Recently, Alan Anderson and I were thrilled to be invited to present to a class at the Washburn University Law School.  For those of you that don’t know, Washburn has developed a truly exceptional energy and oil & gas law program (something that I dearly wish I could have had in law school), thanks in large part to the efforts of Prof. David Pierce.  When Prof. Pierce’s invites us to do just about anything, we usually jump at the chance.

For this presentation, our goal was to provide a high-level but fairly comprehensive overview of the types of legal issues that arise during the main stages of a wind project’s design, construction and operation phases.  Interestingly, after we sat down to plan out the basic categories of information that we wanted to cover, we realized the rough outline of our presentation could be converted into an interesting one-page resource.  With a little coaxing, we were able to distill our notes down into the following chart:

Polsinelli - Wind Project Chart

When it came to preparing the presentation itself, however, we obviously had to provide quite a bit more detail on each of the three main phases of project development.  Our environmental law colleague, Adam Troutwine, proved to be invaluable (as he so often does) by providing an overview of the various state and federal permits that are required for a wind project.  A copy of our PowerPoint is available here:

Powerpoint

I know that I speak for Alan in once again thanking Washburn, Prof. Pierce, and the students for inviting us to speak., and we are very much looking forward to the opportunity to do it again soon.

As always, if you have any questions about any of the materials that we’ve linked to above, or any of the issues discussed therein, please don’t hesitate to reach out to me at lhagedorn@polsinelli.com or give me a call at (816)572-4756.

 

With renewable energy growing in acceptance every day, distributed generation (DG), locally produced energy, is expected to increasingly replace the large, centralized power grid that we’ve all grown accustomed to.

  • Earlier this year, the utility trade group Edison Electric Institute warned of distributed energy’s potential to disrupt the traditional utility’s century-old business model of charging all customers for shared infrastructure.
  • In a recent utility industry survey by PricewaterhouseCooper (PwC), 94% of international industry representatives predict that the power utility business model will be either completely transformed or significantly changed between today and 2030. Distributed generation, according to the survey, is one of the primary causes of this change. Worldwide, 64% expected that distributed generation would make up more than 20% of the global electricity mix by 2030, and 90% of North American businesses predicted that distributed generation would force utilities to significantly change their business models.
  • In a report covering lessons learned from Superstorm Sandy, a group of companies that design, build, and operate the grid called the GridWise Alliance issued a report with a broad swath or recommendations. The stakeholders recognized new policies, rules and operating procedures are needed to safely leverage customer-owned distributed generation during major outage events like Sandy.

A host of changing dynamics including deregulation, changing state and federal policies and incentives for renewable energy, and an explosion of distributed generation is leading to a reduction in the fossil-fuel electricity utilities sell.  As the grid shifts toward this new distributed generation, microgrids—small, self-sustaining grid systems—will become more and more commonplace as technology enablers.

Microgrids have the potential to radically change the U.S. electricity paradigm. Although barely heard of ten years ago, microgrids are expected to explode into a $40 billion-a-year global business by 2020, according to Navigant Research, a clean-technology data company. In the U.S., about 6 gigawatts of electricity will flow through microgrids by 2020, Navigant said.  And while only about 30 commercial-scale systems exist now, some estimate that up to 24,000 U.S. sites could be available for large-scale microgrid conversions.

Once just used to avoid power blackouts, microgrids are now used by power consumers to offset rising retail power prices, which have climbed 34% since 2003 according to the Energy Information Administration. Operators can remain connected to the grid and switch between the electricity they generate and the outside, and can also sell surplus electricity back to the utilities through net metering.

The Department of Defense (DOD) is beginning to embrace DG and microgrids as well.  In May, Lockheed Martin completed the first domestic microgrid at Fort Bliss in Texas for the U.S. Army. The military has already been using them at sites in other countries to reduce fuel consumption.

DOD’s Smart Power Infrastructure Demonstration for Energy Reliability and Security (SPIDERS microgrid program) prime integrator Burns & McDonnell put together a white paper highlighting two huge benefits for our military:  increased power reliability and generation efficiency.

Microgrids do come with their own challenges, such as enabling all of the various components to communicate with one another—and increased standardization is certainly needed if microgrid systems are to continue to proliferate.  But, much like the smart grid and other networks, this challenge can be met with guidance by cooperative stakeholders and perhaps some guidance from government policy.  Any policy will have to straddle the technology-neutral line of effectively enabling development, while still encouraging future innovation.

As our grid increasingly turns to renewable energy, look for distributed generation and, in particular, microgrids to change the hundred-year-old energy game.

I’d like to take a moment to briefly highlight an upcoming event at the University of Missouri-Kansas City (my law school alma mater).  The event, hosted by the University and held at the Intercontinental Hotel in Kansas City, will feature a number of interesting speakers all focusing upon the them of “Expanding Business Opportunities in Energy.”

The keynote speaker will be R. James Woolsey, a former Director of the Central Intelligence Agency.  Director Woolsey has been a very active advocate for energy security in the United States in recent years.  His list of accomplishments is quite long, but a few examples of his involvement include helping found the Set America Free Coalition, dedicated to freeing the United States from oil dependence. He is also on the board of directors for the electric vehicle advocacy group Plug In America and an advisor to The Institute for the Analysis of Global Security, a think tank focused on energy security.  Most recently, Director Woolsey co-founded the United States Energy Security Council, a group with the goal of hlighting and promoting a fresh approach to solving America’s dependence on foreign sources of oil.

In addition to Director Woolsey, the conference will feature such distinguished speakers as Chairman Kevin D. Gunn of the Missouri Public Service Commission, Chairman Mark Sievers of the Kansas Corporation Commission, David Cozad and Mark Smith from EPA Region 7, Frank Rukavina, the Director of Sustainability of NREL, and many others.

The event will be held on May 10.  Registration is $245 for attorneys and other professionals requiring CLE credit, $195 for energy company employees, and $150 for employees of non-profits, government agencies, or educational institutions.  Registration information is available at the University website.

On March 23, 2012 the Interior Department’s U.S. Fish and Wildlife Service (Service), working with the Wind Turbine Guidelines Advisory Committee, released guidelines designed to help wind energy project developers avoid and minimize impacts of land-based wind projects on wildlife and their habitats.  These voluntary Guidelines, which take effect immediately, are designed to provide Best Management Practices for site development, construction, retrofitting, repowering, and decommissioning for wind projects across the country.

A significant portion of the Guidelines are dedicated to providing advice to developers regarding the identification of species of concern that may potentially be affected by the proposed project, as well as the potential impacts that the project may have on those species, including:

 •     Collisions with wind turbines and associated infrastructure; loss and degradation of habitat from turbines and infrastructure;

•     Fragmentation of large habitat blocks into smaller segments that may not support sensitive species;

•     Displacement and behavioral changes; and

•     Indirect effects such as increased predator populations or introduction of invasive plants.

 Additionally, the Guidelines recommend a “tiered approach” for assessing potential impact of a wind project on species of concern and their habitats. As described in the Guidelines:

The tiered approach is an iterative decision-making process for collecting information in increasing detail; quantifying the possible risks of proposed wind energy projects to species of concern and habitats; and evaluating those risks to make siting, construction, and operation decisions.

[ . . . ]

Briefly, the tiers address:

•     Tier 1 – Preliminary site evaluation (landscape-scale screening of possible project sites)

•     Tier 2 – Site characterization (broad characterization of one or more potential project sites)

•     Tier 3 – Field studies to document site wildlife and habitat and predict project impacts

•     Tier 4 – Post-construction studies to estimate impacts

•     Tier 5 – Other post-construction studies and research

Under the Guidelines, developers will work with the Service to identify and avoid and minimize risks to species of concern during the pre-construction phases of the project (Tiers 1, 2, and 3), and then assess the effectiveness of those conservation measures and take additional actions as necessary during post-construction phases (Tiers 4 and 5).

 

Though adherence to the Guidelines is voluntary and does not relieve any individual, company, or agency of the responsibility to comply with laws and regulations, adherence may be beneficial to developers if a violation occurs.  FWS is permitted to take a developer’s action to comply with the Guidelines into consideration when determining whether a violation has occurred, as well as the severity of any penalties.

A copy of the Guidelines is available on the U.S. Fish and Wildlife Service’s website at http://www.fws.gov/windenergy/docs/WEG_final.pdf.  If you have any questions about compliance with these Guidelines, or about any other statutes and regulations affecting a wind project, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com.

Despite the doom and gloom that seems to be dominating the renewable energy headlines of late, I’ve noticed an interesting trend that should bode very well for the continued development of renewable energy in the United States.  While the Federal Government’s lack of action on the 1603 grant has cast serious uncertainty about the future of federal tax incentives for renewables, many state governments have quietly introduced legislation to increase their Renewable Energy Standards (“RESs”) or Renewable Energy Portfolios (“REPs”).

I’ve provided an overview of these very important policies before, but as a quick refresher RES programs are essentially state legislative initiatives that require a certain threshold percentage of a utility’s total energy portfolio be generated from renewable sources (such as wind, solar, biomass, geothermal or other sources) by a certain date in the future.

For states that are trying to incentivize their public utilities to invest in renewable technologies, RES programs provide a relatively straight-forward way to achieve their goals.  However, RES programs are only effective for as long as it takes the utilities to build enough renewable generation or purchase enough Renewable Energy Credits (“RECs”) to meet the thresholds.  Encouragingly, many states that have set RES thresholds have seen their utilities quickly obtain sufficient renewable generation to satisfy the RES for years into the future.  However, once those projects have been developed, the utilities then have no further incentive to continue investing, so development of renewable projects unsurprisingly begins to languish.

This leads us to the good news.  Presented with undeniable evidence that RES programs do in fact lead to increased development of renewable projects, many states are now seeking to either implement RES programs for the first time, or increase the amount of renewable energy that is required.  Below are a few examples…

  • Kentucky: Legislation introduced by State Rep. Mary Lou Marzian, D-District 34, calls for the establishment of a RES which would require utilities to obtain 12.5% of their electricity from renewable energy by 2022.  (Source: NA Windpower)
  • MissouriRenew Missouri, a group formed several years ago to support the state’s first RES, is introducing a new ballot initiative to close existing loopholes that have delayed implementation and increase the thresholds to 25% by 2025.  Jeffrey Tomich of the St. Louis Post Dispatch recently wrote an excellent article summarizing the issue.
  • Illinois: A ballot initiative is being considered which would increase the state’s current 10% by 2015 mandate to 25% by 2025.
  • New Jersey: Though ultimately struck down by Gov. Christie, legislation sponsored by State Sen. Bob Smith and Assembly Member Upendra J. Chivukula sought to more than double the solar output from utilities by 2014.  Jessica Lillian of Solar Industry Magazine provides this overview.
  • Vermont:  Legislation proposed in Vermont seeks to adopt very aggressive RES thresholds, amounting to 40% from existing renewable resources, plus 10% more from new resources by 2013, and adding an additional 40% from new renewable resources by 2025.

I would be remiss if I didn’t also mention a wonderful defense of Renewable Energy Standards written by Peter Fox Penner, Principal and Chairman of the Brattle Group, on Think Progress.  The article is packed full of great information, but among my favorite facts is the following:

In the midst of the worst economy since the great depression, the worldwide market for renewable energy continues to provide jobs and investment. And states are recognizing these economic benefits when setting energy and environmental policies.  The nonpartisan Brookings Institution recently studied employment trends in the clean energy sector and found that, “though modest in size, the clean economy [in the U.S., which according to the study includes many sectors other than renewable energy] employs more workers than the fossil fuel industry and bulks larger than bioscience.” The study also found that the renewable energy sectors “added jobs at a torrid pace.”

We here at Renewable Energy Law Insider would like to congratulate BP Wind Energy North America Inc. (BPWENA) on its announcement of a new 420 MW wind project located in Barber and Kingman Counties, Kansas.  The new wind project, known as Flat Ridge 2, will be located approximately 60 miles southwest of Wichita, Kansas. 

Kansas Governor Sam Brownback, an active supporter of Kansas wind, attended the announcement ceremony on October 3rd.  During his remarks, Gov. Brownback stated,

We have enjoyed working closely with BP Wind Energy to create jobs and grow the economy in our state. Kansans have a proud history of meeting the needs of the world. We export wheat to feed the hungry and will now be exporting our latest crop – clean, reliable and affordable wind energy to power the needs of our nation.

Flat Ridge 2 and BPWENA have worked diligently with the residents and government officials of these counties to ensure a positive local reception to the project.  To that end, Flat Ridge 2 has entered into payment in lieu of taxes (PILOT) agreements and road maintenance agreements (RMA) with Harper County and Kingman County, and has entered into long-term leases with area landowners for placement of all wind turbine generators necessary for successful completion of the Project.

Commercial operation of the Project is currently planned for January 1, 2013. 

For more information about this project, see BPWENA’s press release, or Daniel McCoy’s excellent article in the Wichita Business Journal, “BP announcement another step toward Brownback’s renewable vision.”

Today’s post is part of an on-going series in which we offer practical, plain english definitions of some of the most baffling and complex terms thrown around in the renewable energy industry. 

For today’s edition of Renewable Term of the Week, we will focus on Feed-in Tariffs.

Feed-in Tariffs (FITs)

A feed-in tariff (often referred to as FITs) is a governmental policy that is intended to encourage renewable energy development by guaranteeing that project developers will be able to enter into long-term purchase agreements for the electricity they generate from renewable resources.  Under FITs, utilities are typically required to offer a specified price above market value for every kilowatt-hour (kWh) of electricity produced by renewable developers.  When done well, this guaranteed boost to the profit margin for renewable projects creates a huge incentive to develop renewable projects, which in turn can dramatically alter the energy portfolios of the public utilities that are subject to the policy.

Depending on the policy goals that the legislators want to achieve, the guaranteed price can be tailored to offer added incentives to develop certain types of the technology, small or large projects, or any number of other variables.  Similar to a Renewable Energy Standard, the FIT can also include a cap of sorts, so that the specified price is only offered up until a predefined quota of energy met.  The FIT can also be tailored so that the specified price can decrease over time, or as certain renewable energy goals are met, to more closely reflect the supply/demand curve as the more renewable energy becomes available on the market.

For those industry readers outside of the United States, Feed-in Tariffs are a part of everyday life.  To give you a sense of just how broadly these tariffs are utilized world-wide, the National Renewable Energy Laboratory estimates that, in total, FITs are responsible for approximately 75% of global PV and 45% of global wind deployment.  However, in the United States, FITs have not been nearly as popular. 

One reason that the U.S. has not seen wide-spread use of FITs are potential legal concerns that might come into play.  Specifically, opponents to FITs in the U.S. argue that because FITs involve a wholesale sale of electricity between a renewable developer and to public utility, any state FITs would be preempted by either the Public Utility Regulatory Policies Act (PURPA) or the Federal Power Act (FPA).  Nonetheless, ample research and analysis has been conducted on this topic by some of the leading energy law scholars in the United States, and it appears that solutions to these legal obstacles can be found through careful planning.  For more information on these topics, please see the excellent January 2010 NREL report, “Renewable Energy Prices in State-Level Feed-in Tariffs: Federal Law Constraints and Possible Solutions,” written principally by Scott Hempling with the National Regulatory Research Institute (NRRI).

For more information about Feed-in Tariffs, or any other renewable energy topics please feel free to contact Luke at lhagedorn@polsinelli.com.

Every once in a while, I stumble across something so good that I have to share it with you all. 

Here’s the back-story.  I’ve always been fascinated with the concept of first-movers.  It takes a peculiar mix of genius, foresight and a seemingly illogical disregard of risk to do something truly original.  Being the geek that I am, a few weeks back I decided to find out some more about the first-movers in the field of wind-generated electricity. 

A few google-filled hours later, I came across an article written in the publication “Scientific American” on December 20, 1890.  The article described the story of Mr. Charles F. Brush of Cleveland, Ohio and his amazing windmill dynamo. 

Having made his fortune designing a “dynamo” (essentially an electric generator) and an arc light system that had been placed in-service in cities all across the country (including powering Broadway in New York City), Mr. Brush decided to retire from the business world at the age of 40.  

Like most retirees, he devoted a considerable amount of his time and effort into maintaining his property.  However, whereas many retirees focus on having the greenest lawn or the most impressive gardens, Mr. Brush decided to build an 85-foot tall wind turbine in his backyard.

I’m sure his neighbors were thrilled.

The structure itself was a technical marvel, and represented the first fully-automated electricity generating wind turbine in the world.  Standing just over 85 feet tall, the turbine featured a 56 foot wide wheel that was made up of 144 blades with a surface area of 1,800 square feet.  Additionally, the entire structure was on a revolving platform and utilized a 60 foot long tail which turned the wheel directly into the wind.

Inside the tower was a generator of Mr. Brush’s own design.  The generator was connected to the wheel via a series of pulleys that allowed the generator to have 50 revolutions for every one revolution of the wheel.   At full load, the generator was capable of 500 revolutions per mintue and it could generate 12,000 watts of electricity.

The entire system is amazing, but the part that really blows me away was that Mr. Brush even thought to tackle one of the biggest problems that still plagues the wind industry, battery storage.  In the basement of Mr. Brush’s mansion was a series of 408 battery cells, each with a capacity of 100 ampere hours.  This allowed Mr. Brush to have a contiuous supply of electricity, even when the wind was not blowing.

Unfortunately, Mr. Brush’s wind turbine design never moved out of his backyard and into mainstream use.  Nonetheless, over the course of its 20-year life, the entire structure reliably powered the 350 incandescent lights in Mr. Brush’s home.  In the end, Mr. Brush’s amazing wind dynamo stands as a truly amazing display of ingenuity and the motivational power of too much free-time.  It is important to take some time every once in a while to remind ourselves that, even in cutting-edge fields like renewable energy, we are still standing on the shoulders of giants.

If you are interested in learning more about Mr. Brush and his amazing wind dynamo, feel free to send me an email at lhagedorn@polsinelli.com or leave a comment below.

*I’d like to give a special thanks to Scientific American, a publication that continues to put out quality content to this day.

Effective July 1, 2011, wind and solar project developers in the state of Kansas are subject to a number of new requirements.  These new requirements were proposed in Kansas Senate Bill 227, which was introduced by the Senate Committee on Ways and Means, chaired by Senator Carolyn McGinn.  The Bill passed through Committee and the Kansas House and Senate in a mere three weeks, and was signed by Governor Brownback on April 13, 2011.

The new requirements fall into the following three categories:

1.) Severance of Wind and Solar Rights: The statute states that no person other than the surface owner of a tract of land shall have the right to use the land for the production of wind or solar generated energy unless granted such right by the lawful owner of the surface estate by lease or easement for a definite period.  This new law is in-line with a national trend against severance of wind and solar rights, and effectively prohibits a landowner from selling the wind or solar rights to a project developer while retaining the ownership of the underlying property.

2.) Solar Leases and Easements: Prior to this statute, Kansas had enacted K.S.A. 58-2272, which set forth requirements related to descriptions and terms that had to be included in wind leases and easements. Under the newly enacted Senate Bill 227, these requirements have been expanded to also encompass solar leases and easements. Specifically, under the new standards, every lease and easement involving solar resources and technologies to produce and generate energy must include (among certain other things) the following information:

a. a description of the real property subject to the easement and a description of the real property benefitting from the solar lease or easement; and

b. a description of the vertical and horizontal angels, expressed in degrees, and distances from the site of the solar power system in which an obstruction to the solar system is prohibited or limited.

3.) Marking of Anemometer Towers: Anemometer towers that are at least 50 feet high shall be marked so as to be recognizable in clean air during daylight hours. These markings include painting the top 1/3 of the tower in equal, alternating bands of aviation orange and white, attaching two marker balls on each of the outside guy wires, and attaching one or more seven-foot safety sleeves at each anchor point.

Today, I will continue my well-intentioned but perhaps ill-advised plan to provide you, my loyal readers, with state-by-state updates of recent noteworthy renewable energy stories (seriously, 50 states…what was I thinking?).   Fortunately, today’s state, Kansas, is near and dear to my heart. 

As I’m sure most of you are aware, Kansas is exceptionally windy.  NREL and AWEA have ranked Kansas’ wind resource #2 in the United States, with the potential to generate a staggering 950,000 MW annually from wind alone.  What you may not have realized is that Kansas also ranks in the top 10 states for its solar resource.  Put simply, there is a lot potential for utility-scale renewable projects in the Sunflower State.

Do you know of any Kansas-related news items that you would like me to comment upon or add to this list?  Leave a comment or send me an email at lhagedorn@polsinelli.com and I’ll be sure to add it.  With that background in mind, lets check in with what has been going on in Kansas…

New Kansas Commissioner Sworn In

Kansas Governor Sam Brownback recently named a new Commissioner, attorney Mark Sievers, to the Kansas Corporation Commission.

“Mark’s career began in public service as a police officer in Colorado Springs in 1975, and after receiving a law degree and a master’s degree in Economics, he went on to distinguish himself at the highest levels of the public and private sectors across the country. Mark will bring a wealth of training, experience and knowledge to the commission,” Governor Brownback said.

Commissioner Sievers’ prior professional experience includes time as a collegiate level professor at the Utah State University, the University of Utah and the University of California, an attorney for both large and small f irms, and a Senior Executive at Sprint, SBC, GTE, and Verizon, where he was part of the senior executive team that created Verizon, then the world’s largest merger at $56 billion, with operations in 21 countries and involving 250,000 employees.

Commissioner Sievers was sworn in on May 18, 2011, and will now join Commissioners Ward Lloyd and Thomas Wright.

Kansas Governor Brownback Announces ‘Road Map for Wind Energy Policy’

Kansas Governor Sam Brownback recently announced his “Road Map for Wind Energy Policy” for the state.  This announcement attempts to strike a balance between what Gov. Brownback refers to as the “3 E’s – the Economy, Energy, and the Environment.”  As part of this Road Map, Gov. Brownback sets forth a plan to expand an existing informal moratorium on wind development within a tallgrass prairie area in the Flint Hills region of Kansas.  Under the proposed expansion, the “Heart of the Flint Hills” moratorium will more closely track the geographic area identif ied by the USFWS as a conservation area.

The prior moratorium was established approximately seven years ago by then Governor Kathleen Sebelius to protect development in areas designated as “pristine prairie.” That moratorium was never codified in law.  

In commenting on how this expansion might affect other wind projects within the state, Gov. Brownback stated:

“I do not, however, wish to convey a negative message about the future of wind energy in our state. My administration will continue to work with wind developers and wholeheartedly support their activities in other parts of the state. The Tallgrass Heartland will not prohibit the construction of necessary electric transmission improvements. Wind farms that are currently under power purchase agreements within the protected area, are of course, expected to fulfill those contracts and will have every opportunity to renew their agreements moving forward. However, they will not be expanded.”

Kansas Corporation Commission Approves PPAs for 369 MWs of Wind Energy

On November 10, 2010, Westar Energy, Inc. and Kansas Gas and Electric Company, filed a petition with the Kansas Corporation Commission for a predetermination of the ratemaking principles and treatment that will apply to the recovery in rates of the costs to be incurred pursuant to certain power purchase agreements (PPAs) for the purchase of 369 MW of wind energy. In its petition, Westar indicated the wind farms would become operational in 2012 and proposed that the costs of the purchases under the PPAs be recovered through its Retail Energy Cost Adjustment (RECA).

On March 25, 2011, Westar, the Commission’s Staff, and the Citizen’s Utility Ratepayer Board (CURB), jointly filed a motion to approve a Stipulation and Agreement which supported adoption of Westar’s petition as filed. 

Through a Final Order issued on May 9, 2011, the Commission approved Westar’s recovery of the costs of the PPAs through its Retail Energy Cost Adjustment. In reaching this conclusion, the Commission held that it is reasonable for Westar to enter into these particular PPAs now in order to meet its obligations under the RES Act both in 2011 and in 2016 because the terms and pricing under these PPAs are favorable and execution of the PPAs now will result in benefits to Westar’s customers.

*If you enjoyed these updates, don’t forget to also check out our prior state updates on Arizona, Colorado, and Illinois.