Global Power Law & Policy

Legal and Policy Developments Affecting the Global Power Industry.

 

1
Loose Lips Sink Ships: Public Statements and the Contractual Rights to Renewable Energy Credits in Solar Power Purchase Agreements
2
Balancing the Interconnect: FERC Reforms Large Generator Interconnection Process in a Manner That Could Benefit Energy Storage
3
K&L Gates Blockchain Energizer – Volume 29
4
Join Us for LSI’s Energy Storage Conference on June 11 & 12 in Seattle, WA
5
Join K&L Gates at NEBC’s Energy Workshop on Thursday, June 7
6
ESA News Desk with K&L Gates
7
K&L Gates Blockchain Energizer – Volume 28
8
Congressional Committee Charges Up for EV Hearing
9
K&L Gates Blockchain Energizer – Volume 27
10
California Energy Storage Update – What’s In the Latest Procurement Plans?

Loose Lips Sink Ships: Public Statements and the Contractual Rights to Renewable Energy Credits in Solar Power Purchase Agreements

By William H. Holmes and Kristen A. Berry

This post is one of a series of “practice tip” articles about renewable energy power purchase agreements.

There is a well-known Chinese proverb: “All problems derive from your big mouth.” These are words of wisdom for parties who are negotiating renewable energy PPAs.

In due diligence, we regularly come across on-site solar power purchase agreements (PPAs) that state that the seller is reserving all environmental attributes and selling only the project’s electricity to the buyer. This type of reservation is common in states like Maryland and Massachusetts, where environmental attributes may have a fairly high market value and may be monetized by the seller to make the project more marketable by effectively reducing the delivered price of electricity.  However, despite this environmental attribute reservation, these PPAs too often go on to say, quite expressly, that the buyer has the right to announce that it is using “solar energy” or “renewable energy” produced by the project.  This seemingly innocuous provision, intended to enable the buyer to brag about its renewable energy purchase, can create problems in PPAs where the seller also reserves environmental attributes.

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Balancing the Interconnect: FERC Reforms Large Generator Interconnection Process in a Manner That Could Benefit Energy Storage

By William M. Keyser, Buck B. Endemann, Benjamin L. Tejblum, Kristen A. Berry, and Toks A. Arowojolu

On April 19, 2018, the Federal Energy Regulatory Commission (“FERC”) issued its much anticipated Final Rule to amend the pro forma Large Generator Interconnection Procedures (“LGIP”) and Large Generator Interconnection Agreement (“LGIA”) (“Order No. 845” or the “Order”). Order No. 845 aims to eliminate inefficiencies and to provide a more streamlined and transparent interconnection process by adopting several reforms. The Order’s objectives are three-pronged: (1) to improve reliability, (2) to promote more informed interconnections, and (3) to enhance generators’ interconnection processes by eliminating inefficiencies and bottlenecks.

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K&L Gates Blockchain Energizer – Volume 29

By Buck Endemann, Ben Tejblum, and Daniel Cohen

There is a lot of buzz around blockchain technology and its potential to revolutionize a wide range of industries from finance and health care to real estate and supply chain management. Reports estimate that over $4.5 billion was invested in blockchain startups in 2017 alone, and many institutions and companies are forming partnerships to explore how blockchain ledgers and smart contracts can be deployed to manage and share data, create transactional efficiencies, and reduce costs.

While virtual currencies and blockchain technology in the financial services industry have been the subject of significant debate and discussion, blockchain applications that could transform the energy industry have received comparatively less attention. Every other week, the K&L Gates’ Blockchain Energizer will highlight emerging issues or stories relating to the use of blockchain technology in the energy space. To subscribe to the Blockchain Energizer newsletter, please click here.

On June 7, your Blockchain Energizer author Buck Endemann participated on a “Leveraging Blockchain for Sustainable Energy” panel hosted by Women in Cleantech & Sustainability at Palo Alto City Hall. Co-panelists Lydia Krefta (Pacific Gas & Electric), Cassie Bowie (Energy Impact Partners), Lena Perkins (CPAU), Yvette Solorzano (Omega Grid) and Sara Prochasson (Enedis) discussed how Blockchain technology, paired with the right regulatory environment, could unlock value for utilities and end users and advance renewable energy goals around the world.

IN THIS ISSUE

  • Chelan County Public Utility District Extends Moratorium on New Electricity Requests from Cryptocurrency Miners.
  • Narada Asia Pacific Pte Ltd. Partners with Electrify to Track Distributed Electricity Production through Blockchain.
  • Catalonia Experimenting with Blockchain to Incentivize Localized Smart Metering.

To view more information on theses topics in Volume 29 of the Blockchain Energizer, click here.

Join Us for LSI’s Energy Storage Conference on June 11 & 12 in Seattle, WA

K&L Gates is pleased to participate in Law Seminars International’s upcoming Energy Storage Conference.  The conference is scheduled to be held at our office in Seattle.  K&L Gates’ Portland partner William Holmes hosts this event as Co-Chair.  Washington DC partner William Keyser will present on “FEROrder 841: Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators” and Seattle partner David Hattery will join a panel on “Business and Transactional Issues.”

About the Conference

Many experts view 2017 as the year in which energy storage turned the corner from nascent technology to full-fledged energy market participant. Major milestones included the construction of a large-scale energy storage facility to replace a natural gas plant in California, completed in less than six months; a large-scale solar-plus-storage PPA in Arizona priced substantially below prior market floors; and Tesla’s announcement of the successful powering of a 100MW mega battery in South Australia.Evolving market rules are expanding revenue opportunities for energy storage, including from deferred transmission and distribution upgrades, reduced peak demand charges, integration of intermittent resources, and provision of ancillary services. With FERC’s Order 841 and state policy initiatives to facilitate energy storage and distributed energy resources, energy storage projects may soon receive additional regulatory support.LSI’s first Energy Storage conference will explore in detail all of the facets for energy storage project development with the goal of better positioning you to take advantage of the opportunities.
For more information and to register, click here.

Join K&L Gates at NEBC’s Energy Workshop on Thursday, June 7

Please join us on Thursday, June 7, 2018 as we host the Northwest Environmental Business Council’s (NEBC) Energy Workshop “Powering Our Future: Insight into the Growth of Renewables.”

As host of the event in our Seattle office, our partners Ankur Tohan and Alyssa Moir and associate Endre Szalay will speak on a panel titled “Solar & Wind Project Development: Navigating Risk and Seizing Opportunity.”

PROGRAM OVERVIEW

Join us for an engaging afternoon of discussions on policy, technology, and legal hot topics in the renewable energy industry. Panelists representing perspectives from power producers, power purchasers, energy investors, utility, and the legal industry will discuss the role of competitive markets in the renewable energy sector, the impact and increasing presence of renewables and storage on the grid, and renewable project development issues and opportunities with a focus on the Northwest.

The workshop is presented free of charge to NEBC members and all interested parties.

DETAILS

Thursday, June 7
1:45 – 2:00 p.m.: Registration & Opening Remarks

2:00 – 5:00 p.m.: Technical Workshop

5:00 – 6:00 p.m.: Happy Hour

Location: K&L Gates LLP, 925 Fourth Avenue, Suite 2900, Seattle, WA

REGISTRATION

For more details and to register, click here.

ESA News Desk with K&L Gates

K&L Gates was recently the News Desk Host #ESACon18. The Energy Storage Association’s Annual Convention was held April 18-20 in Boston, MA.  As News Desk Host, we had the opportunity to interview representatives from the organizations that are making an impact on the energy storage industry.

K&L Gates interviewers included Portland partner Bill Holmes, Boston associate Mike O’Neill, Washington D.C. partner Will Keyser and counsel Jim Wrathall. Organizations represented included Sungrow Samsung SDI, Dynapower Company, Ingersoll Rand, WRISE, ESA, Fluence, GE Power, National Grid, NEC Energy Solutions, NEXTracker, and Powin Energy.

To view the interviews, click here.

 

 

 

K&L Gates Blockchain Energizer – Volume 28

By Buck Endemann, Ben Tejblum, and Daniel Cohen

Your Blockchain Energizer authors Buck Endemann and Ben Tejblum presented at EUCI’s “Blockchain Technology for the Energy Sector” conference on May 8-9 in Houston, Texas. The crowd included existing market participants (utilities, retail suppliers, and regulators) along with new participants looking to leverage blockchain technology to facilitate energy transactions and improve utility operations. During our time in Houston, we found that blockchain discussions are a great way to spur broader conversation on innovation and industry sector change. Recurring themes included how utilities could be incentivized to adopt new technologies (through performance-based regulation or other constructs) while ensuring that they continue to meet their obligation to provide reliable service to all customers. The impact of new and innovative business models on low-income households, under-represented communities, and the unknown impacts on data privacy were important topics, as well.

Looking ahead, several panelists proposed that Europe is the “canary in the coal mine” due to the proliferation of distributed energy technologies and strong commitments to renewable energy. Perhaps not coincidentally, that is where the most energy-related blockchain use cases have taken root, usually with the support of business, regulators, and other state actors. K&L Gates attorneys will continue to monitor these developments and keep you abreast, right here in the Blockchain Energizer.

Finally, we are pleased to partner again with EUCI on our “Blockchain Technology Fundamentals: Energy Industry Applications” webinar, to take place on June 5, 2018. Click the link to register!

IN THIS ISSUE

  • Centrica and LO3 Partner to Minimize Renewable Energy Curtailment.
  • PG&E has proposed a Demonstration Project Using Smart Contracts to Generate Low Carbon Fuel Standard Credits.
  • The United Nations and Sun Exchange Team up with ElectriCChain to Use Blockchain and Cryptocurrency to Provide Solar Power in Moldova.

To view more information on theses topics in Volume 28 of the Blockchain Energizer, click here.

Congressional Committee Charges Up for EV Hearing

By Scott Aliferis

Congress will continue its review and oversight of automotive and energy issues this week. On Tuesday, May 8, the House Energy and Commerce Subcommittee on Environment will hold a hearing entitled “Sharing the Road: Policy Implications of Electric and Conventional Vehicles in the Years Ahead”.

The Subcommittee, chaired by Congressman John Shimkus (R-Illinois), has invited a diverse set of witnesses to provide testimony on the wide range of issues, opportunities and challenges facing consumers, automakers, utilities and other stakeholders.

According to a subcommittee memo, the following issues may be examined at the hearing:

  • The reasons for the current growth in EVs and expected future trends in electrification.
  • The policy implications of increasing EV market penetration.
  • The impact of EVs on fueling infrastructure and on the nation’s electrical grid.
  • The response of liquid fuel providers and automakers to changing market trends.
  • The consumer impacts of changing trends in transportation fuels and vehicles.

Another likely topic is the federal tax credit of up to $7,500 on the purchase of a plug-in electric vehicle, depending upon the size of the vehicle and its battery capacity. During last year’s Congressional debate on tax reform, the credit was preserved despite opposition from some House Republicans. However, the incentive begins to phase out after each manufacturer sells 200,000 electric vehicles. Many automakers may hit the limit this year. A group of 36 utilities cosigned a letter in March urging Congress to modify the credit and eliminate the cap. Pacific Gas & Electric was a signatory and its CEO is one of the witnesses for tomorrow’s hearing.

Other witnesses will offer important perspectives and data on the current marketplace and outlook for EV adoption. Additionally, there will be debate surrounding the existing policy and regulatory structures at the state and federal levels and what changes or modifications should be considered.

K&L Gates Blockchain Energizer – Volume 27

By Buck Endemann, Ben Tejblum, and Daniel Cohen

There is a lot of buzz around blockchain technology and its potential to revolutionize a wide range of industries from finance and health care to real estate and supply chain management. Reports estimate that over $4.5 billion was invested in blockchain startups in 2017 alone, and many institutions and companies are forming partnerships to explore how blockchain ledgers and smart contracts can be deployed to manage and share data, create transactional efficiencies, and reduce costs.

While virtual currencies and blockchain technology in the financial services industry have been the subject of significant debate and discussion, blockchain applications that could transform the energy industry have received comparatively less attention. Every other week, the K&L Gates’ Blockchain Energizer will highlight emerging issues or stories relating to the use of blockchain technology in the energy space. To subscribe to the Blockchain Energizer newsletter, please click here.

Authors Buck Endemann and Ben Tejblum will be in attendance at EUCI’s, “Blockchain Technology for the Energy Sector” Conference in Houston, Texas, from May 8–9, 2018. They will be available to discuss the latest in blockchain.

IN THIS ISSUE

  • Energy Web Foundation Is Implementing a Different Consensus Protocol to Reduce Blockchain Electricity Demand.
  • Energy Storage Meets Blockchain: Sonnen Joins the NEMoGrid Project.
  • Softbank and TEPCO Announce a Blockchain Pilot Program to Reduce Carbon Emissions.
  • IOT Group to Re-open an Australian Power Plant to Provide Electricity for Blockchain Companies; Washington Counties Take Divergent Approaches to Cryptocurrency Mining.

To view more information on theses topics in Volume 27 of the Blockchain Energizer, click here.

California Energy Storage Update – What’s In the Latest Procurement Plans?

By Buck B. Endemann and  Kristen A. Berry

Just as Prometheus hid fire in a fennel stalk to gift it to the unaware ancients, the pioneers of energy storage technology seek to harness and store energy in increasingly novel ways. Transforming captured energy into storable and consumable power stands at the forefront of this century’s revolution in green energy technology. In 2017, the United States deployed 431 MWh of energy storage capability, largely spurred by state-specific energy storage mandates.[1] California’s state legislature has continued to lead the nation and spread Prometheus’s “secret spring of fire.”

While the concept of storing energy is centuries-old, new battery technologies promise to mitigate California’s infamous duck curve and provide the low carbon, flexible ramping resources necessary to accommodate the state’s increasing penetration of solar power. The Union of Concerned Scientists estimates the United States’ total current storage capacity at 23 gigawatts (GW), which approximates the capacity of 28 coal plants.[2] Ninety-six percent of this capacity, however, derives from pumped hydroelectric storage, most of which was built in the 1960s and 1970s and is increasingly vulnerable to drought and other environmental risks. More recently, energy storage developers have focused their efforts on battery technologies, with lithium-ion batteries in particular making great strides in terms of duration and cost-effectiveness. Market watchers have projected that by 2020 the price of battery storage could decline to $200 kWh, compared to today’s market price of approximately $340/kWh.[3]

As detailed in the K&L Gates Energy Storage Handbook (Version 2.0), California’s two landmark energy storage bills require California’s Investor-Owned Utilities (IOUs) to procure and install nearly 2 GW of storage by 2024.[4]  Under AB 2514, the California Public Utility Commission (CPUC) required California’s IOUs to procure by 2020 1,325 MW of storage capacity split among the transmission, distribution, and customer domains.  In AB 2868, the legislature set an additional procurement target of 500 MW for distributed-connected energy storage systems, with individual 166 MW goals established for Southern California Edison (SCE), Pacific Gas & Electric (PG&E), and San Diego Gas & Electric (SD&E). Under both laws, California’s IOUs must submit periodic procurement plans to show progress toward each law’s targets.  In February and March 2018, SCE, PG&E, and SDG&E submitted their 2018 energy storage procurement plans, which lay out each IOU’s strategy to meet its energy storage goals in its respective service territory.

SCE proposes to procure a total of 60 MW of energy storage by 2018 in two separate procurements of 20 MW and 40 MW.  The 20 MW of procurement would respond to an additional legislative directive, SB 801, under which SCE is required to deploy energy storage in response to the natural gas shortages caused by the Aliso Canyon gas storage facility’s well failure.  For the remaining 40 MW, SCE plans to launch programs and investments to solicit utility-owned storage, as mandated under AB 2868. SCE’s procurement plan also seeks CPUC approval to allocate $9.8 million to install energy storage at low-income, multi-family dwellings.

PG&E’s procurement plan focuses on the 166 MW of energy storage under AB 2514 that it is required to procure in the 2018-2019 procurement period.  To meet that target, PG&E proposes an energy storage request-for-offers framework. To achieve its AB 2868 target, PG&E outlined its four categories of distribution-connected storage investments: (1) researching the role of distributed energy storage in wildfire safety, particularly within the context of the North Bay Wildfire rebuilding efforts, (2) launching a behind-the-meter storage program for up to 5 MW of thermal storage, (3) identifying and seeking immediate CPUC approval (via a Tier 3 advice letter) for storage investments up to 166 MW, and (4) requesting authorization for additional investments beyond the categories identified in the 2018 application.

SDG&E’s filing proposes seven utility-owned micro-grid projects, all of which would exist at the distribution circuit level. These projects would provide services to entities that contribute to public safety, like police stations and firehouses, by providing storage capabilities separate from the main grid.  SDG&E argues that these distributed storage systems will provide a wide-range of benefits, including grid resiliency, wholesale market revenues, and reduced dependency on non-renewable energy sources by minimizing the need for back-up generators.  SDG&E also plans to contribute $2 million toward a pilot energy storage incentive program for non-profit facilities, such as nursing homes.

Each of these utilities will roll out its initiatives over the remainder of 2018 and beyond.  K&L Gates will continue to monitor energy storage developments and provide updates.

[1] GTM Research / ESA, U.S. Energy Storage Monitor, https://www.greentechmedia.com/research/subscription/u-s-energy-storage-monitor#gs.KZIlnzQ (2017).

[2] Union of Concerned Scientists, How Energy Storage Works, https://www.ucsusa.org/clean-energy/how-energy-storage-works#.WtAsTq2otD8 (2013).

[3] McKinsey & Company, The New Economics of Energy Storage, https://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/the-new-economics-of-energy-storage (August 2016). Energy Storage Report, Study: Flow Batteries Beat Lithium Ion, http://energystoragereport.info/study-flow-batteries-beat-lithium-ion/#sthash.c07jCAVv.gXdjY17t.dpbs (July 2017).

[4] K&L Gates, Energy Storage Handbook, http://www.klgates.com/epubs/Energy-Storage-Handbook-Vol2/ (April 2018).

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