On June 18, 2020, the Federal Energy Regulatory Commission (“FERC”) announced that it will hold two separate technical conferences later this year. First, FERC will hold a Commissioner-led technical conference on September 30, 2020 to discuss issues related to carbon dioxide emission pricing (i.e., “carbon pricing”) as adopted by states in FERC-jurisdictional wholesale electricity markets (“Carbon Pricing in Organized Wholesale Electricity Markets”). Second, FERC staff will hold a technical conference on October 27, 2020 to discuss whether existing frameworks for transmission, interconnection, and merchant transmission facilities can incorporate the growing offshore wind generation efficiently and effectively (“Offshore Wind Integration in RTOs/ISOs”).Read More
This afternoon, the Department of Treasury issued eagerly anticipated guidance extending the continuous construction/efforts test safe harbor to five years for wind, solar, and other tax credit projects that began construction in 2016 and 2017.
The extension applies for purposes of the Code Section 48 investment tax credit and the Code Section 45 production tax credit, and to projects that began construction under either the significant physical work test or the 5% safe harbor. Projects that began construction in 2016 now have through December 31, 2021 to be placed in service without proving continuous construction or continuous efforts. Projects that began construction in 2017 now have through December 31, 2022 to be placed in service for the same purpose. This extension is a boon to the industry, particularly the many wind projects that have experienced disrupted schedules due to the COVID-19 crisis.
Treasury also granted a boon to the solar industry in the same guidance by providing a generally applicable safe harbor for purposes of the 3.5 month test frequently used to safe harbor supplies procured in the last quarter of a calendar year. Specifically, Notice 2020-41 provides that if a taxpayer paid for any services or property paid on or before September 16, 2019 and the services or property are “actually received” by the taxpayer by October 15, 2020, the “taxpayer will be deemed to have had a reasonable expectation” of timely delivery for purposes of the 3.5 month test. This guidance follows months of efforts by participants across the wind and solar industries to obtain assurance that project delays would not negatively impact tax credit availability. By extending these tests, Treasury has provided significant comfort to many investors and ensured the continued advancement of the power industry and the thousands of jobs it provides to Americans across the country.
Join us on Wednesday, June 10, 2020, for a CLE presentation on “COVID-19: Perspectives for the “Next New Normal” for Renewable and Utility Companies.”
Companies are seeing unprecedented legal and business impacts due to the COVID-19 pandemic. These impacts are bringing about changes in strategy and how many companies approach their day-to-day business operations to adapt to this new business environment. This one-hour session will involve a presentation by the following K&L Gates attorneys sharing their perspectives on what to consider during the “next new normal.”
- Michael D. Cuda, Partner, Banking & Asset Finance
- April Boyer, Partner, Labor, Employment and Workplace Safety
- Jamie Lavergne Bryan, Partner, Oil, Gas & Resources
- Elias B. Hinckley, Partner, Power
- John M. Sylvester, Partner, Insurance Recovery and Counseling
This presentation will include the evolving legal and business impacts of COVID-19 in connection with:
- Contract Issues
- Insurance Issues
- Potential Work Issues
- Litigation Trends
This webinar will contain a chat feature in which you can submit questions so that we may tailor this presentation to address your concerns.
To register, please click here.
This webinar will explore the key trade and national security policies that currently impact the ESS market in the U.S. and assess their potential impacts on future deployments, including:
• How might regulatory developments under the Executive Order impact storage?
• What might the future hold for tariffs?
• How do these processes play out in an election year?
For more information and to register, please click here.
Author: Elizabeth Crouse
This afternoon, the Office of Legislative Affairs at the Department of Treasury, issued a letter to Charles Grassley, the Chairman of the Senate Committee on Finance, indicating that Treasury intends to issue administrative relief to the solar and wind industries regarding certain investment tax credit (“ITC”) and production tax credit (“PTC”) deadlines. Although the letter does not provide any details as to the nature of this relief, Chairman Grassley’s April 23, 2020 letter to Treasury requested that the four-year safe harbor for the continuous construction and continuous efforts test for the PTC and ITC be extended to a five-year safe harbor period.
Chairman Grassley did not request administrative relief concerning the impact of COVID-19 related measures taken by manufacturers and shipping companies on a customer’s “reasonable expectation” that materials purchased in 2019 would be delivered within 3.5 months after payment. This latter provision is important for purposes for establishing beginning of construction of solar projects in 2019.
K&L Gates reports on the latest renewable energy policies and activities in the southeastern United States
K&L Gates’ ReNEWS Southeast is a periodic bulletin that will track key developments in renewable energy policy, activities, and technologies that are driving the industry forward.
IN THIS ISSUE:
- Dominion Energy Breaks Ground on Virginia’s First Offshore Wind Installation
- Duke Energy Hits Milestone of 1GW of Owned Solar Energy
- Offshore Wind Areas Examined Off East Coast from Virginia to South Carolina
- North Carolina Legislature Drops Ban on Wind Projects
View more details of Volume 4 by clicking here.
By Eric Niller of Wired
On June 1, 2019 the Pilgrim nuclear plant in Massachusetts will shut down, a victim of rising costs and a technology that is struggling to remain economically viable in the United States. But the electricity generated by the aging nuclear station soon will be replaced by another carbon-free source: a fleet of 84 offshore wind turbines rising nearly 650 feet above the ocean’s surface.
In this article from Wired, K&L Gates partner and Practice Group Coordinator for power David Hattery discusses how in recent years, wind turbines and their technologies have become more palatable, and therefore are more accessible, to communities. Because of this, turbines are able to generate more power than ever.
Click here to read the full article.
On March 27, 2019, Massachusetts’s three electric utilities submitted a draft of their second offshore wind request for proposals (“RFP”) to the state’s Department of Public Utilities (“DPU”) for review and comment. This second solicitation is a follow-up to the initial RFP under Section 83C of Massachusetts’s 2016 renewable energy mandate that directs its utilities to procure 1,600 megawatts (“MW”) of offshore wind nameplate capacity by June 2027.
The initial solicitation in 2017 resulted in the selection of the Vineyard Wind project to enter negotiations with the utilities. The utilities executed power purchase agreements (“PPAs”) totaling 800 MW of offshore wind capacity with Vineyard Wind. DPU is reviewing those PPAs currently. 
Even though DPU has not approved the PPAs for the initial solicitation yet, the utilities have moved forward with the second solicitation because Massachusetts law requires that the second solicitation be issued within 24 months of the first solicitation. The second solicitation contemplates procurement of at least 400 MW of offshore wind capacity, although the utilities will consider proposals ranging between 200-800 MW of capacity. According to this draft RFP, the utilities will consider a larger project proposal if it is “likely to produce more economic net benefits to customers based on the evaluation criteria in the RFP.”
Some of the key bidding requirements and evaluation criteria include:
- Each bidder must be in possession of development rights for offshore wind generation in a designated federal wind energy area (not closer than 10 miles from an inhabited area) as leased after January 1, 2012;
- Each bidder must submit at least one bid of a 400 MW project, or explain why it cannot, and can submit its projects in up to two phases;
- Each bidder must propose a generator lead transmission line;
- Each proposal for the energy generation and/or associated renewable energy certificates must be less than $84.23 per MW-hour on a nominal levelized basis as calculated based on the first solicitation; and
- Proposals will be evaluated on direct contract prices and other costs and benefits, including:
- Direct benefits of any applicable energy storage systems,
- Impacts on Massachusetts’s greenhouse gas emission rates,
- Specific investments in supply chain infrastructure, port facilities, workforce and the Offshore Wind Accelerator Fund, and
- Demonstrated direct benefits to low-income ratepayers.
As proposed, the utilities plan to issue the RFP on May 17, 2019, and expect to receive confidential proposals by August 9, 2019 (with public redacted versions due by August 16, 2019). The utilities plan to select the winner(s) by November 8, 2019, and finalize the PPAs for DPU approval by January 10, 2020.
In comments on the second Section 83C solicitation, several wind developers raised concerns that a timeline that does not permit developers to demonstrate a construction start by the end of 2019 imperils the developers’ ability to qualify for the 12% federal investment tax credit (“ITC”). The production and investment tax credits are currently phasing out for wind, but wind projects that begin construction in accordance with IRS guidance in 2019 may still qualify for the credits at a reduced rate, specifically a 12% ITC or 40% of the maximum production tax credit rate applicable to electricity produced in a relevant year. Many of the commenters indicate that the 12% ITC is more valuable to their projects.
Although the utilities propose to select the winning bidder(s) before the end of 2019, the timeline in the solicitation does not suggest that the utilities and the winners will execute their PPAs and submit them for DPU approval by 2020. Any activity that the developers undertake to begin construction in 2019 based on the unapproved PPA may expose them to the risk that DPU will reject or modify the PPA after a developer has made some expenditures towards the project. See Offshore Wind Handbook, K&L GATES LLP AND SNC LAVALIN at 19 (2018), http://www.klgates.com/files/Upload/2018-08_OG_Offshore-Wind-brochure.pdf.
K&L Gates welcomes you to join us at the Infocast Wind Power Finance & Investment Summit. As a Gold Sponsor for the Summit, we are excited to have the opportunity to meet with you! The conference will be held on February 5-7 at the Omni La Costa Resort and Spa in San Diego, CA.
K&L Gates Highlights
- Portland partner Bill Holmes will serve as the Master of Ceremonies for the Summit.
- Stop by table 21 at the Exhibit Hall to meet our team and pick up a hard copy of our Offshore Wind Handbook.
- We will also have copies of the third edition of our very popular K&L Gates Energy Storage Handbook.
We look forward to seeing you!
February 5-7, 2019, Omni La Costa Resort & Spa, San Diego, CA
K&L Gates is proud to sponsor the 2019 Infocast Wind Power Finance & Investment Summit. The Summit is widely recognized as the leading gathering place for wind industry deal makers. Each year, the industry’s leading developers, investors, lenders, turbine suppliers, EPCs and other players gather to gain valuable insights into industry trends, get the latest market update on the finance and investment landscape, and efficiently schedule rounds of private meetings.
Bill Holmes will serve as the Master of Ceremonies for the conference.
We are pleased to offer clients and friends a 15% discount off of registration. Please contact Lauren Hagerich at email@example.com for more information..
We hope to see you there!