Author: Jake Lebsack

1
Invigorated Federal Interest in Fusion Energy Presents Opportunities and Questions for Growing Private Fusion Energy Sector
2
The Blockchain Energizer – Volume 32
3
Blockchain Energizer – Volume 31
4
Loose Lips Sink Ships: Public Statements and the Contractual Rights to Renewable Energy Credits in Solar Power Purchase Agreements
5
Senate’s Version of the “Tax Cuts and Jobs Act” Is Good News for Energy Renewables
6
ITC Commissioners Recommend Tariffs and Quotas on Imports of Solar Cells and Modules; President May Announce Final Remedy Decision before End of 2017

Invigorated Federal Interest in Fusion Energy Presents Opportunities and Questions for Growing Private Fusion Energy Sector

By Tim L. Peckinpaugh, Michael L. O’Neill, R. Paul Stimers                     

Significant investment is flowing into private companies seeking long-sought-after breakthroughs to develop practical power generation solutions based on nuclear fusion reactions. [1] Fusion reactions have become relatively commonplace in the laboratory setting, but no one has developed a nuclear fusion reactor yet that produces more energy than the device uses to operate and maintain the reaction. Numerous private companies, in the United States and around the world, are attacking this challenge with a variety of approaches, with the goal of making the technology sustainable, practical, and commercial. These companies are receiving significant investment from backers who believe a solution is within reach.

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The Blockchain Energizer – Volume 32

By: Buck B. Endemann, Benjamin L. Tejblum, Daniel S. 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. 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.

IN THIS ISSUE

  • The Arizona Corporation Commission Opens the First Blockchain-focused Utility Regulatory Docket.
  • Energy Web Foundation and LO3 Energy Partner to Standardize Data on Tobalaba.

To view more information on theses topics in Volume 32 of the Blockchain Energizer, click here.

Blockchain Energizer – Volume 31

By: Buck B. Endemann, Benjamin L. Tejblum, Daniel S. 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. 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.

IN THIS ISSUE

  • New Era Energy is Preparing to Launch a Blockchain-based Carbon Credit Market Pilot Program
  • WePower Unveils “Alpha” Version of its Clean Energy Financing and Trading Platform.

To view more information on theses topics in Volume 31 of the Blockchain Energizer, click here.

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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Senate’s Version of the “Tax Cuts and Jobs Act” Is Good News for Energy Renewables

By: Charles H. Purcell, Mary Burke Baker, Elizabeth C. Crouse, Rachel D. Trickett

On November 2, 2017, we alerted taxpayers that the House Ways and Means Committee had unveiled its much anticipated tax reform bill titled the “Tax Cuts and Jobs Act” (the “House Plan”). The House Plan includes substantial modifications to existing renewable energy tax credits including the production tax credit (“PTC”) and the investment tax credit (“ITC”), and also eliminates other tax incentives entirely, effective beginning after 2017, including the Section 199 Domestic Production Activities Deduction (the “DPAD”), the New Markets Tax Credit (the “NMTC”), the Historic Rehabilitation Tax Credit (the “HRTC”), the Enhanced Oil Recovery Credit, and the Credit for Producing Oil and Gas from Marginal Wells.

On the evening of November 9, 2017, Senate Republicans released the Senate’s proposal (the “Senate Plan”). The Senate Plan differs from the House’s proposed legislation in several key ways. Significantly, the Senate Plan does not modify the PTC or the ITC, which is consistent with public statements made by several Senate Republicans since the House Plan was released. Similarly, the Enhanced Oil Recovery Credit, Credit for Producing Oil and Gas from Marginal Wells, and NMTC would all be left intact and the HRTC would remain available, albeit in reduced form. However, unlike the House Plan, the Senate’s proposed legislation did not address expired energy credits for qualified fuel cell and small wind energy property, qualified microturbine property, or production from advanced nuclear power facilities.

Similar to the House’s proposed legislation, the Senate Plan would repeal the DPAD effective for tax years beginning after 2017. As we discussed in our previous alert, repealing the DPAD would affect a variety of domestic manufacturers of a number of items, including solar panels, construction equipment, and software, as well as oil and gas producers.

The Senate Plan is moving very quickly and is expected to proceed on a schedule roughly one week behind that of the House Plan.

ITC Commissioners Recommend Tariffs and Quotas on Imports of Solar Cells and Modules; President May Announce Final Remedy Decision before End of 2017

By: Stacy J. Ettinger, Elias B. Hinckley, and James R. Wrathall

As we previously reported, on September 22, 2017, the U.S. International Trade Commission (“ITC”) found that increased imports of crystalline silicon photovoltaic (“CSPV”) cells and modules have seriously injured (economically harmed) U.S. solar manufacturers. The four ITC Commissioners have now announced their separate recommendations for how to alleviate or “remedy” that economic injury. Remedies, such as tariffs or quotas, normally can be imposed for a maximum of four years.

The President will have the final say on whether to impose a remedy, and if so, the form, amount, and duration of the remedy. There is speculation in Washington that the President’s remedy decision could be announced in December.

The stakes are high. Industry experts believe that tariffs at the levels originally requested by Suniva could massively impede the economic health and growth of U.S. downstream users and consuming industries, more than doubling the costs of some solar projects and putting tens of thousands of jobs at risk. Industry experts believe that imposition of tariffs at the levels recommended by the Commissioners could potentially have less of a draconian impact. Public comments on remedy issues for the President’s consideration may be submitted before November 20, 2017.

As described below, the Commissioners’ recommendations range from 10-35 percent tariffs on cell and module imports to defined quotas on imports of CSPV products. As a result of the ITC’s earlier injury findings, imports from free trade agreement (“FTA”) countries Mexico and Korea would be subject to imposition of remedies while imports from other FTA countries, including Canada, would not.

Chair Rhonda Schmidtlein recommends an in-quota tariff rate of 10 percent and an in-quota volume level of 0.5 gigawatts for imports of cells. Imports of cells that that exceed the in-quota 0.5 gigawatt volume level would be subject to a 30 percent tariff. Commissioner Schmidtlein also recommends a 35 percent tariffs on CSPV modules, to be reduced in each subsequent year.

Vice Chair David Johanson and Commissioner Irving Williamson recommend a 30 percent tariff on CSPV cell imports in excess of 1 gigawatt. In each subsequent year, the tariff rate would decrease and the in-quota amount would increase. For imports of CSPV modules, Commissioners Johanson and Williamson recommend a 30 percent tariff, to be reduced in each subsequent year.

Commissioner Meredith Broadbent recommends a quantitative restriction (quota) on imports of CSPV products into the United States, including cells and modules. The first year import quota would be set at 8.9 gigawatts, to be increased by 1.4 gigawatts in each subsequent year.

Commissioner Broadbent also recommends the President administer these quantitative restrictions through the sale of import licenses at public auction at a minimum price of one cent per watt. The revenue generated by the sale of import licenses would be used to assist domestic CSPV product manufacturers, including for purchase of production equipment, hiring of production workers, and R&D.

The ITC will send its final report to the President, including the Commissioners’ remedy recommendations, by November 13, 2017. The President has up to 60 days – and complete discretion – to determine the form, amount, and duration of the remedy.

The Commissioners’ remedy recommendations, if adopted by the President, would likely result in less impact on final module pricing than Suniva had originally requested. For example, the initial pricing impact of a 30 percent tariff would likely be in the range of 10 to 15 cents per watt on CSPV modules. This amount would likely decline as the price of modules drops and the tariff rate is reduced over time. Additionally, some CSPV manufacturing might shift to free trade agreement countries not included in the injury finding, which could further pull prices lower over time.

Public comments on remedy issues for the President’s consideration are due to the Office of the United States Trade Representative (“USTR”) on November 20, 2017. Rebuttal comments are due November 29, 2017. USTR will hold a public hearing on December 6, 2017.

For more information on the solar proceeding, including information on filing comments on remedy issues, contact Stacy Ettinger, Elias Hinckley, or Jim Wrathall of K&L Gates.

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