiac, Mich., facilities and test-driving prototypes.  Matt Rogers, who oversees the department’s loan programs as a senior adviser to Energy Secretary Steven Chu, said Fisker was awarded the loan after a “detailed technical review” that concluded the company could eventually deliver a highly fuel-efficient hybrid car to a mass audience. Fisker said most of its DOE loan will be used to finance U.S. production of a $40,000 family sedan that has yet to be designed.

Subsidies for Non-Renewable Fuels?

Biodiesel Magazine is reporting that a recent study by the Environmental Law Institute concluded that existing subsidies for fossil fuels provide twice the value in governmental incentives to fossile fuels than to renewable fuels.  The study claims that fossil fuels benefited from approximately $72 billion over the seven-year study period, while subsidies for renewable fuels totaled only $29 billion. More than half the subsidies for renewables—$16.8 billion—were attributable to corn-based ethanol. Of the fossil fuel subsidies, $70.2 billion went to traditional sources—such as coal and oil—and $2.3 billion went to carbon capture and storage, which is designed to reduce greenhouse gas emissions from coal-fired power plants. The focus of the study was that these energy subsidies  favored energy sources that emit higher levels of greenhouse gases over sources that emit fewer greenhouse gases.

Cash is King

Popular investing website, Seeking Alpha, carried a lengthy report on the economics of renewable energy investing.  Among its findings:

  • It is a “buyer’s market” for those developing large wind, solar, bioenergy, biofuel, and other renewable energy projects. In 2009, land is less expensive, equipment cost less, deliveries are faster, and warranties longer. It is a buyer’s market if you have cash, yet it continues to be a difficult time to secure debt financing.
  • Demand for renewable energy is at a record high as U.S. utilities in about 30 states struggle to meet renewable portfolio standards (“RPS”).
  • Utilities in RPS states are looking to sign long term PPAs (“power purchase agreements’) for 5 to 20 years.
  • Renewable energy has been an “historic opportunity” for developers who would take projects through 3 to five years of analysis, regulatory approvals, securing equity and debt financing, buying equipment, program management, and operating the plant. Now, few investors and lenders have the appetite for risk, as projects such as ethanol plants have gone bankrupt.
  • Credit worthiness of developers, utilities and end users are scrutinized. For example, major public real estate owners of buildings, hotels, and shopping centers that want MW of solar cannot get the RE because their corporation or REIT has a sub-prime debt rating.
  • Risk is intensified as redundant regulation and NIMBY (not in my backyard) opposition can delay installation of high-voltage lines for 7 to 10 years from wind or solar farm to major cities that need more electricity. Even billionaire Boone Pickens was unwilling to tie-up money for that period of time.
  • Although large-scale RE development in 2009 is beyond the financing capabilities of most entrepreneurs, it is an opportunity for major public companies with investment-grade bond ratings such as FPL Energy (FPL), GE Energy (GE), Iberdrola Renovables (IBR.MC), and EDF Energy Nouvelles (EEN.PA). Wall Street analysts are forecasting record 2009 and 2010 earnings for Iberdrola and EDF.
  • Smaller wind and solar developers find that new developments are possible, though more difficult. Utilities are standardizing RFPs and making conditions more reasonable. Private equity money is available if investors can be convinced of high returns and low risk. David Perlman, Managing Director with investment banker Fieldstone Private Capital Group, reports that, “Liquidity is returning, but with fewer banks than before economic crisis, smaller lending commitments, shorter maturities, and club deals rather than syndications. Bankers might offer construction terms and an operating loan of no more than five years for developments that show little risk.
  • The ARRA (American Recovery and Reinvestment Act) has helped and hurt. More federal bureaucracy and slower release of money is reported. New wind and solar deals are more likely to use ITC than PTC. The cash flow for an ITC is sooner and more predictable. For many projects, the new Treasury Department Grant is even more favorable than ITC. Tax-exempt bonds are another avenue for financing RE projects reported John M. May, Managing Director of investment banker Stern Brothers. He identifies bioenergy and biofuel from solid waste are good targets for tax-exempt bonds.
  • The demand is growing for renewable energy and fuels. The rewards are significant for the patient investor who can moderate risk with a portfolio of RE projects at various stages of approval. In 2009, the year of the Great Recession, cash is king.

August 31, 2009

Renewable Energy Around the Web: August 31, 2009

Our weekly compilation of renewable energy news and information from around the Web.

Sixteen Days and Counting

Interested taxpayers have sixteen days to submit their preliminary applications for Section 48C tax credits for qualified advanced energy projects.

The American Recovery and Reinvestment Act allocated approximately $2.3 billion in tax credits for qualified advanced energy projects, defined to include projects that are intended to manufactured advanced energy property.    (Refer to our white paper for details on the application process or register for our free webinar on the topic on September 2, 2009).

Although the preliminary application is only two pages long and permits a summary of the project in no more than 300 words, the formal application (due October 16, 2009) is quite lengthy.  The formal application requires a “project information memorandum” of not more than 30 pages (12 point font, single-spaced) excluding appendices.

One of the more challenging aspects of the formal applicable is the requirement that the applicant calculate the “attributable annual manufacturing capacity” (or “AAMC”) to the proposed QAEP.  The theory behind this calcualtion is that each project be rated to determine how much “bang for the buck” society will receive for the dollars of tax credit extended.  So, to make this rating possible, DOE wants to know the dollar value of energy to be produced by the devices produced by the QAEP so that it can compare that value (the AAMC) against the dollars of tax credits for which the applicant is seeking certification.  In theory, the DOE will be able to rank all of the applicant projects by AAMC per dollar of tax credit, giving priority to those projects producing the highest quantity of value per dollar of tax credit.

That’s a great theory but the quantity and variety of variables that contribute to the calculation of AAMC are extreme and there is relatively little time in which to complete the process.  In addition, because no one has ever done this before, there will likely be great variation in the methods and data employed by applicants to justify their respective projects. 

Under the DOE’s guidance, released on August 15, 2009, the DOE will take the applications submitted by October 16th and produce a ranking of qualifying projects to the Treasury by December 16, 2009.  That’s only 60 days to review, validate and prioritize what could be hundreds or even thousands of projects.  (In its OMB estimate of the hours of paperwork required the DOE estimated that it would receive 1,000 complete applications). 

Project developers need to be actively engaged with their accountants, lawyers and advisors if the hope to participate in this initial round of applications for Section 48C credits.

The California Reverse-Auction Proposal

California is proposing to implement a reverse-auction process to determine the price investor-owned utilities will pay for new solar projects in that state.  The proposal is believed to be the first of its kind and has the merit of implementing a market process to determine price while simultaneously acting to stimulate new investment in a renewable sector.

Xtreme Power Plans Plant in Michigan

Texas-based Xtreme Power is planning to convert a deserted Ford Motor Company plant in Wixom, Michigan into a manufacturing facility for its energy-storage systems. 

Xtreme Power says it will build a manufacturing plant for its power-storage systems in Wixom, Michigan, northwest of Detroit, with the help of a state incentives package estimated to be worth more than $200 million.  Michigan officials say Xtreme might hire as many as 2,500 workers between late 2011 and 2014 and generate another 10,000 supplier-related jobs in the area.

Xtreme Power, which employs about 90 people, makes battery-based energy storage systems for power utilities, wind farms and large manufacturing companies.  Its systems, which rely on lead-acid batteries, recharge overnight, creating energy that can be used during the day, when demand for power is higher.

Clairvoyant Energy of Santa Barbara, California, also will receive incentives to use part of the Wixom plant to produce solar panels. Overall, the companies could invest up to $725 million in the project and create 4,300 direct jobs.  “The Wixom project has the potential to make Michigan a national destination for renewable energy products,” said a spokeswoman for Michigan Governor Jennifer Granholm.

PECO Proposal to Buy Solar RECs Approved

The Pennsylvania Public Service Commission approved a proposal by PECO Energy Co. to begin purchasing renewable energy certificates from developers of solar power facilities. 

The ruling allows the Philadelphia utility to begin buying alternative-energy credits to comply with a law that forces utilities to derive a gradually increasing portion of their power from renewable-energy sources.

PUC chairman James H. Cawley commended Peco “for taking the initiative to kick-start the process.” The state’s Alternative Energy Portfolio Standards Act requires electrical utilities to buy 18 percent of their power from alternative-energy sources by 2020.

The market for solar alternative-energy credits has been “very thin and very illiquid” because the laws requiring utilities to buy solar power are only starting to kick in, according to Mike Freeman, senior originator of Exelon Generation Co. L.L.C., the wholesale power arm of Peco’s parent company, Exelon Corp.

Peco’s planned purchase of 80,000 credits over 10 years – each credit represents one megawatt-hour of power, or about as much as a residential customer would consume in a summer – should provide a strong signal to solar builders about the value of their projects, which will assist long-term financing.

First Michigan Biomass-Powered Gasification Plant

Biomass Magazine reported on what is believed to be the first biomass-powered gasification plant in the State of Michigan. 

The report indicated that Heat Transfer International has nearly completed the installation of a gassification plant in Howard City, Michigan, that will become the state’s first gasification plant and the world’s first hot air turbine powered by biomass, according to Pat Dickinson, a business developer for HTI.

The plant will convert turkey litter at Sietsema Farm Feeds into a syngas that will be used to provide the heat and electricity needed to produce turkey feed.

HTI is a designer and manufacturer of SALT retorts, which Dickinson explained are starved-air/low-temperature biomass gasification systems. “We have a technology that converts biomass, through a thermal process, into synthesis gas,” he said. “The syngas is sent to a chamber where it is combusted—much like natural gas or propane—and is then used to make heat, which can be converted into steam, power or hot water; any commodity that is desired.”

Dickinson said unique aspect of the soon-to-be commissioned system at Sietsema Farm is that the air turbine will produce power from poultry litter without the use of steam or an internal combustion engine. “We don’t have to worry about trying to clean the gas to run it through a reciprocating engine,” he said. “The heat we produce off the gasification process is sent through our patented high-temperature ceramic heat exchanger technology, which sends clean, hot air to the turbine. So many times people are looking for—especially for smaller power systems—a half megawatt or a megawatt of power. If they want to make power, they have to make high-pressure steam and use a steam turbine. We don’t have to go through that process, or have a high-pressure boiler to make power.”

July 31, 2009

DoE Announces $8.5 Billion in Loan Guarantees Available

The Department of Energy has announced that it is now ready to accept applications for up to $8.5 billion in renewable energy loan guarantees. 

Energy Secretary Steve Chu said, “These investments will be used to create jobs, spur the development of innovative clean energy technologies, and help ensure a smart, strong and secure grid that will deliver renewable power more effectively and reliably.  This administration has set a goal of doubling renewable electricity generation over the next three years.  To achieve that goal, we need to accelerate renewable project development by ensuring access to capital for advanced technology projects.  We also need a grid that can move clean energy from the places it can be produced to the places where it can be used and that can integrate variable sources of power, like wind and solar.”

Application information from the Department of Energy is available here.

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