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By Marc Campopiano, Kelley Gale and Michael Sullivan

Recent trends demonstrate a rapid growth in corporations directly buying renewable energy from wind, solar and other renewable energy generators. Renewable energy capacity under corporate power purchase agreements (PPAs) doubled each year from 2012 to 2015. For wind energy generation, corporate purchasers constituted 52% of capacity contracted through PPAs in 2015, up from only 5% in 2013. Many corporations are looking to increase reliance on renewable power to meet internal sustainability or environmental policies, and dramatic decreases in renewable costs have increasingly made renewables competitive with traditional power sources. The long-term nature of most PPAs can be attractive to businesses seeking the stability of fixed electricity costs, while renewable developers gain a dependable off-taker, often a critical component of securing financing.

This trend was punctuated by the recent announcement by MGM Resorts International that it plans to pay $86.9 million for the ability to exit Nevada Power’s utility service and purchase its own electricity on the wholesale market. Some states, including Nevada, require approval from state regulators and the payment of an exit fee before being able to purchase power directly from generators across utility transmission lines. As the largest purchaser of energy from Nevada Power (at nearly 5% of annual energy sales), MGM determined it was worth paying the substantial exit fee to control its ability to directly purchase renewable power.

By Christopher Garrett, Daniel Brunton and Taiga Takahashi

On June 6, 2016, in Backcountry Against Dumps et al. v. Jewell et al., the US Court of Appeals for the Ninth Circuit affirmed the judgment of the District Court for the Southern District of California upholding federal approvals for the Tule Wind Project. The Court of Appeals found in favor of the Federal Government and Tule Wind LLC, rejecting claims the plaintiffs brought under the Administrative Procedure Act, National Environmental Policy Act (NEPA), Migratory Bird Treaty Act (Bird Act) and Bald and Golden Eagle Protection Act (Eagle Act).

As we have noted in previous reports, project challengers have increasingly alleged, in litigation, that the mere potential to incidentally affect migratory birds requires government agencies and/or project developers to obtain a permit under the Bird Act and the Eagle Act as a precondition to any regulatory approval for the project. The Court of Appeals, like the District Court, rejected this tactic.

By Julie Marion and E. Rene de Vera

On May 5, 2016, the Internal Revenue Service (IRS) issued Notice 2016-31 (Notice) to provide additional guidance regarding the “begun construction” requirement for renewable energy facilities seeking to qualify for the production tax credit (PTC) under Section 45 of the Internal Revenue Code (Code) or the investment tax credit (ITC) in lieu of the PTC under Code Section 48. The PTC and ITC were extended in December 2015 under the Consolidated Appropriations…

By Marc Campopiano, Jennifer Roy, and Francesca Bochner

California energy agencies and key stakeholders have finished the first step of a statewide planning process to evaluate transmission needs in the state and the region. This process, called the Renewable Energy Transmission Initiative 2.0 (RETI 2.0), will culminate in recommendations to the legislature on where to increase transmission capacity to meet California’s new, more ambitious renewable energy mandate (see our summary of SB 350, which increased California’s Renewables Portfolio Standard (RPS) to 50% by 2030). RETI 2.0 is not a regulatory proceeding, but the resultant recommendations will frame and inform future transmission planning in California.

Background

RETI 2.0 was launched in September 2015 by the California Natural Resources Agency, the California Energy Commission (CEC), the California Public Utilities Commission, the California Independent System Operator (CAISO), and the US Bureau of Land Management California Office.

In December 2015, the managing agencies released a RETI 2.0 Workplan that divides the RETI 2.0 objectives between three overlapping working groups:

By Sara Orr, Jennifer Roy and Francesca Bochner

On May 2, 2016, the US Fish & Wildlife Service (FWS) announced its second attempt to revise its rules authorizing eagle take permits under the Bald and Golden Eagle Protection Act (Eagle Act). The rule would extend the maximum eagle take permit term from 5 to 30 years to better correspond to the typical lifetime of major projects. The proposed revisions are intended to provide clarity on eagle permit regulation, improve permit implementation and increase regulatory compliance while providing strong protection for eagles. Public comments are due by July 5, 2016.

The Bald and Golden Eagle Act

The Eagle Act (16 USC 668-668d) was enacted in 1940 to prohibit the take of bald and golden eagles, except pursuant to federal regulations. The Eagle Act allows the Secretary of the Interior to issue regulations authorizing “take” of eagles for various purposes, with potentially significant fines for violations. Such take must be “compatible with the preservation of bald or golden eagles.” The current “preservation standard” is that the take must be “consistent with the goal of maintaining stable or increasing breeding populations.”

By Julie M. Marion and Thomas Halpern

The Consolidated Appropriations Act, 2016 (the Act), which President Obama signed into law on December 18, 2015, re-enacts the production tax credit (PTC) and investment tax credit (ITC) for wind energy projects and modifies and extends the 30% ITC for solar energy projects. For both resources, the Act generally provides a five-year extension, with a step-down in the amount of credit available depending on when construction of a project commences. For solar energy …

By Marc T. Campopiano, Joshua T. Bledsoe, Douglas Porter, Danny Aleshire, Jennifer Roy and Andrew Yancey

The end of the California State Legislature’s regular session for the year culminated in a frenzy of action, with Assembly members scrambling to pass dozens of bills before midnight on September 12, 2015. The California Legislature voted on a package of 12 bills addressing environmental and health concerns, such as off-shore drilling, divestment of investment funding from coal companies, water quality, energy efficiency in disadvantaged communities, and increased public transportation. This post analyzes three of the more significant and controversial bills proposed this year, including last minute changes to each during the final week of the session: SB 350; SB 32; and AB 1288.

SB 350 (De León): The Clean Energy and Pollution Reduction Act of 2015

The most far-reaching climate change goals of the climate bill package were enshrined in SB 350. The proposed bill, authored by Senate President Pro Tempore Kevin de León and Senator Mark Leno, originally called for a 50 percent reduction in petroleum use in cars and trucks, a 50 percent increase in energy efficiency in buildings, and for 50 percent of the state’s utility power to be derived from renewable energy, all by 2030; termed the “50-50-50” formula.

These standards paralleled Governor Jerry Brown’s climate change agenda for the year, which was first announced during his inaugural address in January. Last Wednesday, following a failure to garner the necessary votes amid resistance from moderate Democrats, state legislative leaders amended SB 350 to drop requirements for a 50 percent reduction in petroleum use for cars and trucks. As modified, the bill passed on a 52-27 vote.

By Sara Orr and Jennifer Roy

On September 4, 2015, the US Court of Appeals for the Fifth Circuit issued a ruling in United States v. CITGO that a “taking” subject to prosecution under the Migratory Bird Treaty Act (MBTA) does not include the unintentional take of migratory birds. Reversing a district court decision and joining the position of the Eighth and Ninth Circuits, the appellate court held that the MBTA’s take prohibition is limited to “deliberate acts done directly and intentionally to migratory birds,” effectively exempting take that occurs incidental to otherwise lawful activities. While such incidental take may still be subject to prosecution under other federal laws protecting birds, such as the Bald and Golden Protection Act or the Endangered Species Act, the Fifth Circuit concluded that unintentional acts are not subject to the strict liability penalties of the MBTA. This ruling may provide additional assurances to a wide variety of industries with operations in the Fifth, Eighth and Ninth Circuits that have the potential to impact migratory birds, particularly oil and gas, wind, and solar energy. Given the divide among the courts and the importance of the issue, however, it is possible that the U.S. Supreme Court will take up the issue in the future.

The Migratory Bird Treaty Act

Congress enacted the MBTA in 1918 to implement a treaty between the United States and Great Britain. The general policy of the MBTA is to provide for the “preservation, distribution, introduction, and restoration of game birds and other wild birds.” The MBTA prohibits the take of all listed birds, and the take of any migratory bird’s parts, nest, or eggs without a permit. The regulations define “take” as “to pursue, hunt, shoot, wound, kill, trap, capture, or collect” or to attempt any of these acts.

By Joshua T. Bledsoe, Marc T. Campopiano, and Max Friedman

As California begins to turn the page on the first chapter of its efforts to combat climate change through AB 32 and to prepare for greater emissions reductions over the coming decades, the California Energy Commission (CEC) and California Public Utilities Commission (CPUC) are considering what these changes will mean for electricity transmission infrastructure. To that end, CEC Chair Robert Weisenmiller and CPUC President Michael Picker sent a letter to Cal-ISO President and CEO Stephen Berberich on July 31, 2015 asking him to participate in the planning stages of the Renewable Energy Transmission Initiative (RETI) 2.0. Since 2008, the first iteration of RETI has served as a statewide initiative to identify and implement the energy transmission projects needed to accommodate California’s renewable energy requirements.

Now, with Governor Brown’s executive order to cut California’s greenhouse gas emissions by 2030 and a number of legislative proposals advancing to set further greenhouse gas emissions reductions targets for 2030 and beyond, as well as the US EPA’s federal Clean Power Plan encouraging regional coordination among states to increase renewable electricity production, the CEC and CPUC feel that the time has come to bring RETI up to date.

By Michael J. Gergen, Joshua T. Bledsoe, David E. Pettit and Tara L. Rice

President Obama recently announced that the Department of Energy (DOE) Loan Program Office (LPO) is expanding support for innovative “distributed energy projects” by adding $1 billion in available loan guarantees to support the deployment of these projects through the existing solicitations for Renewable Energy and Efficient Energy Projects and Advanced Fossil Energy Projects.  Eligible projects could include energy storage, smart grid technologies, cogeneration and methane capture for oil and natural gas wells, as well as roof-top solar and energy efficiency technologies that meet certain “innovation” requirements. For example, roof-top solar projects that are combined with storage may be eligible.

The LPO also is targeting distributed energy developers with special supplements to these two pending solicitations that make clear that existing program authority under Title XVII of the Energy Policy Act of 2005 and resources may be used to accelerate the deployment of distributed energy projects. The credit enhancement available through DOE’s LPO traditionally has been used to support utility-scale energy projects. In recognition of the important role of distributed energy in the future of US energy markets, the LPO is making a concerted effort to marshal program resources to support innovation in this growing segment.