Amid the headline-grabbing events of 6 January 2021, the U.S. Department of Treasury released final regulations under Code Section 45Q. Code Section 45Q provides for a U.S. federal income tax credit at varying rates to taxpayers that participate in various aspects of the process of sequestering carbon oxide and disposing of it in secure geologic storage, use it as a tertiary injectant in a qualified enhanced oil or natural gas recovery project, or utilize it in certain processes.
Join us on 1 October 2020 for a webinar on fusion energy.
For nearly 100 years, scientists and engineers, as well as science fiction authors and fans, have dreamt of harnessing fusion reactions to power our economy. Despite daunting technical challenges, fusion energy may become a technically viable and economic energy source in the coming years, as an attractive carbon-free baseload alternative to conventional energy sources.
As the energy sector progresses towards commercial fusion, governmental regulators around the world are considering how they should treat fusion facilities. Two of the most active jurisdictions for commercial fusion development are the United States and the United Kingdom. Along with Fire Energy and Prospect Law, members of our K&L Gates fusion energy team will provide an update on the regulatory approaches to fusion that the US and UK are taking, the prospects for differentiating regulations for future fusion facilities from those applicable to existing fission-powered nuclear plants, next steps in developing regulatory certainty for the emerging fusion power sectors in these nations, and include a section on risk and the management of risk through insurance.
For more information and to register, please click here.
In a landmark order issued on September 17, 2020, the Federal Energy Regulatory Commission (FERC) adopted rules aimed at removing barriers to the participation of distributed energy resources (DERs) in the organized markets for electric energy, capacity, and ancillary services operated by Regional Transmission Organizations and Independent System Operators (RTOs). Order No. 2222 builds on reforms previously undertaken by FERC and, once fully implemented, should be a major step toward opening up RTO markets to competition, facilitating new entry of resources, and fostering business model innovation.
Order No. 2222 envisions “aggregations,” which are groups of small DERs participating in the RTO markets as a single resource represented by their aggregators. According to FERC, these aggregations will permit DERs to provide a variety of products and services that will compete with more conventional resources in the RTO markets. FERC expects that this will, in turn, ensure that rates remain just and reasonable.Read More
A biweekly update on clean technology applications, distributed energy resources, and other innovative technologies in the renewable energy and clean transport sector.
There is a lot of buzz around cleantech, distributed energy resources (“DERs”), microgrids, and other technological innovations in the renewable energy and clean transport industries. As these innovations develop, energy markets will undergo substantial changes to which consumer 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 and clean transportation industries forward.
IN THIS ISSUE:
- Southern California Edison Invests in EV Charging
- The University of Newcastle Develops Thermal Block Energy Storage System
- Researchers in Sweden Develop Molecule that Stores Sunlight as Chemical Bonds
- Massachusetts Supreme Court Upholds PPA Backing a US$1 Billion Transmission Line to Carry Canadian Hydro-Electric Power to Bay State
Please join K&L Gates Energy, Infrastructure and Resources Practice Area Leader, David Benson, at Solar Power International as he moderates the panel, “The Evolution of Finance in a Changing Offtake Market,” on Friday, September 25, 2020, at 3:05pm EDT.
This panel will discuss new revenue models, such as merchant projects, hedging strategies, and VPPAs, are changing how renewable energy projects are being financed. Topics will include how panelists view projects with these evolving offtake approaches and how they view risk in these markets, taking the audience through transaction structures and what it takes to execute renewable energy deals.
For more information on Solar Power International, please click here.
Join K&L Gates partner, Elias Hinckley, as he participates on a webinar with PV Magazine, “Is Your Company Capturing the 2020 Safe Harbor?”
This webinar will discuss the current 26% solar investment tax credit that will be reduced by to 22% on January 1, 2021 and steps to take to ensure your project captures the full credit.
The webinar will take place on Wednesday, 23 September, 2020, at 11:00 AM EDT.
For more information and to register, please click here.
The U.S. Energy Storage Association (ESA), the national trade association for the American energy storage industry, will recognize K&L Gates with the Brad Roberts Outstanding Industry Achievement Award at the 2020 ESA Annual Awards taking place during the association’s virtual conference next week.
The award recognizes K&L Gates for “its tremendous contributions that have advanced the industry forward including nurturing early storage developers, hosting an annual conference, and developing the widely circulated Energy Storage Handbook.” The ESA determines this award by surveying its members and past award recipients each year to identify a member organization that has made significant contributions in the storage industry.
Read more about the award in the ESA press release.
In her opening statement to an August 11 opinion, United States District Court Judge Valerie Caproni writes:
“It is not only a sin to kill a mockingbird, it is also a crime.”
Judge Caproni’s literary reference is the launching point for addressing the matter at hand: the validity of the Department of Interior’s December 22, 2017, Memorandum M-37050, which concludes that the Migratory Bird Treaty Act (MBTA) prohibition on the “taking” or “killing” of migratory birds applies only to deliberate acts intended to take a migratory bird. The M-Opinion announced the Trump administration’s view of the take prohibition in the MBTA, and states that the Trump administration will not seek criminal penalties against individuals and industries —such as oil and gas, as well as renewable energy— for incidentally taking migratory birds. The M-Opinion significantly limited the scope of the take prohibition in the MBTA, reducing the potential liability for development of infrastructure and renewable energy projects.
Judge Caproni writes that Interior’s opinion violates the letter of the law for the past century and contradicts Interior’s long held position that even incidental take or kill of a migratory bird violated the MBTA “irrespective of whether the activities targeted birds or were intended to take or kill birds.” Now, Judge Caproni stated,
“[I]f the Department of the Interior has its way, many mockingbirds and other migratory birds that delight people and support ecosystems throughout the country will be killed without legal consequence.”
Judge Caproni devotes the remainder of her ruling explaining why the M-Opinion violates the Administrative Procedures Act as contrary to law. Judge Caproni rejected Interior’s narrow reading of the statute as lacking support in the plain language of the MBTA. As Judge Caproni explained,
“There is nothing in the text of the MBTA that suggests that in order to fall within its prohibition, activity must be directed specifically at birds. Nor does the statute prohibit only intentionally killing migratory birds. And it certainly does not say that only ‘some’ kills are prohibited.”
While Judge Caproni acknowledged that in drafting the MBTA Congress may have been “principally concerned” about over-hunting, Congress chose not to narrowly draw the prohibition in the statute to intentional take or kill of birds.
The August 11 order vacates the M-Opinion.
On July 16, 2020, the Federal Energy Regulatory Commission (“FERC” or “the Commission”) issued two noteworthy electric power orders: the first is a final rule (“Order No. 872”) that updates regulations implementing the Public Utility Regulatory Policies Act of 1978 (“PURPA”); the second dismisses the New England Ratepayer Association’s (“NERA”) petition for a declaratory order on FERC’s jurisdiction over net energy metering sales.
Final Rule on PURPA Update
In September 2019, FERC issued of a Notice of Proposed Rulemaking (“NOPR”) to significantly change how it implements PURPA, a law that applies to small power producers. In Order No. 872, FERC largely adopted the NOPR’s proposed revisions to the Commission’s regulations implementing PURPA sections 201 and 210. Notable changes to the PURPA regulations include: (1) providing additional flexibility to set “avoided cost” rates for qualifying facilities (“QFs”) sales; (2) modifying the “one-mile rule” to allow for consideration that affiliated QFs more than one mile but less than ten miles apart may be at the same site ; (3) revising procedures to challenge initial QF certification and re-certification; (4) revising the threshold from 20 megawatts (“MW”) to 5 MW at which a utility may petition to terminate its obligation to purchase from certain QFs; and (5) requiring states to develop criteria that must be met for a QF to be entitled to a contract or legally enforceable obligation (“LEO”).
Changes included in Order No. 872 will be effective 120 days from publication in the Federal Register. When effective, Order No. 872 will not affect existing contracts, LEOs, or existing certifications for facilities, but will be prospective, applying to new contracts or LEOs, and certifications or recertifications for facilities filed after the order’s effective date.
Dismissal of NERA Petition for Declaratory Order
On April 14, 2020, NERA filed a petition for declaratory order, seeking FERC’s declaration that FERC holds exclusive jurisdiction over wholesale energy sales from behind-the-meter generation and requiring that the rates for such sales be priced pursuant to the Federal Power Act (“FPA”) or PURPA, when applicable. Specifically, NERA asked FERC to declare jurisdiction over energy sales of rooftop solar and other distributed energy resources on the customer side whenever the output exceeds the customer’s demand, or the energy is meant to bypass customer load. NERA characterized “full net metering,” as “a practice through which an electricity consumer produces electric energy from a generation source (most often solar panels) that is located on the same side of the retail meter as the customer’s load.” Historically, the Commission sees such transactions as retail in nature and regulated by the states. NERA argued, however, that the energy exceeding customer demand or bypassing customer load is sold to a utility for resale to customers, making them wholesale sales, and therefore, subject to FERC’s jurisdiction.
The Commission began its analysis with a reminder: “Declaratory orders to terminate a controversy or remove uncertainty are discretionary.” The Commission then used its discretion not to address the issues presented, as they did not “warrant a generic statement” from FERC. The Commission found that NERA never identified “a specific controversy or harm” to be addressed. Further, the Commission found that to the extent NERA is concerned that certain New England state regulatory authorities are not pricing QF sales in accordance with PURPA, the petition did not meet PURPA’s requirements for enforcement.
 Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978, 172 FERC ¶ 61,041 (2020).
 New England Ratepayers Ass’n, 172 FERC ¶ 61,042 (2020) (“NERA Order”).
 Qualifying Facility Rates and Requirements Implementation Issues Under the Public Utility Regulatory Policies Act of 1978, 168 FERC ¶ 61,184 (2019) (“NOPR”).
 Behind-the-meter generation refers to energy generated from the customer side of the retail meter.
 NERA Order at P 3.
 NERA Order at P 4.
 NERA Order at P 35.
 NERA Order at P 35.
 NERA Order at P 36-37.
Join us on June 30, 2020 at 4:30pm EDT for a webinar on the Post-COVID-19 Outlook for renewable energy.
Emerging from the first wave of the COVID-19 crisis, the renewables industry has experienced many positive and negative effects, from enormous job loss to valuable cost reductions, innovation in project development, and an uptick in storage contracts. However, there is still significant uncertainty about what a second wave of lock-downs may bring as well as the effect of the macroeconomic climate on investor appetite.
Our expert panel will share with you what they expect to see in the development and power markets worldwide as well as the hot new trends they see as helping the industry emerge from the COVID-19 crisis stronger and more resilient than ever.
- Elizabeth Crouse, Partner, K&L Gates
For more information and to register, please click here.