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On May 28, 2015, Kansas Governor Sam Brownback signed legislation that will have a significant impact on the future of wind generation in the state.  The history of the political struggle underlying this legislation is a topic worthy of its own post, but suffice it to say that SB 91 represents a compromise between the wind industry and a faction of legislators that have attempted to reduce the state’s support of wind energy over the course of the last several legislative sessions.

On a political level, this deal largely revolved around the future of Kansas’ 20% by 2020 Renewable Portfolio Standard, which has been subjected to a number of attacks over the last few legislative sessions.  All of these previous efforts failed, but the political pressure to reduce or repeal the RPS appears to have been steadily ratcheting up for an increasingly motivated faction of the Kansas legislature.

Ultimately, however, the Kansas RPS battle has turned out to be much ado about nothing.  While the legislature was fighting over the ideology of the RPS, Kansas public utilities acquired huge amounts of low-cost renewable capacity.  By the start of 2015 legislative session, every one of the Kansas public utilities had acquired sufficient renewable capacity to satisfy their 2016 RPS requirements, as well as essentially satisfying their 2020 threshold.  Thus, while the RPS was a significant component of the political drama, in reality its fate does not have as much of an impact on current and future wind projects in Kansas as other portions of the legislative package that accompanied the RPS legislation.

Of particular concern for future wind developers in Kansas, one of SB 91’s key components is to introduce a cap on the statutory property tax exemption for future wind projects.  Historically, wind generation assets in Kansas have benefitted from a property tax exemption for the entire life of the project (K.S.A. 79-201).  This exemption, originally enacted in 1999 (pre-dating Kansas’ first wind farm), was originally enacted to provide an incentive to encourage wind development in the state, and there can be no dispute that it has been very effective in that regard.

Under SB 91, existing projects have been grandfathered-in under the old lifetime exemption language, and therefore will continue to receive the full tax exemption (barring any future legislative efforts).  However, any new wind projects will only receive a property tax exemption for the first ten years of the project’s life.  Beginning in year 11, the project will be subject to taxation at its full value.  Specifically, the capped exemption will apply to any projects that 1) have not filed an application for exemption with the Kansas Department of Revenue by December 31, 2016, or 2) have not received a conditional use permit from the applicable county by December 31, 2016.

In addition the property tax exemption cap, there is one final component of the SB 91 package that impacts both current and future wind projects, a reclassification of the tax rate that applies to wind generation assets.  While wind generation assets have not historically been subject to property tax in Kansas, other components of the project (for example, transmission equipment) have been taxed at as “public utility” assets at a 33% tax rate, as opposed to the standard 25% commercial rate.  For true public utilities, the burden of paying this higher 33% tax rate is mitigated by the fact that those costs are ultimately passed on to ratepayers during the utility’s next rate case.  Wind projects are not traditional utilities, and do not recover costs through rate cases.  Thus, the burden of a 33% tax rate can substantially impact the economics of a particular project.  Now that SB 91 will subject future wind project to property taxation, it was important to wind advocates that this tax rate discrepancy be remedied.

With this in mind, as part of the package of legislative amendments in SB 91, an exemption has been added to definition of “public utilities” subject to the 33% tax rate, for any entity that:

  1. generates, markets or sells electricity only at wholesale;
  2. has no retail customers; and
  3. generates energy from an electric generation facility that is actually and regularly used to predominantly produce and generate electricity utilizing renewable energy resources or technologies.

Importantly, this exemption will apply to both current and future projects, so any wind project assets that are subject to taxation will be taxed at a 25% rather than a 33% rate.  For existing projects, this lower tax rate will apply to non-generation assets, such as transmission equipment.  For new projects that will be subject to the 10-year exemption window, the lower rate will apply to all project assets.

Ultimately, wind developers’ views of the changes ushered in by SB 91 probably depends upon whether they have wind projects currently operating or in-development in the state, or alternatively are hoping to construct projects in the future.  Broadly speaking, for existing wind projects, the changes to the RPS and property tax exemptions should not have a significant impact, and the lower tax rates for non-generation assets should be net positive.  For new projects, and for the state’s efforts to continue attracting new projects, the increased tax burden from the property tax exemption cap will have an unavoidable impact on a potential project’s economics.  Only time will tell whether this new burden is severe enough to jeopardize Kansas’ reputation as a wind-friendly state.

If you would like any information about Kansas wind projects or renewable policies, please don’t hesitate to contact the Polsinelli Energy group at:

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

On Nov 4th, Congressional Republicans beat back their Democratic opponents in nearly every part of the country.  Because of this resounding victory, Republicans have a tighter control of Congress than they’ve enjoyed since America teetered into the Great Depression at the end of the 1920s.  (Hopefully this is not foreshadowing).

Although Republicans already enjoyed a solid, governing majority in the House heading into the 2014 midterms, the party still managed to gain more than a dozen seats (a few contests sill remain too close to call, so a final tally isn’t yet known).  The Senate—as is generally the case—is a bit tighter, but Republicans managed to pick up at least 8 seats with the possibility of a 9th if Bill Cassidy (R) defeats Mary Landrieu (D) in the Louisiana runoff on December 6th (as he’s expected to do).  While legislating is much more difficult to do in the Senate, particularly when the majority party lacks the 60 votes necessary to overcome filibusters, Republicans will now have effective control over the Senate floor and all committee work, where the party can set priorities and push favored legislation.

So, what does this all mean for renewable energy?  In a word: Trouble.

It’s no secret that Republicans generally view renewable energy less favorably than their Democratic colleagues.  While it’s true that several Republicans have voted in the past to support renewable incentives and programs, many in the GOP have more recently opposed government support for renewable energy.

Renewable energy’s first test will come during the current Lame Duck session when Congress must decide whether or not to approve a package of tax “extenders” that includes the Production Tax Credit for wind and geothermal energy; as well as separate credits for cellulosic ethanol and biodiesel fuels.  These credits expired at the end of 2013, and have been stuck in limbo since.  Since November 4th, several conservative organizations and some lawmakers have called for an end once and for all to the PTC. Although it’s ultimately likely that Congress passes this suite of tax extensions, pressure is mounting to end, or at a minimum phase out, the PTC.  Republican leadership in the next Congress will likely look for ways to make this happen.

If history is any guide, Congressional Republicans will also attempt to trim spending on renewable energy programs.  These include the now-solvent loan guarantee programs at the Departments of Energy and Agriculture; as well as ongoing efforts at the Department of Defense to incorporate more renewable power into its own energy mix.  The GOP-controlled House has continually tried to shift money from renewable energy over to fossil-fuel programs, and it’s expected the incoming Republican Senate will do the same

Besides tax incentives, the two biggest federal programs driving renewable energy development will be the ongoing Renewable Fuels Standard (RFS) and the Environmental Protection Agency’s proposed Clean Power Plan to limit greenhouse gas emissions from the utility sector.  With many Midwestern Republicans and Democrats alike supporting the RFS, repeal is all but impossible.  Substantial revisions could be on the way; however, as reformers are looking to scale back the mandates for as-yet-to-be produced advanced (cellulosic) fuels and perhaps even opening up the standard to nonconventional petroleum products.

Unlike the RFS, EPA’s efforts face near-unanimous Republican opposition.  Speaker Boehner and incoming Majority Leader McConnell have already promised action to stop the agency from moving forward with GHG regulations.  It’s very unlikely McConnell will have the 60 votes needed to overcome a certain filibuster—much less 67 votes to overcome a veto—but he does have alternative ways to get at his goal.  First, Republicans could attempt to use the Congressional Review Act (CRA) to override agency action.  Although using the CRA is immune from Senate filibuster and only needs 51 votes for passage, this tactic has only been used successfully a single time since its creation.  Further, the CRA can only be implemented once a rule has been finalized (at least 18 months away in this case) and Republicans will not want to wait until then before acting.  Their second alternative is to use the appropriations process to prevent EPA from implementing rules related to reducing GHG emissions.  This tactic faces better odds, although success isn’t guaranteed.   It’s unlikely a full repeal of the Clean Power Plan would be enacted, but Republicans might find some bipartisan support—and a less confrontational White House—if they craft more targeted changes that could lead to additional state flexibility or longer compliance timelines.

With Congress unable to move significant legislation, the RFS and the Clean Power Plan could still push renewable energy development; however, Congressional interference or repeal of these efforts could create additional uncertainty and drive away investment.

If you would like any information about the federal renewable energy policy, please reach out to the Polsinelli Public Policy or Energy practice groups, or contact us directly at:

Tracy Hammond, 202.626.8322, thammond@polsinelli.com

Luke Hagedorn, 816.572.4756, lhagedorn@polsinelli.com

Earlier this month Congress finally passed, and President Obama signed, the long-awaited Agriculture Act of 2014.  The “Farm Bill” became law after an unusually contentious process that led to significant policy changes in several of the measure’s key sections such as crop insurance, dairy subsidies and food stamps.  The bill contains a robust Energy Title as well.

Because this is the most significant piece of renewable energy legislation enacted in over a year (and likely to be enacted this Congress), it’s worth noting some of the key programs and funding provisions that were included.

The bill calls for nearly $900 million in funding for important energy programs and extends those programs through the 2018 Fiscal Year. These include:

  • The Rural Energy for American Program (REAP)—$50 million/year for 5 years in mandatory funding (FY 2014-2018)
  • The Biomass Crop Assistance Program (BCAP)—$25 million/year for 5 years in mandatory funding (FY 2014-2018)
  • The Biorefinery Assistance Program—$200 million in mandatory funding from FY 2014-2016
  • The Repower Assistance Program—$12 million in mandatory funding for FY 2014
  • The Bioenergy Program for Advanced Biofuels—$15 million/year in mandatory funding for 5 years (FY 2014-2018)
  • BioPreferred Program and Federal Government Procurement Program—$3 million/year for 5 years in mandatory funding (FY2014-2018)

Although the bill also authorizes discretionary spending for many of these programs beyond the mandatory funds summarized above, Congress has routinely failed to appropriate this discretionary spending.  Since we don’t expect this behavior to change given even tighter federal budgets in the future, the mandatory funding amounts are the critical numbers to focus on and plan for.

Several key policy changes were also made to existing renewable energy programs that open up these incentives to new types of projects and biobased products.  Specifically, the bill:

  • Adopts the definition of “renewable chemicals” as a product or substance produced from renewable biomass and establishes the term in federal law for the first time, making products covered by this definition eligible for federal incentives.
  • Modifies the definition of “biobased product” to explicitly include forestry materials and forest products that meet biobased content requirements, notwithstanding the market share the product holds, the age of the product, or whether the market for the product is new or emerging.
  • Defines “forest product” to ensure that mature forest products are treated equally as other biobased products, and clarifies that all forest products are eligible for inclusion in the BioPreferred Program and the Federal Government Procurement Program if they meet biobased content requirements and innovation standards.
  • Ends grant funding for the Biorefinery Assistance Program (which was never appropriated money by Congress anyway) and extends loan guarantee eligibility for the program to renewable chemical and biobased product manufacturing facilities.
  • Blocks the use of REAP funds for the deployment of blender pumps and other mechanisms to dispense renewable fuel.

While Congress may still debate energy efficiency legislation and tax writers could cobble together another tax “extenders” bill prolonging certain incentives for renewable energy, it’s important to realize that the Farm Bill may be the last significant piece of energy legislation signed by President Obama before the midterm electio

Although the new year is less than a month old and Congress has only been in session a handful of days, there’s a lot to talk about regarding renewable energy policy.

In mid-January, the President signed the FY 2014 Omnibus Appropriations bill.  This included funding for the entire federal government through September 30th of this year.   Despite immense fiscal pressure, several renewable projects of note received at least some funding including the following:

  • With an estimated $7.8 million in grant funding and $40 million in loan guarantees likely to be forthcoming for a Notice of Funding Available in 2014, the Omnibus allocated an additional $3.5 million for loan guarantees to further support the Rural Energy for America Program (REAP). Eligible REAP projects in the past have included biofuel production equipment, flex-fuel pumps, and anaerobic digesters for electricity production.
  • The bill provides for the transfer of up to $45 million from the Department of Energy to confirm its commitment to the Navy’s biofuel program.
  • The Biorefinery Assistance Program, has a current Notice of Funding Availability (NOFA) out for its remaining $76 million in carryover funding to support up to $181 million in loan guarantees for eligible commercial biorefinery developments or retrofits. However, of the six conditional commitments still in the program pipeline, some are expected to either not close or be reduced.

In addition to enacting the Omnibus Appropriations package, The President and his Administration have several rulemakings on the docket for the year that can help deploy and promote renewable energy on public and private lands.

U.S. EPA has a full plate with more than 140 items on its radar, including regulations tightening carbon dioxide emissions from both new and existing power plants.  These could ultimately prove to be the biggest federal drivers for renewable energy production in the coming decades.  The rule for future power plants—proposed in September, 2013—should be finalized by year’s end.  This proposal would essentially prohibit new coal fired power plants from being built, unless plans included a mechanism to capture and sequester much of the plants carbon emissions underground.  A similar proposal for existing power plants is set for release in June 2014, to be finalized in June the following year.

The U.S. EPA will also have to determine what levels to set for the year’s Renewable Fuels Standard (RFS).  Late last year the agency proposed scaling back targets for the first time since the program was established in 2005, requiring that refiners blend just 15.21 billion gallons of renewable fuels into the nation’s fuel supply.

The Interior Department plans to establish a competitive bidding process for solar and wind energy projects for the first time.  The regulations planned for May for commercial solar and wind energy development on federal lands would establish competitive bidding procedures for sites within designated leasing areas, would define qualifications for potential bidders, and would structure the financial arrangements necessary for the process.  In the past, BLM has only processed applications on a first-come, first-served basis, which has led to numerous delays.

 

 

 

 

 

 

 

 

 

As part of our continuing effort to provide current, topical information relating to renewable energy projects, RenewableEnergyLawInsider provides a series of posts from individuals with a wide range of experience and expertise. Today, Tracy Hammond from the Polsinelli Public Policy Group in Washington D.C. provides an update about the impact that the federal government shutdown will have on renewables in the United States.

The federal government shutdown is now in its fourth day, and there is no quick resolution of the   partisan standoff in sight.  Both Republicans and Democrats appear to be digging in instead of reaching out, and it is likely that this shutdown could last two to three weeks, with a breakthrough coming only as the U.S. approaches its borrowing limit (or debt ceiling) October 17th.

Although there’s enough speculation, prognosticating and second-guessing to fill volumes; I’ll focus here on how this shutdown will impact renewable energy.

In thee near term, the government shutdown could delay the release of federal renewable fuel requirements for 2014.  Renewable fuels stakeholders expected the U.S. EPA to release its proposed targets—levels of conventional and advanced biofuels that must be blended into gasoline and diesel—in mid-October.  The release will almost certainly be delayed and the longer the shutdown, the longer the delay.  A long delay in the release of the requirements will increase  uncertainty in the fuels market, giving critics of the RFS additional opportunities to call for repeal or modifications to the program.  A delay will also affect efforts in Congress, where a group of lawmakers from the House Energy and Commerce Committee are crafting legislation to reform the standard. However, their efforts will hinge  on what EPA decides to do with its 2014 numbers.

Other rules that could drive renewable energy development, like EPA’s efforts to draft emissions caps for greenhouse gases will also be delayed, making it even more difficult to meet the timeline laid out by President Obama earlier this year.

During the shutdown, many Congressional offices are working with significantly reduced staffs.  And with much, if not all, of the attention focused on funding the government and raising the debt ceiling, work is not being done on a host of other legislative priorities.  Just one example is the renewable energy Production Tax Credit (PTC), now set to expire in less than three months.  In addition to wind, the PTC provides a 2.3 cent-per-kilowatt-hour credit for geothermal energy and closed-loop biomass, and a 1.1 cent-per-kilowatt-hour credit for qualified hydropower facilities, marine and hydrokinetic power, landfill gas, trash combustion, small irrigation power facilities and open-loop biomass. The Congressional Joint Committee on Taxation found that a one-year extension of the tax credit would cost about $6.1 billion over 10 years. A five-year extension would cost roughly $18.5 billion.  Given the current budget pressures, these are not insignificant amounts.  Without some sort of as-yet-unknown “grand bargain”, it seems very unlikely that the PTC will be extended before the end of 2013.

Because nearly all other legislation has taken a back seat to the funding and debt discussions, the Farm Bill remains in limbo.  With no new Farm Bill agreement, programs like the Renewable Energy for America Program (REAP), the Biomass Crop Assistance Program (BCAP) and the Advanced Biorefinery Assistance Program are attempting to operate with only leftover money from previous years.  Soon, these programs will expend all of their resources and be forced to shut down until Congress passes a Farm Bill authorizing new funding.

Speaking of REAP, BCAP and other similar programs, with no one at USDA, DOE and other agencies to review and approve applications, no new funds will likely be released to worthy recipients.  Projects will be put on hold and construction will stop on efforts to increase energy efficiency and deploy new renewable energy across the country.  Although this may only be a short term hiccup lasting a few weeks, delays take a toll on project financing, increase expenses and push off potential completion.  As the budget battles continue, federal departments and agencies will almost certainly continue to try to do more with fewer resources—both human and monetary.  This trend will inhibit deployment and make it more difficult for deserving projects to move forward.

The first rule of medicine is do no harm.  As Congress continues to fail at its most basic task—funding the federal government—renewable energy and those that earn a living in the sector won’t be mistaking their congressional leaders for doctors anytime soon.

As part of our continuing effort to provide current, topical information relating to renewable energy projects, RenewableEnergyLawInsider provides a series of posts from individuals with a wide range of experience and expertise. Today, Tracy Hammond from the Polsinelli Public Policy Group in Washington D.C. provides an update about the ongoing attention being paid to the Renewable Fuel Standard by the U.S. House of Representatives.

The House Energy and Commerce Committee this week completed 2 days of hearings on the renewable fuel standard (RFS), the federal mandate to blend 36 billion gallons of biofuels into the nation’s gasoline supply by 2022.  Multiple industries and interests weighed in on the economic, environmental and technical impacts of the law. The hearing capped off an effort that began with a series of white papers the panel released this summer to gather information and feedback on the program.

The RFS is one of the largest and most controversial renewable energy program ever mandated by the federal government.  Since its creation in the 2005 and expansion in 2007, interest groups have launched major lobbying campaigns both supporting and opposing the standard. It has suffered additional criticism since last summer’s record drought badly damaged the nation’s corn crop, raising questions about the viability of corn-based ethanol, the most common biofuel in the U.S.

For the first time since 2007, Congress is taking a very serious look at revising the standard.  Although some, like the oil and refining sectors and their congressional allies, are calling for a full repeal of the law, there is not sufficient support for such a dramatic policy reversal.  This sentiment was summed up best by senior Democrat Rep. Gene Green (D-TX), “I would probably vote for repeal of the RFS, but I don’t just see where we’re going to get there.”

There does, however, seem to be support—at least in the committee—for making changes to the standard to address rising ethanol credit prices and the 10% “blend wall,” or the technically feasible limit to the amount of ethanol that can be blended into the nation’s fuel supply.  This is echoed by Rep. John Shimkus (R-IL), “You don’t have enough for a repeal, but you do have enough for a reform.”

Other Members complained that U.S. EPA, which administers the RFS program, sets excessively high targets for cellulosic biofuels.  These fuels made from purpose-grown plants, ag waste, algae, energy grasses and other feedstocks that don’t conflict with food crops are 2nd generation biofuels and were hoped to eventually displace corn ethanol and soybean biodiesel.  Unfortunately, the development of these fuels has been agonizingly slow.  For example, the mandate calls for 1 billion gallons of cellulosic biofuels made this year. Instead, EPA has proposed revising that number down to just 14 million—and that target will not likely be met by the advanced biofuels industry.

Senate Democrats from the Mid-Atlantic states are also wading into the debate.  Sen. Ben Cardin (D-MD) is working on legislation to reform the RFS, while senators from neighboring states, including Delaware and Pennsylvania, are urging the EPA to temporarily waive some blending requirements for obligated parties (refiners) in their states.  Like their House counterparts, oil-patch Republicans in the upper chamber have also called for a full repeal.

As with many things involving Congress, this process will take a long time to play out.  After 6 years of “fuel vs. food” fights, questions about the sustainability of corn ethanol, and the near non-existence of a cellulosic biofuels industry; however, we may be reaching a tipping point that will force lawmakers to make changes to the most contentious parts of the RFS both in order to appease critics and perhaps even prevent the standard’s total collapse.

As part of our continuing effort to provide current, topical information relating to renewable energy projects, RenewableEnergyLawInsider provides a series of posts from individuals with a wide range of experience and expertise. Today, Tracy Hammond from the Polsinelli Public Policy Group in Washington D.C. provides an update about the U.S. House of Representative’s failed Farm Bill and its impact on the renewable industries.

I was prepared to title this piece “A Tale of Two Farm Bills” after the U.S. House of Representative’s presumed-passage of comprehensive farm legislation this week.  I would have reported on the drastic differences between the Energy Titles within the House and Senate Farm Bills while speculating on what a future compromise might look like.  However, after the House failed to pass its version of the bill (H.R. 1947) 195-234, it is now unclear if we will even see legislation enacted at all.  While the Senate approved its bill (S. 954) on June 10th by a bipartisan vote of 66-27, the House’s failure leaves the fate of the Farm Bill and its energy provisions uncertain at best.  This, coupled with the expiration of current programs at the end of September, leaves us all with an option no one wants—an extension of current policy with no real funding for renewable energy in rural America.

How did we get here?  Well, in addition to setting federal agriculture policy, the Farm Bill also has a dramatic impact on rural, renewable energy. In 2002, Congress began shaping energy policy through farm legislation.  Then—and again in the 2008 bill—Congress has used the Farm Bill to create renewable energy programs for rural America and incentivize ethanol and biodiesel production.  This year; however, many of these innovative programs are likely to receive reductions in funding or may be ended completely.

The 2008 Farm Bill expired in 2012; however, Congress approved a bare-bones extension (to September 30, 2013) of current policy in the year-end “Fiscal Cliff” deal.  Unfortunately, this deal failed to include any funding for the bill’s energy programs, essentially suspending them for 9 months.

Even if Congress can get the Farm bill back on track, the House and Senate bills treat their respective energy titles very differently in terms of funding levels and prioritization.  The Senate bill provides $880 million in mandatory funding (over 5 years) for various energy programs like the Rural Energy for America Program, the Biorefinery Assistance Program, and the Biomass Crop Assistance Program. S. 954 would also authorize another $1.12 billion in discretionary funds. H.R. 1947, on the other hand, would eliminate all mandatory funding and authorize $1.4 billion in discretionary funds.  By comparison, the current 2008 farm bill authorized $1.1 billion in mandatory funds and $1 billion in discretionary funds.

Although these figures sound like a lot of money, Congress rarely (if ever) actually appropriates any of the discretionary funds included in these bills.  Thus, the only money that will ever go to farmers and rural small businesses must come from mandatory funds.  Because of their budgetary concerns, House Republicans have essentially called for the end of several energy programs aimed at rural America even if they can pass a bill out of their chamber.

It is still possible that the House can approve a bill and that some funding will survive a House-Senate compromise later this year; however, it’s increasingly likely that several energy programs will receive dramatically reduced funding and may end altogether if Democrats and Republicans can’t compromise and cobble together a path forward.

I wanted to drop in to quickly announce that the June edition of North American WindPower includes a cover article drafted by yours truly, Alan Claus Anderson and Britton Gibson of the Polsinelli Energy Group.  The article, entitled “On the Front Lines: Advocates Prevail in State RPS Fight,” provides an overview of the recent legislative battles that have occurred in Kansas in relation to the state Renewable Portfolio Standard.

As part of the combined legislative efforts of the wind industry, the Wind Coalition, the Climate and Energy Project, the Kansas Energy Information Network, and many other groups, Polsinelli and Scott White of KEIN prepared a report that detailed the economic benefits of wind generation for the state of Kansas.  We presented that report before several Kansas House and Senate Committees, as well as at a series of Business Leader Forums hosted by the Climate and Energy Project across the state to help educate business owners and community leaders about the numerous economic benefits of wind energy.

Ultimately, I’m happy to report that the efforts to repeal the Kansas RPS were unsuccessful.  However, there are numerous other states all across the United States that are facing very similar legislative challenges to RPS policies.  We believe that the lessons we have learned in Kansas can translate well into defending RPS policies in other states, and hopefully this article can serve as a template of sorts for organizing a successful defense of these important policy initiatives.

If you have any questions about the national or state-level attacks being raised against RPS policies, or about the economic benefits of the wind industry for a particular state or region, please feel free to write a comment, email me at lhagedorn@polsinelli.com, or call me at (913)234-7416.

 

 

 

 

 

 

 

 

As one of the final acts of the 2013 legislative session, on May 17th the Missouri legislature approved an amendment that will phase-out the Missouri solar rebate between 2014 and 2020. The approved amendment was based largely upon similar legislation that was supported by the Missouri solar industry trade group, MOSEIA, as well as the Missouri public utilities.

As background, pursuant to Proposition C, the voter intiative implementing Missouri’s Renewable Energy Standard, the state’s public utilities provide a rebate of $2.00 per watt for new or expanded solar systems on customers’ premises, up to a maximum of 25 kW per system (for a maximum total rebate of $50,000 per system), subject to a 1% annual cost cap for the utilities.

This rebate has been viewed as extremely effective in encouraging the development of the Missouri solar industry over the last few years. In light of this success, going into the 2013 legislative session both the solar industry and the public utilities believed that it was necessary to begin planning for the phase-out of the incentive over the next few years. To this end, a number of bills were introduced setting forth proposed phase-out schedules ranging from 4 to 6 years. Though none of the stand-alone bills garnered enough support to pass both chambers prior to the session end on Friday, an amendment to an existing utilities bill which included the phase-out language was successfully proposed and passed on the final day of the session.

As passed, the amendment sets forth the following phase-out schedule for the solar rebate:

  • $2.00/watt before June 30, 2014;
  • $1.50/watt between July 1, 2014 and June 30, 2015;
  • $1.00/watt between July 1, 2015 and June 30, 2016;
  • $0.50/watt between July 1, 2016 and June 30, 2019; and
  • $0.25/watt between July 1, 2019 and June 30, 2020.

In addition to the phase-out, there are a number of other provisions included in the amendment that could potentially impact the Missouri solar industry and the public. If you have any questions about the solar rebate, this legislation, or the potential impacts on the solar industry or your company, please feel free to leave a comment or contact me at lhagedorn@polsinelli.com or (913)234-7416.

Energy policy issues are notoriously complex.  Seemingly small changes in a state’s energy policy can lead to wide-ranging and often unintended political, economic, and environmental consequences.  In an effort to facilitate thoughtful policy discussions about these issues in the state of Kansas, several attorneys from the Polsinelli Shughart energy practice group, Alan Claus Anderson, Britton Gibson and myself, have partnered with Dr. Scott W. White of the Kansas Energy Information Network to draft a report that relies on empirical evidence gathered from the nineteen wind farms currently in operation or under construction in the state of Kansas to estimate the true economic impact of these projects.  The text below is part of a larger report, which is also available at http://www.polsinelli.com//files//upload/StudyKansasWind.pdf.  We have already discussed the history of Kansas’ unique wind resource in Part 1, and provided a brief history of Kansas wind generation in Part 2.

Today, we will cover the significant potential for future project development in the state, due in large part to the expansion of Kansas’ transmission grid and exciting advancements in wind generation technology.

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Future Project Development

Despite the significant growth the Kansas wind industry has experienced over the past few years, the vast majority of the state’s wind resource remains untapped. This growth potential is attributable to many factors, including the fact that the wind resource in Kansas is still significantly underutilized, with a large number of potential projects sites ready to be developed.  While some of these sites simply await a buyer, some of them merely require access to sufficient transmission to move the electricity, while others require incremental improvements in wind generation technology.

1.         Expansion of the Transmission Grid

Wind energy projects are viable only if they have access to a transmission grid that can transport the power to customers.  Historically, this has been an important factor for wind project developers looking for suitable project locations in Kansas, because the bulk of the state’s best wind resource is located in areas with limited access to transmission lines.  This issue is currently being addressed by a number of public and private entities.

The Kansas“V-Plan,” the northern portion of the Southwest Power Pool’s (“SPP”) “Y-Plan,” is particularly noteworthy.  The “V-Plan” consists of high-voltage transmission that connects eastern and western Kansas with the dual purpose of improving electric reliability and carrying more electricity from various sources, including wind, and thus further establishing a competitive energy market in the state.  Two companies, ITC Great Plains and Prairie Wind Transmission, LLC, a joint venture between Westar Energy and Electric Transmission America, are participating in the construction of this 180-mile transmission line which is expected to be completed in 2014.  The “Y-Plan” will help support the addition of 2,500 MW of new wind generation in Kansas, Oklahoma, and the Texas panhandle.[i]

In addition to the “V-Plan,” ITC is also developing a 210-mile high-voltage transmission line between Spearville, Kansas and Axtell, Nebraska.  Construction of this line, known as the “KETA Project” began in 2009 and is expected to be completed by the end of 2012.[ii] Once completed, the KETA Project, which was encouraged by the Kansas Electric Transmission Authority (“KETA”), will support renewable generation development by providing more potential interconnection locations and transmission capacity for renewable energy generators.[iii]

Finally, Clean Line Energy, a private company based in Houston, Texas, is in the process of developing a significant transmission project across the state known as the “Grain Belt Express Clean Line.”  Once constructed, this privately-owned project will provide a 700-mile, 600 kV extra high voltage direct current (“HVDC”) transmission line starting in Kansas and running east through Missouri, enabling Kansas wind to be exported to serve utility customers in Missouri, Illinois, Indiana, and points farther east.  Clean Line anticipates that this project will enable approximately $7 billion of new, renewable energy projects to be built.[iv]  Clean Line Energy has set 2018 as the goal for commercial operation of this new transmission line.[v]

As the Figure below illustrates, these new transmission lines are located in the heart of Kansas’ most productive wind areas and provide valuable paths to market for future wind projects in those areas.

Generally speaking, wind speeds increase as turbine heights (referred to as “hub heights”) increase. Since wind speed is the single most important factor in creating electricity out of the wind, tapping into high winds is key to a successful wind project. For this reason, the most noticeable wind turbine technology improvements have focused on taller hub heights and larger rotor diameters. The combination of these improvements have led to significant increases in efficiency, which have resulted in wind farms with higher capacity factors or similar capacity factors in areas with lesser winds or lower elevations.

Wind speeds have historically been measured at 50 meters for wind farm development. However, utility-scale wind turbine hub heights have been significantly higher than 50 meters for many years (as an example, the Gray County wind farm, built in 2001, has a hub height of 65 meters).

On average, Kansas possesses a robust wind resource at a height of 50 meters.  However, as the Figure below illustrates, at a height of 80 meters, roughly half the state experiences average wind speeds between 8 and 9 meters per second,[vi] which is well above the 7 to 8 meters per second commonly found at a height of 50 meters.

Given that wind speed increases with an increase in altitude, there has been a trend across the wind industry to erect turbines with taller hub heights.  As seen in the Figure below, over the last decade, hub heights across the country have steadily increased from an average of approximately 60 meters in 2001 to 81 meters in 2011.[vii]

As technology continues to improve, and construction costs for these towers decrease, it is probable that 100 meter hub heights will become common for wind projects in Kansas.  This trend towards taller hub heights is evidenced by the fact that, in 2011, 128 turbines were installed in the United States with hub heights of 100 meters, a sharp increase over the 17 turbines of that size installed in 2010.[viii]  The following Figure provides some context to the significant technological advances that have occurred over the last decade.[ix]

As the average hub heights for Kansas projects increase from the current average of 80 meters, access to high-quality wind resources will increase and more locations in Kansas will be economically viable.  As shown in Figure 8, the wind speeds available at 100 meters are predominantly in the range of 8.5 to 9.5 meters per second.

Ultimately, the combination of an expanding transmission infrastructure and technological advancements will significantly expand the areas of the state that can support viable wind development.

If you have any questions or comments about the Kansas wind industry, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com or (913)234-7416.


[i] Edison Electric Institute, ITC Holdings, Corp. Company Overview, available at http://www.eei.org/ourissues/electricitytransmission/documents/transprojrenew_e-m.pdf.

[ii] ITC Great Plains Kansas Spearville-Axtell project profile, http://www.itc-holdings.com/images/itc-greatplains/projects/ITCGP_Profile_KETA_Gen_52311.pdf

[iii] Edison Electric Institute, ITC Holdings, Corp. Company Overview, available at http://www.eei.org/ourissues/electricitytransmission/documents/transprojrenew_e-m.pdf.

[iv] Clean Line Energy Partners Website, Grain Belt Express Clean Line Project Description, available at http://www.grainbeltexpresscleanline.com/site/page/project_description.

[v] Clean Line Energy Partners Website, Grain Belt Express Clean Line Schedule, available at http://www.grainbeltexpresscleanline.com/site/page/schedule.

[vi] Kansas Wind map at 80-m Height, Wind Powering America, U.S. Department of Energy, September 2008, available at http://www.windpoweringamerica.gov/pdfs/wind_maps/ks_80m.pdf.

[vii] U.S. Department of Energy, 2011 Wind Technologies Market Report, August 2012, available at http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.

[viii] Id.

[ix] Lantz, E.; Wiser, R.; Hand, M. (2012). IEA Wind Task 26: The Past and Future Cost of Wind Energy, Work Package 2, available at http://www.nrel.gov/docs/fy12osti/53510.pdf.