On April 13, 2017 the Energy Storage Association (“ESA”) filed a complaint with FERC, alleging that PJM Interconnection, L.L.C. (“PJM”) had unilaterally implemented a series of changes to its Regulation market without FERC’s review and approval, in violation of the Federal Power Act (“FPA”). ESA contended that its members who participate in the Regulation market had “suffered significant and detrimental financial harm” as a result of PJM’s changes, and that ESA was filing its complaint “to compel PJM to give the Commission the opportunity to determine whether each of these changes are just and reasonable and not unduly discriminatory.” Continue Reading Energy Storage Association Alleges Changes to PJM Regulation Market Violate FPA
On April 6, the California Public Utilities Commission (CPUC) unanimously approved an order doubling the budget of California’s Self-Generation Incentive Program (SGIP). The order directs California’s three investor owned utilities to double their collection of SGIP fees from ratepayers. Together the utilities will collect $166 million dollars annually through 2019 to fund the SGIP, resulting in an addition $249 million for project funding.
The Order implements California’s Greenhouse Gas Reduction Act (AB 1637), which Governor Brown signed into law in September, 2016. The Act directs the PUC to increase the maximum collection for SGIP and extends the net energy metering program for fuel cells that commence commercial operation on or before December 31, 2021. The law updated the qualifications for the battery storage program by increasing the individual project cap to 5 MW and increasing the statewide cap by approximately 76 MW. Continue Reading California Seeks to Transform the Market: Doubles Funding for Distributed Generation with a Vision for Massive Battery Storage Growth
NPM Tax Valid Under U.S. Constitution, Says Texas Appellate Court
On March 24, 2017, the Third Court of Appeals of Texas decided Hegar, et al. v. Texas Small Tobacco Coalition, et al., No. 03-13-00753-CV. The court held that a tax on nonparticipating or non-settling manufacturers (“NPMs”) did not violate either the Equal Protection or the Due Process Clause of the Fourteenth Amendment to the U.S. Constitution. The law at issue, Subchapter V to Chapter 161 of the Texas Health & Safety Code (“Subchapter V”), taxed NPMs remaining outside of the Master Settlement Agreement (“MSA”) at approximately $0.55 per cigarette pack and companies subsequently joining the MSA at approximately $0.15 per pack. The case was of particular interest because Texas is not a party to the MSA, yet the MSA’s distinctions were the bases for Subchapter V’s. Continue Reading NPM Tax Valid Under U.S. Constitution, Says Texas Appellate Court
We would like to thank all our clients for choosing Troutman Sanders to represent them in 2016. In 2016, our work spanned 23 states and several countries and accounted for more than 2 gigawatts of installed renewable energy with a value exceeding $5.5 billion.
In “2016 Renewable Energy Market Year in Review and a Look Ahead to 2017,” we reflect on the biggest trends and challenges we observed in 2016 and offer insights into important trends and policy agenda items that will continue to be significant in 2017 and beyond, including:
- Tax Reform
- Federal Tax Credits
- The “Duck Curve”
- Renewable Portfolio Standards
- Energy Storage / Battery Storage
- Public Utility Regulatory Policies Act of 1978 (PURPA)
- Resurgence of Natural Gas-Fired Generation
- Commercial Power Purchase Agreements
- Proxy Revenue Swaps
- Foreign Investment
- Community Choice Aggregation
- Federal Policy
To view the complete newsletter, click here.
On Thursday, March 16, the Trump Administration released its 2018 budget blueprint, which shifts away from many of the Obama Administration’s chief initiatives as related to clean energy. While not surprising, the new Administration’s approach to the 2018 budget is to cut spending and reduce regulations. The proposal demonstrates that goal and “the Administration’s commitment to reasserting the proper role of what has become a sprawling Federal Government.” The White House will release the full budget in May, but this blueprint provides some guidance on the Administration’s direction moving forward.
The U.S. Department of Energy budget blueprint would shrink the overall budget 5.6% from 2017 levels to $20.8 billion. While the overall budget would decrease, Trump proposed an 11% ($1.4 billion) increase to the National Nuclear Security Administration, which oversees nuclear weapons and falls within the umbrella of the DOE. Accordingly, the 5.6% overall cut may be a bit misleading. Continue Reading President Trump Releases Budget Blueprint Including Cuts to Clean Energy Research and Development
According to various reports, President Donald Trump plans to appoint Kevin McIntyre as FERC Chairman, and Neil Chatterjee and Rob Powelson as FERC Commissioners, to fill the three vacant Commissioner seats at FERC. All three potential appointees are Republicans, whereas the current Commissioners—Acting Chairman Cheryl LaFleur and Commissioner Collette Honorable—are Democrats. Continue Reading Reports Suggest President Trump Plans to Appoint McIntyre as FERC Chairman, Chatterjee and Powelson as FERC Commissioners
With New Federal Administration, States Betting Bigger on Renewables
Nearly 1 in 10 States have launched proposals directing utilities to procure anywhere from 50% to 100% of their power from renewable energy resources by mid-century. Currently 29 states and the District of Columbia have renewable portfolio standards (RPS) in place. Several states, however, have introduced even more aggressive proposals likely in reaction to the fact that new federal requirements are not likely to be promulgated (e.g., the Clean Power Plan).
Some States Move All In For 100% Renewables
In 2015, Hawaii became the first state to adopt a 100% RPS designed to completely decarbonize its power portfolio. Over the next thirty years Hawaii’s RPS will ramp up with incremental requirements starting with 30% renewable generation by 2020 and ultimately achieving 100% renewable generation by 2045.
In recent weeks, state law makers in Massachusetts and California have introduced legislation to require 100% renewable energy output. In Massachusetts, a bill would require the state to get all of its electricity from renewable sources by 2035, and ultimately meet all of its heating, cooling and transportation needs through renewable sources by 2050. Continue Reading With New Federal Administration, States Betting Bigger on Renewables
On February 24, 2017, the Balancing Authority of Northern California (“BANC”) – acting on behalf of its member, Sacramento Municipal Utility District – entered into an Implementation Agreement with the California Independent System Operator Corporation (“CAISO”) to participate in CAISO’s western Energy Imbalance Market (“EIM”). BANC had announced in October of 2016 that it would begin negotiations on behalf of its members to develop the Implementation Agreement. Going forward, participation in the EIM will require participating transmission service providers in the BANC balancing authority area to revise their open access transmission tariffs to reflect CAISO’s rules and procedures governing the EIM and to execute service agreements associated with the EIM. Continue Reading BANC Enters California Energy Imbalance Market
On March 2, 2017, the U.S. Senate voted 62-37 to confirm Rick Perry as the Secretary of the Department of Energy (“DOE”). Secretary Perry will succeed Dr. Ernest Moniz. Prior to his confirmation as Secretary of the DOE, Secretary Perry was Governor of Texas from December 2000 to January 2015, qualifying as the longest-serving governor in Texas history.
After being sworn in, Secretary Perry stated, “It is an honor and privilege to serve as the Secretary of the [DOE]. As Secretary, I will advocate and promote American energy in all forms.”
The emerging trend of energy private equity (“EPE”) funds is revolutionizing the renewable energy field, as renewable energy joins leveraged buyouts, venture capital and hedge funds as asset classes that institutional investors and high net worth investors are using to deploy their capital in a diversified manner, with the added “social good” of investing in a sustainable energy future. Sophisticated energy sponsors are increasingly eschewing the traditional project finance structure, in which capital stacks are created for each deal, in favor of a private equity fund structure in which committed capital is deployed by the sponsor in accordance with a specified investment strategy. From the sponsors’ perspective, the goal is the “holy grail” of all private equity sponsors – permanent capital. This trend can be seen as further evidence of renewable energy maturing as an asset class within the larger investment world. Since this trend is so new, the terms of EPE funds vary tremendously. However, some common terms are summarized below. Continue Reading A Revolution Coming in Renewable Energy Finance: The Emergence of Energy Private Equity Funds