Global Power Law & Policy

Legal and Policy Developments Affecting the Global Power Industry.

 

1
TREASURY AND IRS PROPOSE REGULATIONS FOR INFLATION REDUCTION ACT’S LOW-INCOME COMMUNITIES BONUS CREDIT PROGRAM
2
FERC APPROVES ENFORCEMENT’S SETTLEMENTS WITH TWO DEMAND RESPONSE PROVIDERS
3
Financing the Renewable Hydrogen Revolution
4
From IP Law Watch: H2 PRODUCTION: A SHIFT TOWARDS ELECTROLYSIS
5
From IP Law Watch: Global Trends in Hydrogen IP Protection
6
Join CleanCapital for a Webinar: How is the Inflation Reduction Act Affecting Clean Energy Developers?
7
Reactive Power Compensation for Renewable Energy Facilities: Opportunity Amidst Change
8
Update on the Tax Credit Revolution: Prevailing Wage and Apprenticeship Clock Starts Soon
9
The Energizer – Volume 110
10
The Energizer – Volume 109

TREASURY AND IRS PROPOSE REGULATIONS FOR INFLATION REDUCTION ACT’S LOW-INCOME COMMUNITIES BONUS CREDIT PROGRAM

By: Martha G. PughMary Burke BakerDavid Wang

On 1 June 2023, the US Department of the Treasury (Treasury) and Internal Revenue Service (IRS) issued a notice of proposed rulemaking (NOPR) regarding the Low-Income Communities Bonus Credit Program (Program) established under Section 48(e) of the Internal Revenue Code (Code), pursuant to the Inflation Reduction Act of 2022 (IRA).The Program provides for increases in the amount of energy investment credits available under Code Section 48(a) (Section 48(e) Increase) to certain applicants by allocating environmental justice solar and wind capacity limitation (Capacity Limitation) to qualified facilities.

The IRS previously released Notice 2023-17, which provided initial guidance for potential applicants seeking allocations of calendar year 2023 Capacity Limitation.

This NOPR generally adopts the guidance set forth in Notice 2023-17 but, critically, changed many important aspects, imposed additional qualification requirements, and clarified previously undefined terms. This alert provides an overview of this NOPR and specifically discusses the following:

  • What solar and wind facilities qualify for the Section 48(e) Increase;
  • The four categories of qualified facilities;
  • The specific “financial benefits” (Financial Benefits) requirements for facilities otherwise eligible for a 20% Section 48(e) Increase;
  • Ineligibility of facilities placed in service prior to Capacity Limitation allocation;
  • Additional criteria that, if met, allow qualified facilities to get priority Capacity Limitation allocation; and
  • Conditions that will lead to post-Capacity Limitation allocation disqualification from, and recapture of, the Section 48(e) Increase.

To read the full alert, please click here.

FERC APPROVES ENFORCEMENT’S SETTLEMENTS WITH TWO DEMAND RESPONSE PROVIDERS

By: Kimberly B. FrankRuta K. SkucasMaria C. FacontiTheodore L. Kornobis

On 22 May 2023, the Federal Energy Regulatory Commission (FERC) issued two orders approving stipulation and consent agreements that resolve enforcement investigations by FERC’s Office of Enforcement (FERC Enforcement) of two demand response providers, Leapfrog Power, Inc. (Leapfrog) and OhmConnect, Inc. (OhmConnect), regarding their participation in the California Independent System Operator (CAISO) market.1 FERC Enforcement’s focus in both cases concerned whether the companies violated a provision of the CAISO tariff requiring market participants to have a reasonable expectation that they could fulfill the bids they submitted. 

To read the full alert, please click here.

Financing the Renewable Hydrogen Revolution

A supplement to The H2 Handbook, United States

Risk in the hydrogen industry spans multiple areas, from feedstock and power supply to offtake and transportation. Understanding the regulatory, tax, and practical considerations of hydrogen projects, particularly green hydrogen, is essential for formulating an investment strategy for renewable hydrogen.

A supplement to the United States section of The H2 Handbook, this new guide offers insights to mitigating risk for projects in the United States, including the new and updated US federal income tax credits provisions of the Inflation Reduction Act. 

From IP Law Watch: H2 PRODUCTION: A SHIFT TOWARDS ELECTROLYSIS

Hydrogen production technology, according to the joint EPO-IEA report summarizing patent trends in the hydrogen economy (summarized here), accounts for the largest percentage of patenting activity since 2011 among the three primary stages of the hydrogen value chain (i.e., (i) production, (ii) storage, distribution, and transformation, and (iii) end-use industrial applications). Trends show a shift in hydrogen production from carbon-intensive methods to technologies that do not rely on fossil fuels. The bulk of recent increased patent activity is directed to electrolysis development, while patent activity related to production from biomass and waste has decreased.

Read the rest of this post on K&L Gates’ IP Law Watch blog.

From IP Law Watch: Global Trends in Hydrogen IP Protection

By Jason EngelBen Fechner and Clare Frederick

The European Patent Office (EPO) and the International Energy Agency (IEA) recently published a joint report summarizing innovation and patent trends within the hydrogen economy.1 The report is based on global patent activity since 20012 and is intended to help governments and businesses understand which parts of the hydrogen value chain appear to be making progress and which parts may be lagging behind.3 The report dives deep into specific technologies, lists the most active applicants in select technologies, and attempts to identify the impact of different governmental programs in specific sectors, with a goal of trying to help focus future innovation efforts.

Read the rest of this post on K&L Gates’ IP Law Watch Blog.

Join CleanCapital for a Webinar: How is the Inflation Reduction Act Affecting Clean Energy Developers?

In August Congress passed the Inflation Reduction Act, a landmark climate and clean energy bill. Six months later, we’re asking: where are we now?

Join CleanCapital’s Jon Powers, K&L Gates’ Elizabeth Crouse, and Environmental Defense Fund’s Elizabeth Gore, for an informational webinar to understand how the rollout of IRA policies will impact clean energy developers. What are the steps to full implementation? What progress has been made on tax and other key policy levels within the administration?

Hosted by:
Jon Powers
President, CleanCapital

Panelists:

Elizabeth Crouse
Tax Partner & Co-Lead of Power, K&L Gates

Elizabeth Gore
Senior Vice President, Political Affairs at Environmental Defense Fund

To learn more and register, please click here.

Reactive Power Compensation for Renewable Energy Facilities: Opportunity Amidst Change

By: Ruta Skučas, Maria Faconti, Kimberly Frank

Originally published in the Oil, Gas & Energy Resources Law Section Report – Volume 47, Number 1 / January 2023.

Reactive power provides synchronous and non-synchronous generators, as well as other forms of non-generation resources capable of providing reactive power, with a potential additional revenue stream. The provision of voltage support to the grid is an ancillary service, compensated in various ways in the various wholesale electricity markets. Renewable developers should familiarize themselves with the opportunities provided by reactive power compensation, even as some of the compensation models may be shifting.

In 2016, the Federal Energy Regulatory Commission (“FERC”) began allowing wind and solar facilities to offer reactive power as an ancillary service into wholesale electricity markets. Over the past few years, FERC and the independent system operators (“ISOs”) and regional transmission organizations (“RTOs”) began to revisit reactive power compensation models and, as a result, there has been a greater focus on reactive power issues in 2022. This article reviews the current status of reactive power compensation in various U.S. regions, as well as possible future changes.

Update on the Tax Credit Revolution: Prevailing Wage and Apprenticeship Clock Starts Soon

U.S. Energy, Infrastructure, and Resources Alert

By: Elizabeth C. CrouseCraig E. Leen

The U.S. Treasury Department released a preliminary draft of Notice 2022-61 (the Notice) on 29 November 2022 and the final on 30 November 2022. Taxpayers now have 59 days to begin construction on qualified projects without causing those projects to be subject to the new prevailing wage and apprenticeship requirements. The U.S. Department of Labor also released companion FAQs on the prevailing wage and apprenticeship rules 29 November 2022. The Notice generally applies to credits under Code[1] Sections 30C (alternative fuel infrastructure), 45Y (post-2024 electricity PTC[2]), 48E (post-2024 electricity ITC[3]), 45V (hydrogen PTC), 45 (current electricity PTC), 48 (current electricity ITC), 45Q (carbon capture), 45L (energy efficient homes), 45U (zero-emission nuclear power), 48C (advanced energy manufacturing facilities), and 179D (energy efficient commercial buildings), but the beginning of construction rules apply more narrowly.

For further details, please see the following Alert that discusses some of the main points in the Treasury and Labor guidance that was released.

The Energizer – Volume 110

By: Buck B. EndemannMatthew P. ClarkNathan C. HoweNatalie J. ReidDavid WangOlivia C. Ashé

There is a lot of buzz around clean technology, distributed energy resources (DERs), microgrids, and other technological innovations in the renewable energy and clean transport industries and how these developments can contribute to solving longstanding environmental justice issues. As these innovations develop, energy markets will undergo substantial changes to which consumers and industry participants alike will need to adapt and leverage. Every other week, K&L Gates’ The Energizer will highlight emerging issues or stories relating to the use of DERs, energy storage, emerging technologies, hydrogen, and other innovations driving the energy industry forward. 

IN THIS ISSUE 

  • U.S. Department of Energy Announces US$600 Million in Funding for Energy Storage Projects and Energy Efficiency Upgrades 
  • NET Power Announces Zero-Emissions Gas Plant in Texas
  • U.S. Government Blocks Import of Solar Panels Under Uyghur Forced Labor Protection Act

The Energizer – Volume 109

By: Buck B. EndemannMatthew P. ClarkNathan C. HoweNatalie J. ReidDavid WangOlivia C. Ashé

There is a lot of buzz around clean technology, distributed energy resources (DERs), microgrids, and other technological innovations in the renewable energy and clean transport industries and how these developments can contribute to solving longstanding environmental justice issues. As these innovations develop, energy markets will undergo substantial changes to which consumers and industry participants alike will need to adapt and leverage. Every other week, K&L Gates’ The Energizer will highlight emerging issues or stories relating to the use of DERs, energy storage, emerging technologies, hydrogen, and other innovations driving the energy industry forward. 

IN THIS ISSUE 

  • BMW Expands Electromobility Plan and Manufacturing Footprint in South Carolina 
  • NJ BPU Selects Offshore Wind Transmission Projects under PJM’s State Agreement Approach
  • NextEra Energy Invests US$1.1 Billion in Renewable Natural Gas Production

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