Solar Energy

Rio+20 Disappoints But Does Renewable Energy Need an International Treaty to Move Forward?

June 23, 2012 14:34
by J. Wylie Donald
Rio+20 wrapped up yesterday.  The moniker derives from the twentieth anniversary of the Earth Summit, the 1992 United Nations Conference on Sustainable Development, which was held in Rio de Janeiro.  This reprise was billed as “an historic opportunity to define pathways to a safer, more equitable, cleaner, greener and more prosperous world for all.”  The conferees focused on two themes:  “How to build a green economy to achieve sustainable development and lift people out of poverty, ... and how to improve international coordination for sustainable development." The agenda was dense, ranging from jobs to  energy, sustainable cities to food security and sustainable agriculture, and water and oceans to disaster readiness.  Some criticized this “all things to all people” approach.  We take a more pragmatic view:  “whatever works.” Unfortunately, it does not appear that much is working.  All that was agreed was that there would be more discussion in the future.  Criticism of the conference was uniform.  NPR panned it as “one of the biggest duds.”  The New York Times captured the disappointment of CARE (a political charade), Greenpeace (a failure of epic proportions) and the Pew Environment Group (a far cry from success). Even Sha Zukang, Secretary-General of the conference, could muster little positive to say:  "This is an outcome that makes nobody happy. My job was to make everyone equally unhappy," If the goal was another international agreement filled with platitudes that would accomplish nothing, that was not achieved.  But we would like to suggest that something positive may be coming.  We would like to focus on just one of the initiatives, Sustainable Energy for All (SE4ALL).  Conducted under the auspices of the United Nations, SE4ALL has three objectives: 1. Universal access to electricity2. Increased use of renewable energy3. Increased energy efficiency Over 1.3 billion people in the world do not have access to electricity for their homes and work. Electricity is enabling.  Whether for studying after dark, pumping irrigation water, eliminating wood/charcoal/dung stoves, or refrigerating medicine, the benefits of electricity are immediate and life-changing.  The program calls for innovation and investment, and policy choices that enhance innovation and investment. Renewable energy is part of the program for many of the reasons raised in this country:  job creation, reduction of greenhouse gas and pollutant emissions, insulation from price volatility, and increased energy security.  A justification not common to the domestic debate about renewable energy is also put forth.  Renewable energy can cut balance-of-payment imbalances, The program’s goal is to double the share of renewable energy in the world energy use portfolio by 2030. “Of the three objectives of Sustainable Energy for All, improving energy efficiency has the clearest impact on saving money, improving business results, and delivering more services for consumers.”  Thus efficiency improvements are the easiest point of entry for lifting more people out of energy deprivation for less money.  The program’s goal is to double the current rate of efficiency improvement by 2030. Is this all pie in the sky? Two vantage points suggest it is not.  First, the investment community very much supports the renewable energy sector.  Michael Liebriech, the CEO of Bloomberg New Energy Finance gave an interview at Rio+20 and made the point that he’s seen $1 trillion pour into the sector globally since 2004.  “My clients really don’t necessarily care about what’s happening in the negotiations. They’re concerned about what’s right in front of them. What would you rather trust, a decades-long process that hasn’t resulted in a whole lot of progress, or a trillion dollars in investment?”  Diplomats and governments should listen. Second, UN Secretary-General Ban Ki-Moon, who grew up without electricity, has explained why SE4ALL is a program worth putting forward:  "Widespread energy poverty condemns billions of people to darkness, to ill health and to missed opportunities ....”   One can imagine him continuing:  “I had seen first-hand the grim drudgery and grind, which had been the common lot of … generations of … farm women. I had seen the tallow candle in my own home, followed by the coal-oil lamp. I knew what it was to take care of the farm chores by the flickering, undependable light of the lantern in the mud and cold rains of the fall and the snow and icy winds of winter. … I could close my eyes and recall the innumerable scenes of the harvest and the unending punishing tasks performed by hundreds of thousands of women, growing old prematurely, dying before their time, conscious of the great gap between their lives and the lives of those whom the accident of birth or choice placed in the towns and cities.”   Except that is not the Secretary General, it is Senator Frank Norris, the champion of the Rural Electrification Act of 1936, which literally turned the lights on across much of rural America.  Rural electrification was a good idea then, as millions can attest.  And it is a good idea now.  The trick today is how to wed the developing renewable energy sector, with the billions of dollars of investment being made, to an electrification program for 1.3 billion people.  A distinction here that will make electrification easier than it was in the 1930s, is that many renewable energy sources (solar, wind, tidal) by their nature can be utilized without investment in large power distribution networks.  If SE4ALL is about innovation and investment, it seems eminently achievable.

Climate Change | Legislation | Renewable Energy | Solar Energy | Sustainability

Bad Karma for Fisker Automotive: Of Loans and Lawsuits

February 21, 2012 19:59
by J. Wylie Donald
As if it wasn’t hard enough trying to displace the internal combustion engine as the motive force of the automobile, then this happens.  First the plug-in hybrid Chevy Volt’s battery starts catching fire.  Then battery-maker Ener1 files for bankruptcy protection.  Last Thursday, the electric vehicle arena acknowledged more bad news.  Fisker Automotive, maker of the electric sport coupe Karma and promisor of the Nina, issued a press release following a set of disquieting reports from various outlets.  The sour news:  “As a prudent business measure, project Nina has been temporarily put on hold until financing, either from the DOE or elsewhere, can be secured.” Fisker is the high end of electric vehicles.  Its “plug-in extended range” Karma sedan seats four and retails between $96,000 and $109,000.  It can do 0-60 in 7.9 seconds in full electric (Stealth) mode (the plug-in part).  But turn on its gasoline engine, which turns its electric generator, and you’re down to 5.9 seconds (Sport Mode) (the extended range part).  Motor Trend calls it “a sweetheart to hustle.” Nina is (was?) the more consumer-friendly version of a Fisker. It is to be (according to reports) a compact or midsize sedan, priced in the $40,000 range (after the $7,500 federal tax credit).  It is to be built in a refurbished GM plant in Delaware, which Fisker bought out of GM’s bankruptcy in 2009.  Predicted production levels were 100,000 vehicles per year.  That goal is currently not realizable. Fisker has raised a lot of money.  Besides over $850 million in private financing, in 2009 “Fisker Automotive closed a $529 million loan arrangement under the Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program for the development and production of two lines of plug-in hybrid electric vehicles. The project is expected to create about 2,000  jobs in Wilmington, Delaware.”   Times change.  In May, after providing $193 million to Fisker, DOE stopped lending because various milestones in Karma sales and production had been missed.  Or as Fisker put it in its recent press release:  “In May 2011 Fisker Automotive opted to stop taking reimbursements from the DOE while the company entered negotiations to implement more realistic and achievable milestones.” Fisker's financial difficulties are not being kept secret.  The tip of the proverbial litigation iceberg made its appearance earlier this month in the form of a lawsuit filed in California Superior Court: Wray v. Fisker Automotive Holdings et al. (Complaint attached below.)  In the suit Mr. Wray, an investor in Fisker and various Fisker investment entities, claims he was deceived into buying Fisker securities because he was unaware that a subsequent "pay to play" offering could require him to increase his investment or lose the beneficial position he had procured by virtue of his earlier contributions. Mr. Wray put over $200,000 into Fisker. In return he received preferred stock with various benefits such as "conversion price discounts", "anti-dilution protection", and "liquidation preferences." While risks of investing were disclosed, nowhere, it is alleged, did the offering memoranda inform Daniel Wray, or any other investor, that if he did not participate in future forced financing of Fisker, as Fisker and Advanced Equities [the broker/dealer] dictated, he would suffer a significant dilution of all of his earlier investments; conversion of the convertible preferred stock to common stock loss of all the rights, preferences and privileges that his ownership of preferred stock conferred, including liquidation preference, anti-dilution protection and initial public offering discounts/special conversion rights. Complaint ¶ 26. But on January 18, 2012 the broker/dealer wrote Mr. Wray (and presumably others) seeking money: "Due to Fisker's urgent need for equity capital, the Financing now contains a "pay to play" provision that requires all holders [of certain securities] to purchase Series D-1 Preferred Stock in an amount equal to at least 40% of such holder's aggregate dollar amount invested ...".  Id. ¶ 28.  Mr. Wray had slightly over $200,000 invested, and was now on the hook for another $83,922.32. In his complaint, Mr. Wray alleges breach of fiduciary duty, fraud, negligent misrepresentation, and various violations of the California Corporations and Business & Professions Codes, among other things. The greencarreports blog did a little investigating and is not overly sanguine about Mr. Wray’s chances on the merits.  We look at it from a different perspective.  We are not privy to Mr. Wray's thinking but his suit may be an astute way to buy time before committing to the next $80,000. If the DOE funding hurdles are cleared, or private sources come through, then the investment, particularly for one in preferred status, may be particularly fruitful. And if the big money is not forthcoming, then throwing good money after bad might be avoided.  In that case, Mr. Wray might not find himself alone on the tip of the iceberg any longer either. 20120207 Complaint, Wray v. Fisker Automotive Holdings, Inc..pdf (707.64 kb)

Climate Change | Green Marketing | Solar Energy

Solyndra Takes the Fifth and Mascoma Prepares for an IPO: A Down-and-Up Day for Renewable Energy

September 26, 2011 19:50
by J. Wylie Donald
  It was a sobering moment Friday. Two executives of Solyndra LLC, after being honored by the President, receiving vast sums of money from investors, and earning kudos and accolades from industry and government,  asserted their Fifth Amendment right against self-incrimination and refused to testify before a congressional committee investigating the solar cell manufacturer's bankruptcy and potential improprieties in the procurement of loan guarantees.  We are not privy to the corporate planning but are comfortable stating that that was definitely not in the business plan. A more successful business model (for the moment anyway) appears to be that of cellulosic ethanol entrepreneur Mascoma Corporation, which on Friday filed its S-1 in anticipation of its IPO seeking $100 million in investment. As one blogger reported:  "the numbers continue to look strong, and the timelines continue to point toward commercial volumes of cellulosic ethanol in the 2013-14 time frame, at affordable prices."  We shall see.  Mascoma describes itself as follows:  "Using its proprietary consolidated bioprocessing, or CBP, technology platform, Mascoma has developed genetically-modified yeasts and other microorganisms to reduce costs and improve yields in the production of renewable fuels and chemicals."   While the holy grail is commercial success using any biomass resource, Mascoma is hedging its bets and touting application of its "bugs" to ethanol producers. It asserts that its "consolidated bioprocessing" is better than current processes and that it can help ethanol manufacturers produce more cheaply. This resort to established product lines is becoming a trend. An article in Scientific American, The False Promise of Biofuels by David Biello, reports that many in the biofuel area, where the lack of success in commercialization of biofuel applications has been discouraging, are seeking to use their proprietary technologies in other areas such as pharmaceuticals and cosmetics. Internet commentators draw parallels between Mascoma and Solyndra based on the government support each received. Frankly, we find it not much of an insight. Government support is an enticement for investors.  If you have it, it will be easier to locate private financing. If you don't, it is just the opposite.  Still, federal and state involvement is eye-opening.    Mascoma's S-1 reveals that it has yet to turn a profit over the past five years and in fact has lost almost $140 million so far. It has been able to do this with a little over $100 million in private investment, $30 million in debt and $34.5 million in revenue. Eighty-six percent of Mascoma's revenue in 2010 came from government sources, which is substantial; government grants exceed $65 million.  The Department of Energy has provided separate grants of $20 million and $4.3 million, New York's Energy Research and Development Authority and Michigan's Strategic Fund have contributed $14.8 million and $20 million, respectively, in return for facilities in each state. A few million ($6.3 MM) has come from the BioEnergy Science Center at UT-Battelle. And somehow, for less than a million dollars, the Province of Alberta has a commitment for the construction of a facility in Alberta.  We hesitate now as we write our conclusion, for fear of jinxing Mascoma. We hope and trust that the its economic trajectory is 180 degrees from that followed by Solyndra. But just in case, we offer this small bit of advice: pay close attention now to the D&O policy. The next shoe to drop for Solyndra and its officers and directors will be lawsuits alleging various forms of misfeasance as individuals and entities that were financially burned seek to shift their loss.  We could write much regarding D&O policies. It will suffice here to counsel for focusing on pursuing coverage extensions for government investigations and for a requirement of "final adjudication" in any species of fraud exclusion.  The market is reportedly soft (except for Chinese reverse mergers) and there is no time like the present to establish the most favorable coverage terms.  Stated differently, when your executives are taking the Fifth and the litigation sharks are circling is no time to be parsing your coverage.

Renewable Energy | Solar Energy

The Sun No Longer Shines on Solar Panel Maker Solyndra LLC - Bankruptcy and the FBI

September 9, 2011 07:36
by J. Wylie Donald
Well, it was only a matter of time before renewable energy hit the mainstream. By which we mean that the bloom comes off the road as the rubber hits the rose.  Yesterday the FBI raided the headquarters of bankrupt Solyndra LLC, which formerly "led the way to a brighter future", to quote President Obama (4:00).  It seems that some questions have arisen over its bankruptcy filing and whether it misled the government in the procurement of loan guarantees. Those questions are the focus of a criminal investigation. What is the taxpayers' share?  Potentially over half a billion dollars. Solyndra is not the only clean energy darling to fail. Evergreen Solar, Inc. has gone under.  As has Spectrawatt.  (We could add wind, biomass and others.)  A niche legal practice is building somewhere. What practitioners should take from all this, and a central feature of our perspective, is that the new risks and opportunities in the climate change and renewable energy space, are ineluctably accompanied by the old risks and opportunities. The art and craft of what we as lawyers do is the melding of the old with the new. To focus on solar, a key feature of a solar project is the renewable energy credit or REC. Lawyers on both sides should be focusing on where those will end up in a bankruptcy and who will have claims to them.  Is it just another asset, or do its features merit special consideration.  If a REC is an executory contract, perhaps the ostensible owner owns very little after a bankruptcy filing.  Another key feature, will be the tax credit. How will that be treated?  Who gets paid by the loan guarantee (such as in Solyndra's case)? And we advise against just muddling through. We were on a wind farm deal where the other side proposed to include climate change (i.e., a change that would result in less wind) as a force majeure. A good idea, unless you understand how a force majeure clause works:  upon the occurrence of the force majeure event, one has to give notice in a specified period declaring the event.  Counsel obviously had never thought how the client would discern that climate change had occurred such that notice should be given. Because that moment cannot be precisely determined, inevitably such notice will be deemed late or premature and the defense to performance avoided. We point all this out as a caution.  Contracts, like roses and like roads, need to be tended to.  A failure to understand the subject matter fully may result in something undesirable (like a mixing of metaphors), or even harmful (like the loss of a valuable asset).

Renewable Energy | Solar Energy

A Welcome Holiday Present: One Year Extension of the Solar Energy Tax Grant in Lieu of Credit

December 23, 2010 07:39
The renewable energy industry got a nice holiday present this year. On December 17, 2010, President Obama signed into law H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "Tax Relief Act"). Included among the panoply of tax cuts is a tax grant extension cheered by the renewable energy industry. Section 707 of the Tax Relief Act extends by one year the deadline for commencing construction of specified energy property, such as solar facilities, to be eligible to receive a grant of 30% of the cost of the property from the U.S. Treasury under Section 1603 of the American Recovery and Reinvestment Act of 2009. The property will be eligible for the grant if it is placed in service during 2009, 2010, or 2011, or if it is placed in service after 2011 and before the energy credit termination date (January 1, 2017, for solar facilities) if construction began before January 1, 2012. The extension of the tax grant in lieu of credit will allow those interested in developing solar facilities to continue to take advantage of the grant for another full year rather than work to beat the clock to demonstrate compliance by the end of 2010. Projects now under way that are expected to be placed in service in 2011 no longer have to meet Treasury's safe harbor for commencement of construction (demonstrating 5% of construction) by December 31, 2010. The safe harbor and its requirements, however, will be relevant in 2011 for projects expected to be placed in service after 2011. As participants in solar transactions plan their activities for 2011, they should be mindful of the steps that need to be taken by December 31, 2011, to document and maintain eligibility for any projects expected to be placed in service between 2012 and 2017, by either commencing construction or meeting the 5% safe harbor. Due to the sluggish credit markets and economy in 2009, the grant in lieu of credit program was not as great a stimulus to the development of renewable energy projects as some had initially expected. This grant extension brings welcome news to the solar industry and to any large energy user that may want to reduce its energy costs by developing and installing a solar facility. It evidences Congress' continued commitment to the development of alternative energy projects and should result in the development of many more viable projects and the creation of jobs related to the construction and installation of solar energy facilities.  

Climate Change | Legislation | Renewable Energy | Solar Energy

Tilting at Windmills: Cape Wind PPA Pending Review at MA DPU

August 20, 2010 04:26
Its been 10 years since Cape Wind Associates, LLC originally proposed developing 130 wind turbines in Nantucket Sound and, after navigating successfully through a labyrinth of federal, state and local permitting and siting challenges and fending off the perfect storm of litigation, the winds may finally be blowing in Cape Wind’s direction. (Check out this link for a good history of Cape Wind, details on the project, and legal challenges and the controversies surrounding it: Even though now fully permitted for construction, however, the challenges for the nation’s first offshore wind project are far from over as utility regulators consider whether to approve the power purchase agreement (PPA) and public debate in Massachusetts continues to question the wisdom of allowing governmental support for a private project.  Cape Wind still needs to complete the project financing arrangements, estimated at $1 to $2 billion, and an approved PPA is a crucial foundation for commercial financing. According to National Grid’s May 10, 2010 filing with the Massachusetts Department of Public Utilities (DPU), in which it submitted the PPA documents requesting approval of the power purchase arrangements, the utility subsidiaries of National Grid, Massachusetts Electric Company and Nantucket Electric Company plan to buy about 50% of Cape Wind’s power output at 20.7 cents per kilowatt hour over 15 years, which would represent approximately 3.5% of National Grid’s electric distribution load in Massachusetts and exceed its mandate under the state’s renewable portfolio standard obligation, as set forth in the Green Communities Act.  National Grid further stated that the average residential homeowner using 500 kWh per month would see an increase of $1.59 per month in 2013, equal to 2.2% increase on the bill at today’s energy commodity prices. And so, now that the tough environmental and siting decisions have been made in Cape Wind’s favor, the issue has been joined at the DPU on the project’s economics and whether the public (in the form of Massachusetts ratepayers) should support the project.  Just this week, an Op-Ed writer in the Boston Globe criticized the administration of Massachusetts Gov. Deval Patrick’s alleged lack of transparency, political support for the high energy cost of the PPA and the price risk contingencies in the contract.  (The energy cost can go up or down depending on certain market conditions and there is a limited sharing of risk in the PPA related to the project’s power output and qualification for tax credits.  The actual costs presented to the DPU are based on forecasts, but there are uncertainties and risks as well.) This might be a good time to comment on what I like to call the renewable energy economic facts of life.  It’s a fact that renewable energy costs more than energy generated with fossil fuel sources, such as coal or natural gas.  There’s simply no way around that fact. Whether a project is solar, biomass, fuel cell, wind powered or some other renewable source, the cost of the technology and project development is simply higher and sometimes far more expensive than fossil generation.  When it comes to market forces, therefore, generators of renewable power cannot sell the energy economically into a functioning market without substantial price supports or other subsidies. One such subsidy is the federal government’s 30% investment tax credit and the production tax credit, but these tax credits are not enough to help renewable projects to clear the hurdle.  They still need a long-term PPA with a credit-worthy energy buyer and a vibrant market for the renewable energy certificates (RECs) generated by the project.  (Just yesterday, New Jersey's governor signed into law a measure that would create ocean RECs or ORECs to support such projects.  See blog post below.)  Depending on deal terms that include who (buyer or seller) acquires the ownership rights to the RECs, the per-kilowatt-hour energy cost can increase or decrease. In Cape Wind’s case, the PPA buyer is acquiring all of the environmental attributes of the wind power, including the RECs, and capacity rights in addition to the energy itself.  That means that National Grid will have the right to sell the RECs in the market and credit the ratepayers for revenues generated in the marketplace as a result.  The net energy cost, therefore, will likely be less than the 20.7 cents per kWh specified in the PPA. Ultimately, the question for Massachusetts regulators and the public will be whether the renewable energy, which promises clean renewable energy that reduces greenhouse gas emissions and global climate change, is worth the cost.  If we really want to diversify our power supply with clean renewable energy and reduce our reliance on coal and natural gas fired generation, projects like Cape Wind deserve public support and contracts like the ones pending before the DPU merit serious consideration.

Climate Change | Renewable Energy | Solar Energy | Weather

NJ Governor Signs Offshore Wind Measure Into Law

August 19, 2010 08:47
New Jersey Gov. Chris Christie signed into law the Offshore Wind Economic Development Act Thursday, thereby endorsing an initiative designed to spur economic growth through the development of renewable energy and green jobs. Just as NJ has been a leader in providing substantial market-based economic support for solar energy through a rigorous solar renewable energy certificate, this new legislation is intended to establish an offshore wind renewable energy certificate program (OREC) to provide market support for wind energy.  The measure also provides offshore wind developers with financial assistance and can be combined with tax credits from existing programs for businesses that construct manufacturing, assemblage and provide water access facilities to support the development of qualified offshore wind projects. “The Offshore Wind Economic Development Act will provide New Jersey with an opportunity to leverage our vast resources and innovative technologies to allow businesses to engage in new and emerging sectors of the energy industry,” Christie said in a prepared statement. “Developing New Jersey’s renewable energy resources and industry is critical to our state’s manufacturing and technology future. The bill directs the New Jersey Board of Public Utilities (BPU) to develop an offshore renewable energy certificate program and, by requiring that a percentage of electricity sold in the state to be generated from offshore wind energy, creates an offshore wind “carve out,” or subdivision within the existing renewable portfolio standard in NJ similar to the solar program. The offshore wind carve-out is intended to support at least 1,100 megawatts of generation from “qualified” offshore wind projects, which are defined to include projects developed in the Atlantic Ocean and which are connected to the electric transmission system in New Jersey. Through the legislation, the New Jersey Economic Development Authority (EDA) will provide financial assistance to qualified offshore wind projects and associated equipment manufacturers and assembling facilities. The signing of the Offshore Wind bill is not the first time Christie has expressed support in recent months for offshore wind development.  In June, he signed a memorandum of understanding with nine other East Coast governors establishing the Atlantic Offshore Wind Energy Consortium to facilitate federal-state cooperation for commercial wind development on the Outer Continental Shelf off of the Atlantic coast.

Climate Change | Solar Energy | Weather

Cape Wind Approval Signals (Regulatory) Tide is Turning for U.S. Offshore Wind Development

April 29, 2010 09:53
Several European countries already have offshore wind farms, including Denmark, Ireland, the Netherlands, Sweden, and the United Kingdom.  Earlier this year, China completed the installation of its Shanghai Donghai Bridge offshore wind farm project, which has a total installed capacity of 102 MW (enough to power 200,000 Shanghai homes) and is the first large scale offshore wind farm constructed outside Europe.  As for the United States, the Department of Interior (DOI) had issued a report last April which noted (in part) that 28 of the contiguous states have a coastal boundary (including the Great Lakes), 78% percent of the electricity demand in the United States is from the coastal states, and offshore wind has the potential to meet a large proportion of that demand.  As analyzed by the National Renewable Energy Lab, over 1,000 gigawatts (GW) of wind potential exists off the Atlantic Coast and over 900 GW of wind potential exists off the Pacific Coast.  Despite the great potential for offshore wind in the United States, not one offshore wind project has been approved for construction in the United States…until now.  On Wednesday, April 28, 2010, Secretary Salazar approved the Cape Wind project to be constructed on the intercontinental shelf off of Massachusetts.  The regulatory tide is turning…  Approval of the Cape Wind offshore wind project despite contentious opposition by certain groups provides regulatory support for offshore wind and provides some guidance for several other offshore projects that have been proposed in the last few years.  The development of wind projects in the United States, which are (by all accounts) capital-intensive, has been hampered by concerns about the financial markets, the overall economic downturn, regulatory uncertainty as to the future role for renewables in energy policy, and environmental issues.  While Congress has yet to pass comprehensive climate and energy legislation, the approval of the Cape Wind project signals that large scale renewable energy development can play a role in economic recovery and in energy independence and that opposition by those who believe offshore wind farms are unsightly will not prevail when other factors align in favor of the development.   The process for the Cape Wind project began in 2001, when Cape Wind Associates, LLC, submitted an application to the United States Army Corps of Engineers (the Corps) for a permit to construct an offshore wind power facility in Nantucket Sound.  Public review and opposition followed.  According to the DOI, the proposed Cape Wind project is expected to meet 75% of the electricity demand for Cape Cod, Martha’s Vineyard, and Nantucket combined and cut carbon dioxide emissions from traditional power plants by 700,000 tons per year.  The Cape Wind facility will occupy a 25-square-mile section of Nantucket Sound and produce enough energy to serve more than 200,000 homes in Massachusetts.  The maximum energy output of Cape Wind is 468 MW, with an average anticipated output of 182 MW.  The project includes a 66.5-mile buried submarine transmission cable system, an electric service platform, and two 115-kV lines connecting to the mainland power grid. Success begets success.  And so, even though the United States is not the first country to approve the construction of an offshore wind farm, this is very encouraging for wind energy developers, the construction industry, and financial investors who were waiting to see whether the 9-year old Cape Wind proposal would pass regulatory - and especially environmental - muster and then survive the aesthetic opposition raised by some.       

Climate Change | Renewable Energy | Solar Energy

Top 10 List for Solar as Connecticut Considers Solar Strategy

January 21, 2010 05:44
As the legislative season heats up again in Connecticut, with a session scheduled to commence in early February, some energy industry lawyers, policymakers and leading Legislators themselves have been talking over the last few weeks about what Connecticut should do to improve the deployment of renewables generally and solar in particular.  There seems to be more recognition that, for Connecticut to achieve its broad greenhouse gas emission reduction strategies and climate change mitigation goals, more needs to be done to promote investment in renewables in the state and, if green jobs can be created along the way, all the better. A question that keeps coming up in Connecticut is how New Jersey, which has a similar climate and is not even in the top-ten list among states with respect to the intensity of sunshine, could achieve status as the state with the second largest quantity of installed solar photovoltaic capacity, second only to California.  If you look at per-square-mile or per-capita statistics, New Jersey can even boast that it has the most installed solar projects in the U.S. So what has New Jersey done to promote solar PV? After implementing one of the more aggressive renewable portfolio standards (RPS) in the country as part of the Energy Master Plan, with its mandate that 22.5% of the energy supply be generated from renewable sources by 2021, the NJ RPS also contains a solar “carve out” of 2.12% by 2021.  This is the amount of energy supply required to come from solar PV.  The state also decided to wean itself from the grant-based program except for residential and small commercial on-site solar P/V installers, because the available grant funds alone would not support the growth needed to achieve the RPS and solar carve-out.  And so, the New Jersey Board of Public Utilities adopted a rule that instituted a massive increase in the “alternative compliance payment,” or ACP, for solar from $350 (the amount for other renewables) to initially $711 per megawatt hour.  This is the amount that has to be paid into the fund if load-serving entities do not have enough solar energy in their portfolios.  And hence, the solar renewable energy certificate, or SREC, was given a massive increase in valuation.  Since SRECs typically trade at 75% to 80% of the ACP, market values for SRECs rose to the $600 to $650 range. Especially when these state incentives are combined with the federal renewable energy investment tax credit and accelerated depreciation allowed, the market signals sent in New Jersey to the solar industry have attracted business investment on a grand scale, created green jobs and market-based renewable investments along the way. In my view, Connecticut needs to take similar steps.  The following strategies would help Connecticut facilitate deployment of solar photovoltaic installations in a market-based approach that reduces the reliance on direct governmental grants, promote the creation of green jobs, and attract private capital investments.  Here’s my Top-10 List: 1.      Create a Solar PV Carve-out within the Class I RPS to mandate separate solar RPS. 2.      Create separately-recognized solar renewable energy certificates, or SRECs. 3.      Substantially increase the alternative compliance payment amount for solar PV. 4.      Allow electric distribution companys (EDCs) to conduct auctions or otherwise conduct a process to acquire long-term SREC contracts (+/- 15 years), but mandate transparent pricing to send market signals in real time. 5.      Allow EDCs and capacity and peaking generation contractors to install on-site solar (with reasonable size limits to protect viability of non-utility market for projects) and recover project costs through rate base.  (For private wholesale generation sites, this can be done through a cost of service contract for differences with an EDC.) 6.      Establish one-stop-shopping with the Connecticut Department of Public Utility Control or other capable agency to certify completion and verify qualifying amounts of SRECs generated by a solar project installed in Connecticut with transparent market prices to facilitate open trading of SRECs. 7.      Authorize Connecticut to negotiate a compact or memorandum of understanding  with New Jersey and other states with similar programs to allow for the cross-border recognition and free trade of SRECs (at least through other states that comprise the Regional Greenhouse Gas Initiative (RGGI) or Northeast regional transmission organizations (i.e., ISO New England, ISO-NY, and PJM) with comparable GIS tracking systems). 8.      Adjust real and personal property tax law to ensure that solar improvements are not taxed. 9.      Revise zoning law to define solar as a beneficial use such that solar projects cannot be denied without substantial evidence in a written record finding that a solar project is not a beneficial use in a specific case.  Consider establishing exclusive jurisdiction for larger scale solar PV projects with the Connecticut Siting Council for projects equal to or greater than 1MW to expedite siting by petition for declaratory ruling. 10.  Allow for unlimited size of net metered solar projects behind customer meters provided that system size cannot be greater than customer’s on-site electricity requirements, subject to standard interconnection agreement with EDC following EDC confirmation of no adverse impact on distribution system.  Please write in on this blog and let me know what would be on your wish list to help facilitate the deployment of solar and other renewables in Connecticut.

Climate Change | Solar Energy

NJ Proposes Net Metering Rule Change, Expanding On-Site DG

January 11, 2010 04:44
By Shawn Smith McCarter & English, Hartford Office The New Jersey Board of Public Utilities (BPU) recently proposed an amendment to its net metering rule that will create an even greater economic incentive for utility customers to develop on-site renewable energy, especially solar energy systems.   The proposed amendment would eliminate the 2 megawatt (MW) limit on the size of renewable energy systems eligible for net metering, which would lift an obstacle for large-scale solar projects.  This gives customers the opportunity to develop larger renewable energy systems to generate renewable energy and offset their electric bills.  By developing new systems or expanding upon existing ones, customers can take advantage of the economic and environmental benefits of net metering.   The net metering rules allow customers which generate on-site electricity using Class I renewable energy sources, such as solar, to connect with the local electric distribution company (EDC) and generate electricity on the customer’s side of (or “behind”) the meter.  The net meter virtually “spins both ways,” meaning that the EDC will either charge the customer for electricity supplied in excess of that generated on site by the renewable project, or credit the customer for purchases resulting from excess energy generated by the renewable energy source.  Under the existing net metering rules, a renewable energy system cannot (1) generate more than 2 MW of electricity, or (2) exceed the annual amount of “electricity supplied by the electric power supplier or basic generation service provider to the customer.”  The 2 MW restriction created a ceiling that limited the ability for larger commercial customers to take advantage of net metering.   By proposing to lift the ceiling, the BPU is inviting customers (or third-party developers using power purchase agreements, for example) to invest in larger renewable energy systems that generate more than 2 MW of electricity.  Such a policy shift helps the state to achieve its ambitious objectives set forth in the Energy Master Plan of  achieving 22.5% of renewables, including a renewable portfolio standard target of 2.12% of all energy sold in NJ coming from solar generation.   Despite arguments from some owners of large warehouses and developers seeking to build utility-scale solar projects on vacant property sites, the BPU rejected calls to revise the second net metering condition, which requires that a renewable energy system’s generating capacity be equal to or less than the average amount of electricity consumed by that customer on site either from that supplied annually by an electric power supplier or the EDC in the form of basic generation service.  Nevertheless, the potential economic payoff for customers investing in renewable energy projects is clear--the larger the renewable energy system, the lower their electric bill.   When the net metering rule is combined with other New Jersey regulatory incentives that promote solar projects, especially as the available federal investment tax credits and accelerated depreciation credits provide enhanced opportunities to support solar projects, the solar industry is expected to continue to focus its business development efforts on NJ and larger-scale sites can expect the solar industry to come knocking.    The proposed amendment provides a particularly significant opportunity for commercial customers to develop or expand upon solar energy systems to take advantage of the substantial market incentives for solar that exist in New Jersey.  New Jersey has encouraged the development of solar energy through its Energy Master Plan (EMP) and the market for Solar Renewable Energy Certificates (SRECs). New Jersey’s solar market, which is the second-largest in the United States (second only to California), continues to grow as a result of these efforts.    The BPU is soliciting comments on the proposed amendment to the net metering rule through March 5.  Anyone interested in submitting comments is free to do so.   Another notable proposal of the BPU concerns New Jersey’s “Prevailing Wage Law,” which requires the BPU to adopt regulations to ensure that the prevailing wage rate be paid to workers “employed in the performance of certain contracts for construction undertaken in connection with board [BPU] financial assistance.”  Renewable energy projects constructed with BPU’s financial assistance will soon be subject to the prevailing wage requirements if the BPU proposal is adopted.  The BPU is soliciting comments on the prevailing wage law through March 5.  Anyone interested in submitting comments is free to do so.   Finally, in yet another effort to expand renewables, the BPU opened the door for renewable energy projects located outside of New Jersey, other than solar, to qualify for New Jersey RECs.  Previously, only on-site renewable energy facilities directly connected to a New Jersey EDC’s distribution system could qualify for RECs.  Now, pursuant to the new regulation adopted recently, the BPU is allowing qualifying renewable projects located outside of New Jersey, except solar, to obtain New Jersey RECs provided these projects are connected to the PJM Interconnection, L.L.C.’s (PJM) generator information system for tracking renewable energy.  PJM is a non-profit regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia, including Pennsylvania, New Jersey and Maryland.

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