Tag: Solar

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Join K&L Gates at NEBC’s Energy Workshop on Thursday, June 7
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Tax Credits for Energy Facilities Extended in New Budget Bill
3
President Trump Imposes Tariffs on Imported Solar Modules and Cells
4
Tax Reform Goes to the President: How Did Renewables Fare?
5
Today’s House vote in Favor of H.R. 1, the Tax Cuts and Jobs Act
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ITC Commissioners Recommend Tariffs and Quotas on Imports of Solar Cells and Modules; President May Announce Final Remedy Decision before End of 2017
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Suniva Injury Finding Announced: Solar Import Remedies Heading to a Political Decision
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K&L Gates Blockchain Energizer – Volume 11
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K&L Gates Blockchain Energizer – Volume 3
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New Treasury Guidance Significantly Expands Field of Renewable Energy Projects That May Qualify for the PTC or ITC

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 Energy Facilities Extended in New Budget Bill

By Charles Purcell,  Won-Han Cheng, Elizabeth Crouse, and Andrea Templeton

Congress recently enacted the Bipartisan Budget Act of 2018, which contained a number of extenders applicable to tax credits for energy facilities.  In the case of PTC-eligible energy facilities that were not covered by the earlier extension applicable to wind and solar, the credit was extended to facilities where construction was commenced before January 1, 2018.  This new rule applies to closed and open loop biomass, geothermal, landfill gas, trash, qualified hydropower, and marine and hydrokinetic facilities.  In addition, the election to claim the ITC in lieu of the PTC on these facilities was also extended to facilities where construction was commenced before January 1, 2018.

The ITC provisions were amended to extend the “commence construction” dates for 30% credits for fiber optic solar, qualified fuel cell, ground based thermal heating and cooling systems, and qualified small wind energy property to be consistent with solar facilities (terminating at the end of 2021). The Act also extended the “commence construction” dates for 10% credits relating to qualified microturbine and combined heat and power system property (also terminating at the end of 2021).  To be eligible for the extension, combined heat and power system property must be placed into service after December 31, 2016.

In addition, the credits for fiber optic solar, qualified fuel cell and qualified small wind project will step down over the next 5 years.  It also appears that any such property not placed in service by the end of 2023 will not be eligible for any ITC.

President Trump Imposes Tariffs on Imported Solar Modules and Cells

By Stacy Ettinger and James Wrathall

President Trump announced the imposition of tariffs on imported crystalline silicon photovoltaic (“CSPV”) modules and cells, as previously recommended by the U.S. International Trade Commission.  The tariffs will be effective February 7, 2018.

Importers will be required to pay a tariff in the amount of 30 percent of the entered value in the first year, declining by 5 percent a year in each of the second, third, and fourth years.  With respect to CSPV solar cells, the first 2.5 gigawatts imported in each year will be exempted from the tariff.  These tariffs are in addition to the antidumping and countervailing duties relief previously imposed by the U.S. Department of Commerce on Chinese solar imports.

For U.S. solar developers and installers, the initial 30 percent tariff is expected to add 10 to 15 cents per watt to the final installed price.  Green Tech Media Research (“GTM”) has predicted this will cause a reduction of approximately 10 percent in U.S. installed solar capacity.  The tariffs do not apply to technologies other than CSPV, specifically thin film modules.  Therefore manufacturers of thin film products such as Solar Frontier and First Solar may see increased relative market share.

The biggest impacts on projects are expected in the utility-scale solar sector, which is largely dependent on being competitive with other generation sources.  Residential solar is viewed as more resilient and less sensitive to price changes.

Some CSPV manufacturing might shift to free trade agreement countries not included in the injury finding.  In particular, manufacturers based in Singapore or Canada may benefit, if the President’s proclamation reflects the approach taken by a majority of the ITC Commissioners to exclude these countries from the tariff program.

China, South Korea, and other countries with exports subject to the tariffs will likely file complaints before the World Trade Organization (“WTO”).  It is unclear what position the current Administration would take in response to an adverse WTO decision, if any. In any case, the WTO dispute settlement process itself could take anywhere from two to four years to complete.

Companies should consider steps to mitigate impacts of these tariffs.  Reportedly over two gigawatts of modules have already been procured for 2018 projects in the United States.  Accessing stockpiles of solar equipment may aid in reducing economic impacts.

The formal proclamation signed today by President Trump provides for exclusion of particular products from the safeguard measure. Procedures for requests for exclusion will be published in the Federal Register within 30 days.  Companies may want to review the product exclusion process and consider whether an exclusion request is warranted.

 

Tax Reform Goes to the President: How Did Renewables Fare?

By Charles H. Purcell, Rachel D. Trickett, and Elizabeth C. Crouse

On December 20, 2017, the U.S. House of Representatives voted to send the Tax Cuts and Jobs Act (the “Act”) to the president for his signature, which is the final step required to make the Act effective. What does the final bill mean for the renewable energy industry? The Investment Tax Credit (“ITC”) and the Production Tax Credit (“PTC”) appear to remain unchanged (for now) and the Base Erosion and Anti-Abuse Tax (aka, the BEAT or International AMT) in the final version of the Act is better for the renewables industry than in previous iterations. Nevertheless, a handful of other provisions may significantly impact the renewable energy industry.

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Today’s House vote in Favor of H.R. 1, the Tax Cuts and Jobs Act

By: Elizabeth C. Crouse

Earlier today, the U.S. House of Representatives voted in favor of H.R. 1, the Tax Cuts and Jobs Act. As expected, the limitations on the Production Tax Credit and Incentive Tax Credit that we discussed in our post on November 3 remain in the House bill: the House Republicans would dramatically curtail the PTC, leave the ITC in respect of solar energy installations largely intact, and renew the ITC in respect of several “orphan” renewable energy technologies. However, as discussed in our post on November 15, the Senate Republicans would not change the existing PTC or ITC provisions in the Senate tax reform package. (According to recent news reports, the Senate Republicans intend to renew the ITC in respect of the “orphan” technologies in an extenders bill later this year.) The Senate has not yet voted on its separate tax reform proposal and, at this point, it is not clear whether a conference committee bill will include any provisions regarding the PTC or ITC.

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.

Suniva Injury Finding Announced: Solar Import Remedies Heading to a Political Decision

In response to a petition by bankrupt U.S. solar panel manufacturer Suniva Inc., today the U.S. International Trade Commission (“ITC”) issued a finding that low-cost solar panel imports have caused “serious injury” to the domestic manufacturing sector.

It is widely believed that trade sanctions from this decision could cause price increases on the most commonly used type of solar panels, and therefore significant harm to the U.S. solar industry and corporate energy consumers.  By early November, the ITC will recommend a remedy, which will go to the White House for a final decision within three months.

The ITC’s injury finding generally applies to solar panel imports from all countries.  However, the ITC also is required to separately consider whether imports from countries with which the U.S. has a Free Trade Agreement (“FTA”) account for a substantial share of total imports and are contributing “importantly” to the serious injury.  In this case, the ITC made affirmative injury findings for imports from FTA countries Mexico and Korea, which will be included in the determination of remedies. The ITC made negative findings with respect to the other FTA countries, including Canada, which therefore will not be subject to such remedies.

The stakes are high.  Industry experts have said that by increasing the cost of panels, the tariffs sought by Suniva could have a negative impact of more than $50 billion on the U.S. solar industry.  More than 88,000 jobs in the solar supply chain could be eliminated, and 47 gigawatts of solar installations could be cancelled in the next five years.  Major corporate energy consumers relying on solar to meet sustainability commitments could see costs of installed utility-scale projects more than double.  It is unclear whether raising tariffs, especially to levels requested by Suniva, would significantly boost domestic panel manufacturing or create new jobs.

The ITC remedy recommendations will go to the White House, which has authority to impose whatever remedies President Trump chooses.  There is opposition to tariffs across the political spectrum, with commenters ranging from The Wall Street Journal and the Heritage Foundation on the right to the Solar Energy Industries Association (SEIA), environmental groups, and labor unions on the left, all arguing that imposing tariffs would harm U.S. economic interests.  Despite this broad opposition, the solar industry is very concerned that President Trump may view tariffs favorably as appearing to make a strong statement in favor of U.S. manufacturing and against Chinese trade imbalance.

The outcome of the remedy may be heavily influenced by political calculations.  SEIA and a number of industry coalitions will respond to the ITC decision with vigorous political advocacy, making the case to the White House and Congress that tariffs on solar panel imports would be counterproductive.  Another group, the American Solar Jobs Coalition, is working to build a path forward that “will support all aspects of the U.S. solar industry and ensure that the President’s decision will allow the solar industry to continue to support American businesses and drive American prosperity.”  Companies in the solar sector and clean energy consumers should actively monitor the outcome of this matter, and consider strategic responses in the event significant trade sanctions are imposed.

For more information on the Suniva proceeding, contact Elias Hinckley, Stacy Ettinger, or Jim Wrathall of K&L Gates.

Elias B. Hinckley
+1.202.778.9091
elias.hinckley@klgates.com

Stacy J. Ettinger
+1.202.778.9072
stacy.ettinger@klgates.com

James R. Wrathall
+1.202.778.9092
jim.wrathall@klgates.com

K&L Gates Blockchain Energizer – Volume 11

By Molly Suda, Buck B. Endemann, and Ben Tejblum

There is a lot of buzz around blockchain technology and its potential to revolutionize a wide range of industries from finance and healthcare to real estate and supply chain management. Reports estimate that over $1.4 billion was invested in blockchain startups in 2016 alone, and 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. To subscribe to the Blockchain Energizer newsletter, please click here.

IN THIS ISSUE

  • Bank Consortium Moves Forward with “Know Your Customer” Distributed Ledger Technology
  • Solar Technology Company Announces ICO to Fund Development of Local, Decentralized Energy Trading Platform
  • UK Startup Testing Blockchain Platform to Cut Time for Switching Energy Suppliers

To view more information on theses topics in Volume 11 of the Blockchain Energizer, click here.

K&L Gates Blockchain Energizer – Volume 3

A bi-weekly update on applications of blockchain technology in the energy industry

By Molly Suda, Buck B. Endemann, and Benjamin L. Tejblum                   

There is a lot of buzz around blockchain technology and its potential to revolutionize a wide range of industries from finance and healthcare to real estate and supply chain management. Reports estimate that over $1.4 billion was invested in blockchain startups in 2016 alone, and 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

  • Blockchain-Powered Crowdfunding Brings Solar Energy to Africa
  • Illinois Considering Blockchain Technology to Streamline Government Programs
  • Arizona Paves the Way for Smart Contracts

To view more information on theses topics in Volume 3 of The Blockchain Energizer, click here.

 

New Treasury Guidance Significantly Expands Field of Renewable Energy Projects That May Qualify for the PTC or ITC

On May 5, the U.S. Treasury Department released Notice 2016-31 to address certain changes made to the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) in the Protecting Americans from Tax Hikes (“PATH”) Act of 2015, Pub. L. No. 114-113, Div. Q.  The Notice generally extends the application of the “beginning of construction” and “continuous construction” requirements set forth in Notices 2013-29, 2013-60, 2014-46, and 2015-25, and also favorably modifies several key factors of both requirements.  In addition, on May 18, the U.S. Treasury Department released a revised version of Notice 2016-31, which states that the provisions of Notice 2016-31 apply to any project for which a taxpayer claims the PTC or, via Code Section 48(a)(5), the ITC, that is placed in service after January 2, 2013.

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