Category: Wind

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Join K&L Gates at the Infocast Wind Power Finance & Investment Summit
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Join K&L Gates at Wind Power Finance & Investment Summit 2019
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RENEWABLE ENERGY BUYERS’ SUMMIT
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Winds of Change
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US Offshore Wind Market Handbook Helps Investors Navigate Technical and Regulatory Issues
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K&L Gates Advises innogy on Acquisition of More Than 2,000 MW Onshore Wind Projects
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Join K&L Gates at NEBC’s Energy Workshop on Thursday, June 7
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Tax Credits for Storage After Solar or Wind?
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Tax Reform Conference Bill Released: PTC and ITC Emerge Battered
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The Senate has passed the Tax Cuts and Jobs Act. Is this the next drop in the renewable energy roller coaster?

Join K&L Gates at the Infocast Wind Power Finance & Investment Summit

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

We look forward to seeing you!

Join K&L Gates at Wind Power Finance & Investment Summit 2019

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 lauren.hagerich@klgates.com for more information..

We hope to see you there!

 

RENEWABLE ENERGY BUYERS’ SUMMIT

January 9-11, 2019

K&L Gates is proud to sponsor the 2019 Infocast Renewable Energy Buyers’ Summit (REBA). REBA is an invitation-only event where renewable energy buyers gather to discuss renewable energy procurement best practices with their fellow corporate buyers, as well as get valuable insights from leading renewable energy experts.

Teresa Hill will be moderating a panel on Latest Trends in PPA Terms and Structuring, and Bill Holmes will be moderating two panels, Assessing the Potential of Green Tariffs as a Renewable Sourcing Option, where attendees will assess the potential of green tariffs to provide a viable sourcing solution for renewable buyers, and Distributed Energy Solutions to Meet Corporate Goals, which will focus on on-site solar and energy storage.

Please let us know if you will be in attendance!

Winds of Change

Federal Auction for Offshore Wind Leases in Northeast Set Record High

By David L. Wochner, Abraham F. Johns, and Michael L. O’Neill

On December 13 and 14, 2018, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) conducted an auction for three offshore wind power parcels in Massachusetts. The auction not only broke the record [1] for number of companies bidding, but also for being the highest grossing offshore wind lease sale. The promotion of federal offshore land auctions and positive statements [2] from both the Secretary of the Interior and the acting head of BOEM suggest that the Trump Administration remains committed to developing U.S. offshore wind resources.

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US Offshore Wind Market Handbook Helps Investors Navigate Technical and Regulatory Issues

K&L Gates LLP, and Atkins, a member of the SNC-Lavalin Group recently released an Offshore Wind Market Handbook to help guide investors through technical- and regulatory issues in the emerging US offshore wind market.

“Many large companies and institutional investors who have been successful with offshore wind projects in Europe are now poised to invest in the US,” said Andrew Thompson, Director, Offshore Wind at Atkins. “However, technical and regulatory issues unique to this market can be a barrier to developers for offshore wind energy projects. Our handbook provides practical information that addresses key matters.”

Regulatory issues include a discussion of the interplay between US federal jurisdiction and the various coastal states that have enacted laws and regulations encouraging offshore wind projects. Technical issues include turbine and foundation options and solutions, performance assurance strategies and a discussion of innovations in design and equipment that are particularly suited to US coastal waters.

“Essentially, technical and regulatory legal issues are intertwined such that project success requires a closely coordinated cross-discipline team,” said David Hattery, co-leader of K&L Gates’ power practice. “Together, K&L Gates and Atkins demonstrate a pool of knowledge and a depth of experience to draw on that gives us uniquely valuable insight into the legal and technical challenges facing the US offshore wind industry.”

The K&L Gates renewable energy practice combines European project experience with US regulatory and project development expertise. Atkins is a leading provider of full range technical and operational expertise in the energy industry, including engineering design and owner’s engineer services in the global offshore wind market. Together, K&L Gates and Atkins demonstrate market leadership on key issues and can help investors build a leading position in the US offshore wind market.

To read the full press release, click here.

K&L Gates Advises innogy on Acquisition of More Than 2,000 MW Onshore Wind Projects

3 August 2018

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.

Tax Credits for Storage After Solar or Wind?

By Elizabeth Crouse, Elias Hinckley and William Holmes

On Friday, March 2, the Internal Revenue Service released Private Letter Ruling (“PLR”) 201809003. The PLR is not binding precedent, but it indicates that the IRS will permit a taxpayer to claim a Code Section 25D credit in respect of a residential battery installed after the solar panels to which it will be attached was installed. In the PLR, the IRS expressly states that it will treat the battery as property that “uses solar energy to generate electricity,” provided only solar energy is used to charge it.

The PLR concerns individuals claiming a credit for a residential system, but don’t stop reading. This outcome matters for C&I and utility scale projects also.

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Tax Reform Conference Bill Released: PTC and ITC Emerge Battered

By Elizabeth C. Crouse

Earlier this evening, the conference committee considering the tax reform bills previously passed by the U.S. House of Representatives and the U.S. Senate released legislative text for the much rumored conference bill. Although neither the Production Tax Credit (“PTC”) nor the Investment Tax Credit (“ITC”) are directly impacted, the Base Erosion and Anti-Abuse Tax (often referred to as the “BEAT” or “International AMT”) provides only partial relief for U.S. corporations subject to that tax that have PTCs or ITCs available to offset their U.S. federal income tax.

Under the conference bill, a U.S. corporation that is subject to the International AMT may use up to the lesser of 80% of the PTCs and ITCs available to them or the “base erosion minimum tax amount” only through 2025. The PTC and ITC cannot be used to eliminate any International AMT otherwise due.

As in previous iterations of the Tax Cuts and Jobs Act, the conference bill does not distinguish between PTCs and ITCs earned in respect of qualifying projects that have already been placed in service or begun construction. In addition, although the International AMT rate has been adjusted (5% for tax years beginning in 2018, 10% for tax years beginning between 2019 and 2025, and 12.5% thereafter), the rate applicable to U.S. corporations that are in an affiliated group with any bank or registered securities dealer will always be 1% higher than the generally applicable rate. In addition, the PTC and ITC cannot be used to reduce the International AMT due in any tax year beginning in 2026 or thereafter.

Thus, although the impact of the International AMT is somewhat reduced in the conference bill, the International AMT could still prompt some multinational investors in renewable energy projects to divest certain operating projects and projects under development as well as discourage investment in new projects.

The Senate has passed the Tax Cuts and Jobs Act. Is this the next drop in the renewable energy roller coaster?

By Elizabeth C. Crouse

Early in the morning of Saturday, December 2, the U.S. Senate voted along party lines to approve its version of the Tax Cuts and Jobs Act (the “Act”). The U.S. House of Representatives approved its rather different version of the bill on Thursday, November 16, 2017. Although the two bills now must proceed through the conference process to reconcile their differences, many predict that any bill ultimately sent to the President will largely resemble the Senate version. It is not clear how long the conference process may take, but Congressional Republicans have indicated that they intend to send a final bill to the President before Christmas, perhaps as early as December 15. Ultimately, while it appears that the investment tax credit (“ITC”) and production tax credit (“PTC”) provisions likely will not be changed in the reconciliation bill, the net effect of other provisions, particularly a new “International AMT,” may significantly chill the tax equity market that supports much of the renewable energy industry.

The PTC and ITC Provisions Are Not Expected to Change

The tax reform measure approved by the full Senate includes several changes compared to the version approved by the Senate Finance Committee and also differs in some significant ways compared to the House bill. It is important to note that while the House bill includes dramatic cuts to the PTC and more limited revisions to the ITC, the Senate bill would not change either credit program. During the Senate Finance Committee mark-up, Republicans indicated their intent to address the availability of the ITC and PTC for certain “orphan” technologies before the end of the year. Addressing energy provisions in a different tax package would relieve some of the pressure on revenues in the tax reform bill as lawmakers must stay within the budget reconciliation instruction constraints, including that the deficit may not be increased by more than $1.5 trillion over a ten-year period.

Provisions That May Suppress Tax Equity Investment

However, both bills include radical changes to corporate and international taxation that may suppress investment in renewable energy projects that qualify for the ITC and PTC.

  • First, the change in the corporate income tax rate to a flat 20% rate (or perhaps a 22% rate, based on recent statements from the President), temporary renewal of 100% bonus depreciation and increased expensing of capital investments are expected to reduce appetite for tax credits because of generally reduced corporate exposure to U.S. federal income taxes. In addition, the Senate bill would not repeal the corporate Alternative Minimum Tax. (Under current law, a corporation that is subject to the Alternative Minimum Tax may be required to pay tax on income that would otherwise be sheltered by the PTC or ITC under certain circumstances. However, there is a significant effort to at least reduce the corporate Alternative Minimum Tax in the reconciliation bill.).
  • Second, in the course of changing the United States from a “worldwide” to a “territorial” tax system, the bills would add “base erosion” provisions that may inhibit investment by multinational corporations in the United States generally and specifically in PTC and ITC projects. In other words, under the bills, a person would be required to pay U.S. federal income tax on the income it earns in the United States, but not outside of the United States. The base erosion provisions are intended to limit the ability of a taxpayer to reduce its U.S. income through certain transactions and arrangements with non-U.S. affiliates. One of these rules would discourage a U.S. company from financing its operations with debt from a non-U.S. affiliate beyond a certain point.

Another base erosion provision would require a U.S. corporation to pay tax on 10% (11% if it is a bank) of (x) its “modified” taxable income, less (y) the tax it would otherwise pay without taking into consideration its U.S. federal income tax credits other than the research and development credit. A U.S. corporation is subject to this rule if it pays non-U.S. affiliates for a threshold amount of goods and services, e.g., component parts or administration, and the multinational group has gross receipts of more than $500 million on average over the prior three years (the “International AMT”). Although generally applicable, this rule would require a calculation of adjusted income that would not account for the PTC or ITC, regardless of when the PTCs or ITCs were earned. Thus, a company that is subject to the International AMT will likely be required to pay tax on income that would otherwise be sheltered by the PTC or ITC, including income that may be sheltered under the existing Alternative Minimum Tax rules. There are reports that a coalition of Republican Senators are attempting to exclude the PTC and ITC from the adjusted income calculation for the International AMT, but it is not clear that will be accomplished during the reconciliation process.

What does this mean for the renewable energy industry?

If the bill that ultimately crosses the President’s desk largely mirrors the Senate bill, it is likely that many of the very large tax equity investors will become subject to the International AMT (since many of those investors are banks, they are also likely to become subject to the higher International AMT rate). Some of those investors have indicated that they will attempt to sell their PTC and ITC holdings and will pull back from further investment. While it seems unlikely that the largest investors will completely exit the PTC and ITC market, even a partial withdrawal seems likely to cause significant turbulence in the market. While the provisions applicable to the tax equity investors that are not subject to the International AMT are more of a mixed bag, the reduction in the corporate income tax rate and increase in bonus depreciation may curb their PTC and ITC appetite.

There is a reasonable possibility that the reconciliation bill will diverge from the bills in material ways, particularly if the President’s recent statements considering a 22% corporate income tax rate are taken seriously. In any event, it seems likely that negotiations over the tax bills may convert the Suniva Section 201 proceeding into just one among several concerns for those riding the “solarcoaster” in the months ahead; at the same time, the uncertainty that the Senate and House bills create with respect to the PTC will occupy the attention of the wind industry.

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