RenewNewEngland.com

President's Budget: A Few Extensions of Renewable Energy Incentives

Following up on last week's post on the extension of the production tax credit, there were a couple of interesting developments yesterday. 

First, House Republicans offered to decouple the payroll tax cut from other measures to be considered in the payroll bill being negotiated by a House-Senate Conference Committee, and they may not require that the tax cut be offset by spending cuts or tax increases. Unfortunately, a “clean” payroll tax cut would not include an extension of the production tax credit.  There will be more to come as this plays out in the halls of Congress. 

Second, the President released his 2013 Budget which contains some interesting proposals regarding renewable energy that are likely to leave some folks happy and others feeling left out.  The budget is not a great barometer of what will actually be passed later in the year, but it does signal the Administration's priorities. 

The proposal would extend the production tax credit and the investment tax credit for wind facilities and wind property placed in service in 2013, but would not include extensions of the in-service date for any other type of property. The proposal would also extend Treasury's Section 1603 grant program to all otherwise qualifying property placed in service in 2012 (including property on which construction begins in 2012).  The program currently only applies to property for which construction began in 2009, 2010, and 2011. 

For property placed in service after 2012, the proposal would replace the grant with a refundable tax credit administered by the Internal Revenue Service. In other words, a developer would receive a tax refund from the IRS in much the same way the developer receives a grant from Treasury, except that it would be claimed on the developer’s tax return. 

The refundable credit would be allowed with respect to property placed in service in 2013 in the case of wind, biomass, landfill gas, municipal solid waste, incremental hydropower, certain geothermal, and marine and hydrokinetic.  The refundable credit would be allowed for property placed in service from 2013 through 2016 in the case of solar, fuel cells, microturbines, combined heat and power, small wind, and certain geothermal. Qualification requirements for the refundable credit would be the same (except for the effective date provisions) as the qualification requirements currently applicable under the Treasury grant program. 

Renewables Industry Pushes for Production Tax Credit Extension in Payroll Tax Cut Bill

The production tax credit for wind projects is scheduled to expire at the end of the year, and the credit for geothermal, hydropower, and biomass expires at the end of 2013.  Industry executives are vigorously lobbying Congress to extend the credits.  The best vehicle for an extension is the payroll tax cut bill currently being negotiated by a House-Senate conference committee (H.R. 3630). 

At a recent press briefing, Peter Kelley, vice president for public affairs at the American Wind Energy Association, said that “the urgency of this issue calls for extending it in the first quarter of this year because later will be too late.”  The next opportunity for an extension would likely be in the lame-duck session at the end of the year, but executives say that by then the industry will have abandoned projects and manufacturers will be out of business.  Wind industry executives visited Congress on February 8 to ask for a one-year extension of the credit. 

Executives from the National Hydropower Association, the Biomass Power Association, and the Geothermal Energy Association  echo the argument as to their respective industries.  Utility-scale hydropower, biomass, and geothermal projects starting today would find it nearly impossible to be completed by the end of 2013 because of the lengthy licensing and build times required.  For that reason, progress on new projects beyond 2013 has largely stalled.  Industry representatives are seeking an extension through 2016 (currently only solar and a few other resources are extended through 2016).  Read the February 8 letter to Congress from the hydropower, biomass, and geothermal representatives here. 

Earth Day In Our Backyard

This being Earth Day #40 and federal climate legislation or regulation being promised (or threatened, depending on who you ask), the media is awash in articles, open letters, rants and analyses on renewable energy law and policy.  We’ve linked to a few of our favorites under “Renewables News” to the right. 

The weather is shockingly spring-like in Northern New England today, and we’re more in the mood to barbeque than to blog.  But we can’t decamp to our actual backyards without an Earth Day shout out to our friends at Ocean Renewable Power Company in our virtual backyard (Portland and Eastport, Maine).  ORPC has developed new technology to capture tidal energy, as described in this article.  (For an interactive demo of the turbine technology, click here.)  Among the project benefits touted by ORPC:  unobstructed views. 

Later this month, another, more visible ocean energy project should be getting the final word from the feds, and the fate of Cape Wind may foretell the viability of federal legislation in support of wind.  The open question: will nimbyism suck all the air out of the wind industry?  (Check the Wikipedia entry for NIMBY and you’ll find opposition to Cape Wind listed as a prime example.)

We wish there were a clever acronym for those folks whose backyards inspire them to support renewable energy.  We could nominate NH’s Bode Miller and VT’s Hannah Kearney, Olympic Gold Medalists, as examples on that Wikipedia page:  both have signed an open letter (pdf) in support of comprehensive climate legislation, citing the environmental and economic needs of the mountains and ski towns they love so dearly.

Whether your backyard is mountain, ocean or sunny windowsill, we wish it a little bit of green this Earth Day.

Maine Ocean Energy Task Force Submits Final Report

The Maine Ocean Energy Task Force  submitted its final report (pdf) with detailed appendices (pdf), to Governor Baldacci on December 31, 2009.  (We discussed earlier drafts of this proposal in this previous post.)

OETF Co-Chairperson Beth Nagusky, Director of Innovation and Assistance at the Maine Department of Environmental Protection, has indicated that The Governor's Office will submit draft legislation to implement the OETF recommendations early in the legislative session.
Key findings of the Report include recommendations that Maine:

• Make a major commitment to development of offshore wind, tidal, and wave power;
• Commit to a goal of installation of 5 gigawatts (5,000 megawatts) of offshore wind energy generating capacity in Maine’s coastal waters and adjoining federal waters by 2030, and to a goal of timely and efficient development of tidal energy resources at optimal locations in Maine’s coastal waters, including but not limited to those in the Passamaquoddy Bay region;
• Improve the siting, permitting and governance framework for renewable ocean energy development;
• Move aggressively to support strengthening Maine's current out-dated transmission and distribution infrastructure, incorporating smart-grid technologies, and explicitly recognize in law the need for new transmission and distribution capacity to achieve the State’s wind power and energy conversion goals; and
• Support the financing and development of renewable energy goals by requiring the Maine Public Utilities to issue a Request for Proposal for renewable ocean energy generation where the rate impact is reasonable.

For more information about the Ocean Energy Task Force and offshore development opportunities in Maine, contact Pierce Atwood's Lib Butler.  

Testing the Wind

Today, in accordance with LD 1465 (pdf), “An Act To Facilitate Testing and Demonstration of Renewable Ocean Energy Technology,” Maine’s Governor Baldacci announced the final selection of three offshore wind energy demonstration areas in Maine.  (The four site finalists were announced in October 2009, as discussed in this previous post.)

One of the three sites, located near Monhegan Island, is designated as the “Maine Offshor Energy Research Center,” which will be used for research and development projects run by (or in cooperation with) the University of Maine.

The other two sites – off Boon Island near York and off Damariscove Island near Boothbay - are available for R&D projects by commercial entities.  To obtain a permit for a project in one of these sites, a company must first apply for a general permit for offshore wind energy demonstration project under 38 MRS §480-HH from the Department of Environmental Protection.

With a MDEP general permit approval in hand, the company must then apply for a submerged lands lease from the Department of Conservation.  Because these sites are designated for research and development uses rather than permanent, commercial installations, permits for the Boon Island and Damariscove Island sites will good for five years from the date they were granted or three years from the date construction starts (with certain term extensions available); in applying for the permit, applicants must provide a project removal plan that details how they will remove the project at the end of the permit period.

More details about the demonstration areas, including interactive maps of the designated areas, are available at the Department of Conservation site.

This site selection process complements the work of the Ocean Energy Task Force and its recommendations concerning legislation to make near-shore and off-shore sites available for both R&D and ultimately commercial renewable energy projects.  The draft final report of the OETF can be found here. 

Offshore (Data) Mining

Together with Senator Mark Begich of Alaska, Maine Senator Olympia Snowe has introduced the Renewable Energy Environmental Research Act of 2009 (pdf).  The proposed legislation aims to coordinate the collection and dissemination of environmental data so crucial to the development of marine energy resources.  Under the proposed bill, $100M would be appropriated to NOAA each year 2010 through 2014, with the requirement that up to 50% of the funds would be made available to educational institutions and to states with federally-approved coastal zone management programs (pdf). 

As shown on this interactive map, every New England state (other than Vermont,  which lacks a seacoast) is already working with NOAA on coastal and ocean management issues.  Of course, as Senator Snowe’s press release suggests, the University of Maine’s Advanced Structures and Composites Center, which has partnered with Norway’s StatoilHydro to investigate the potential of off-shore wind, would be a natural recipient for this kind of funding.  (For more on this program, see our previous post.)  But with multiple off-shore energy projects in various stages of development in Maine, Massachusetts and Rhode Island, the impact of this bill would be felt throughout the region.

The environmental data covered by the proposed legislation is of great interest to environmental advocates, who want to make sure off-shore development won’t cause unreasonable harm to the habitats where they’re built.  The data is also of critical importance to developers – and their potential investors - who have been calling (pdf) for the refinement, integration and standardization of this kind of environmental data in order to minimize the risks associated with both permitting these projects and their eventual productivity.