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.
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.
On Tuesday of this week the Massachusetts Department of Environmental Protection (MassDEP) and Department of Public Health (MDPH) released the Wind Turbine Health Impact Study: Report of Independent Expert Panel (January 2012). Among other things, the expert panel was charged by the two agencies with identifying and characterizing the attributes of concern most commonly reported by individuals residing near wind power projects (e.g., noise, infrasound, vibration, and shadow flicker) and then – based on a evaluation of peer-reviewed scientific studies – assessing the magnitude and frequency of any potential impacts and risks to human health associated with the operation of these projects. Findings by the expert panel include:
MassDEP and MDPH will be holding three public meetings on the Report in February and will receive public comment until Monday, March 19 at 5 p.m. Electronic comments may be submitted to: WindTurbineDocket.MassDEP@MassMail.State.MA.US How the Report will be used both in Massachusetts and elsewhere in the northeast will be interesting to follow.
Additionally, although not part of the expert panel’s original charge, two members of the panel also provided MassDEP and MDPH an addendum, A Brief Review of Wind Power in Denmark, Germany, Sweden, Vermont, and Maine (January 2012). The addendum looks at wind power development in the two New England states and three countries with the goal of identifying whether there are best practices or lessons learned that could benefit Massachusetts. The authors identify three factors they believe contribute to greater project success:
The addendum identifies the Fox Islands Wind project on Vinalhaven Island in Maine as the one project in Maine or Vermont that is “especially noteworthy” because of its success and community involvement.
As we described in this June 2009 publication, the removal of the bald eagle from the federal list of threatened and endangered species developed under the Endangered Species Act has given new life to the Bald and Golden Eagle Protection Act (pdf). Similar to the Endangered Species Act, the Eagle Act prohibits the “take” of bald and golden eagles. A take is broadly defined by regulation to include, among other things, disturbance of eagles. As a result, a wide range of activities potentially fall within the prohibition created by the Eagle Act. A violator of the Act may be held both civilly and criminally liable.
Last fall, the U.S. Fish and Wildlife Service finalized new regulations (pdf) under the Eagle Act authorizing the limited take of eagles. An individual now may obtain a take permit if the Service determines the potential take is compatible with the preservation of the bald and golden eagle and cannot practicably be avoided. While the regulations provide a basic framework for this new permitting process, many details will need to be worked out. In addition, the regulations allow for the development of "programmatic permits" that could be applied to specific industries – including wind energy. How permitting under the new regulations will evolve remains to be seen and is something we will continue to monitor.
For more information about the Eagle Act, contact Nick Livesay.
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
Later this month, another, more visible ocean energy project
should be getting the final word from the feds, and the fate of
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.
Last Thursday, FERC issued a Notice of Inquiry (pdf) seeking comments on the extent to which barriers exist that may inhibit the integration of certain renewable energy sources into the electric grid. FERC particularly identified locational challenges and limited dispatchability as problems associated with resources like wind and solar that can adversely affect reliability and (in the realm of “unintended consequences”) can require the addition of more conventional resources for balancing purposes.
In this proceeding, FERC intends to explore how existing rules, regulations, tariffs, or even industry practices hinder the development of variable energy resources, through either discrimination or imposing unjust rates, and as part of this, to consider potential reforms. In the past, FERC has adopted targeted rules to encourage renewable resource development – such as standardizing interconnection agreements for wind resources (Order 661), or adopting a reduced penalty for imbalances caused by intermittent resources (Order 890). In this proceeding, FERC will take a “fresh look” at all existing policies and rules, “with the aim of removing unnecessary barriers to transmission service and wholesale markets for Variable Energy Resources (“VERs”) and other technologies that may aid their integration, and promoting greater efficiencies that ultimately will reduce costs to consumers.“ The seven specific areas FERC singled out are:
However, FERC will not consider transmission planning and cost allocation issues, as these are being considered in another docket. (Transmission Planning Processes Under Order No. 890, Docket No. AD09-8-000) Comments are due 60 days from publication in the Federal Register, expected to be the last week in March, 2009.
Yesterday, the Fox Islands Wind Project held its official ribbon-cutting, attended by dignitaries from around the state and our own Lib Butler, Avery Day, Tom Doyle and Nick Livesay (Pierce Atwood represented Fox Islands Wind throughout this process). After years of work, the project is expected to lower electricity rates for island residents, and keep year-round island living economically viable.
The three turbine, 4.5 MW project is not large for Maine, compared to facilities like TransCanada's 44 turbine, 132 MW Kibby Mountain installation, currently under construction, or First Wind's 38 turbine, 57 MW Stetson Wind project. But the project may offer a glimpse of the future of wind development in Maine and New England.
In the near term at least, it's likely to be increasingly difficult to construct large scale terrestrial wind in Maine. Both existing and proposed projects have encountered increasingly fervent opposition, which cites concerns about building in scenic or otherwise undeveloped landscapes, and the growing, if unsubstantiated, claims of negative health effects from wind turbines near homes. The pace of current proceedings at the Maine PUC for approval of a transmission project needed for reliability purposes does not bode well for the sizable transmission projects needed to meet state and regional wind development goals. One solution is the state's aggressive development of offshore wind, which, though fabulously expensive, is not in anyone's backyard.
The model of the Fox Islands Wind Project offers another solution: relatively small, community-owned projects sited close to load, owned by those who will use the electricity. While the process of constructing Fox Islands' wind turbines was similar to other wind projects (though not without some island-specific twists), the process of developing community support was unique, involving a deep commitment to community education and detailed engineering, economic, environmental and visual impact studies. The Island Institute, working with the Fox Island Electric Cooperative, a member-owned cooperative utility, involved the community members throughout the process. The cooperative initially created a wholly-owned project development company. That company then designed the project, and found private equity investors and US government loans to finance the project. Research suggests that local residents' sense of ownership and participation in a project's development can have a positive effect on their response to the visual and auditory impact of wind turbines. The Fox Island experience bears this out: as a result of this process, island residents voted to approve the project by a vote of 383 to 5 in July of 2008. The response to the project in the coming months and years will be telling, both for Vinalhaven and for the other communities around Maine that hope to replicate the success of the Fox Islands Wind Project.
After a series of public information workshops in September along the coast of Maine, the Maine Department of Conservation announced (pdf) on Tuesday that it has narrowed the potential sites for an offshore wind energy demonstration site from seven to four sites. The four sites include areas off Boon Island, Damariscove Island, Monhegan Island and the town of Cutler. This site will be used by the University of Maine national offshore wind demonstration project, recently awarded an $8 Million grant from the Department of Energy, to test deepwater wind turbine technology. The State explained that the consultation process has allowed the State to choose the areas with the fewest impacts on existing fisheries and wildlife.
The Department of Conservation will be accepting comments until November 30th. Legislation passed this June requires the Department to select a site by December 15th, 2009.
DOE today announced
an investment of up to $8M in the University of Maine