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 this larger report, which is available at http://www.polsinelli.com//files//upload/StudyKansasWind.pdf. 

In Part 1 of this series, we discussed Kansas’ unique wind resource.  Today, we will provide a brief history of Kansas wind energy generation.  Additional sections of this report will follow in subsequent posts.

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A Brief History of Kansas Wind Energy

The substantial growth inKansas’ wind energy capacity in 2012 has been the culmination of more than a decade of hard work byKansas’ citizens, utilities and electrical cooperatives, local, county and state officials, and third-party participants. 

Although Kansas has long been known for the winds sweeping across its prairielands, it was not until 1999 that Westar Energy (then Western Resources) took the first steps into utility-scale wind power with the installation of two 600 kW Vestas wind turbines near the Jeffrey Energy Center in Pottawatomie County, north of St. Marys, Kansas.  In 2001, Westar’s Jeffrey Energy Center project was followed by the state’s first large scale wind farm, the Gray County Wind Project built near the town of Montezuma by NextEra Energy Resources (then FPL Energy). Containing 170 Vestas 600 kW turbines with a total installed capacity of 112 MW, the Gray County Wind Project is still operating today.

Since those early successes, at least one project has come online in Kansas every year since 2008, (see Table 1), and the period from 2011-2012 has seen a boom that will nearly double the state’s installed wind capacity (see Table 2).

Though there were a number of early wind projects inKansas, Table 1 above illustrates that there was a significant increase in project development beginning in 2008 and 2009.  A lot of this growth is the result of steady improvements in wind generation technology and increasing access to new areas of the state due to the expansion of transmission infrastructure (as will be discussed in a future post).  This is also the period when theKansasstate legislature adopted the state’s Renewable Portfolio Standard (“RPS”), a policy implemented to diversify the state’s electricity generation mix by adding more renewable generation.

Prior to 2009, demand for wind energy in Kansaswas driven by voluntary measures. Some utilities, like Empire District Electric (“Empire”), began purchasing wind energy due, in part, to high natural gas prices and a high percentage of natural gas baseload generation, which wind-powered generation could offset. Empire believed that the addition of wind power to their system was a way to “decrease exposure to natural gas, provide a hedge against any future global warming legislation” and to help them provide their customers “lower, more stable prices.”  Empire noted that the energy purchased from wind farms allowed them to decrease the amount and percentage of electricity generated by natural gas, and thus decrease their exposure to fuel price volatility. Similarly, the Kansas City Board of Public utilities saw wind power as “a hedge against high market purchase prices” and estimated their 20-year power purchase agreement for wind power would save the utility $3 million during the first decade.  Ultimately, some utilities decided to participate in the voluntary RPS that then-Governor Kathleen Sebelius had proposed, while others foresaw the potential for a future, mandatory, RPS.

Since 2009, demand for renewable energy in Kansasby public utilities has been driven by the RPS, as passed by the Kansas Legislature in May 2009 through Senate Substitute bill for H. 2369 and incorporated by Kansas Statutes Annotated (K.S.A.) 66-1256 through 66-1262. Under the RPS, every regulated public utility in the state is required to own or purchase renewable generation, such that the nameplate capacity of the renewable generation owned or purchased by the utility satisfies the following minimum threshold percentages of the utility’s average three-year annual peak retail sales:  

  • 10 percent for 2011 through 2015
  • 15 percent for 2016 through 2019
  • 20 percent for 2020 and beyond

Importantly, for renewable capacity generated in Kansas, utilities are awarded an additional 10 percent credit toward their requirements, thus incentivizing utilities to keep the renewable projects, and the economic benefits that they create, within the state. Additionally, a key provision of the RPS language was a one percent cap on the rate impact of compliance.[v]  Under this guideline, the Kansas Corporation Commission (“KCC”) is permitted to exempt any utility that can demonstrate that compliance with the RPS would cause retail rates to increase by one percent or more.  This effectively ensures that, to the extent that there is a cost associated with developing renewable generation opportunities as compared to traditional fuel sources, the rate impact for retail customers will be minimal.

Since 2010, the KCC has prepared and submitted an annual report to the Legislature that details each utility’s progress toward fulfilling its RPS requirements, including forecasts for its renewable energy generation over the next 20 years. The most recent data for each of the six affected utilities are summarized in the following Table 3.

As the chart above illustrates, all Kansas utilities currently have enough renewable generation in their portfolios to satisfy the RPS through 2015, with most possessing far more renewable generation than is required.  Additionally, most Kansas utilities currently have more than enough renewable generation in their portfolios to satisfy the 15 percent threshold that will take effect from 2016 through 2019, with only a small amount of additional renewable generation required for Westar and Midwest.

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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.

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.  Additional sections of this report will follow in subsequent posts.

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In order to understand the current status of the wind industry in Kansas and its impact on the state economy, it is necessary to first understand why Kansas is uniquely positioned to reap its extraordinary wind resource.

A. KANSAS’ ABUNDANT WIND RESOURCE

Kansas enjoys one of the best wind resources in the world, ranking between first and third among the states in terms of total wind capacity. To quantify this resource, wind speed measurements are taken at several heights that reflect typical wind tower hub heights: 50 meters, 80 meters, and 100 meters. As Figure 1 below illustrates, at 50 meters most of western Kansas has access to “Class 4” winds, with wind speeds ranging from 7.5 to 8.1 meters per second, with a number of additional locations reaching “Class 5” status, with wind speeds ranging from 8.1 to 8.6 meters per second.

Figure 1: Kansas Annual Wind Speeds at 50 meters

To understand how Kansas’ access to wind compares to other states across the country, it is necessary to consult Figure 2 below, which illustrates the wind speeds at a height of 50 meters for the entire United States.

Figure 2: U.S. Wind Resource Map at 50 Meters (U.S. Department of Energy, National Renewable Energy Laboratory)

As Figure 2 shows, Kansas is well positioned in America’s “Wind Belt.” This geographic advantage means that Kansas has access to a robust renewable energy source that few other states share. Kansas and its neighboring Plains states have access to one of the best wind resources in the United States. As Figure 3 below shows, the electrical transmission grid in the U.S. is broken into three distinct electrical interconnections: ERCOT, which serves most of Texas, the Western Interconnect, which serves all states west of the Colorado-Kansas state-line, and the Eastern Interconnect. With new transmission projects in the works to alleviate bottlenecks in the grid (as will be discussed in a Part 3 of this series), Kansas is in a prime position to export power from its excellent wind resource.

 

Figure 3: The United States Transmission Grid.

 

Prior to 2012, Kansas ranked ninth among states in terms of operational wind energy.  Building on this success, Kansas has led the nation in new wind energy construction in 2012, with an anticipated operational wind energy capacity of approximately 2,714 MW by the end of 2012.

 

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.

As an avid follower of energy projects in the Midwest, I’m proud to be attending the 2012 Kansas Energy Conference in beautiful Manhattan, Kansas.  Have no fear if you aren’t able to attend, however, because I’ll be uploading lots of pictures and commentary from the exhibitors and presentations over the next few days.

For those of you that will be in attendance, please stop by the Polsinelli table and say hello.  I’ll be buzzing about the new collaboration between Polsinelli’s Energy Law Practice Group and the Kansas Energy Information Network.

Finally, as an added bonus for you, my loyal readers, here is a special preview of one of the many excellent handouts that we will be distributing at our table.  This is just a small example of the wonderful content that will be available, so stop by and take a look.

If you have any questions or comments about the Kansas Energy Conference or Kansas energy projects in general, please leave a comment or contact me directly at lhagedorn@polsinelli.com.

For all of you who are interested in renewable energy projects in the State of Kansas, I’m pleased to bring you some good news this Monday morning.  The Energy Law Practice Group of Polsinelli Shughart PC (a law firm that I am proud to be a part of) is announcing an ongoing collaboration with the Kansas Energy Information Network (KEIN), a phenomenal informational resource for energy projects in Kansas.  This collaboration is the result of significant work by Alan Claus Anderson and J. Britton Gibson of Polsinelli Shughart and Scott W. White of KEIN and Scott White Consulting.

What does this mean for you?  It means that KEIN will continue to provide the excellent content that has been its staple since 2001, but will also have access to additional resources and analysis from one of the nation’s leading energy law firms.  We are all extremely excited about the potential benefits of this collaboration for everyone involved.

Additional information from the Polsinelli press release is provided below.  If you have any questions or comments, please leave a comment, email me at lhagedorn@polsinelli.com, or seek me out at the Kansas Energy Conference being held this Tuesday and Wednesday in Manhattan, Kansas.

Polsinelli Shughart Energy Practice Group Partners with Kansas Energy Information Network

Press Releases – September 21, 2012

The Energy Practice Group of Polsinelli Shughart PC is proud to announce that it has teamed with the Kansas Energy Information Network (KEIN) to continue making useful energy information widely-available and easy to access. This collaboration will continue to provide an invaluable one-stop resource for the general public and energy professionals seeking information and analysis about energy projects in Kansas.

“We continue to be very active in energy projects and issues in Kansas and we’re excited to be able to work with Scott and the Kansas Energy Information Network on not only collecting information but providing analysis that can be used by people and companies interested in Kansas energy issues” said Alan Anderson, vice chair of the Energy Practice at Polsinelli Shughart.

Founded in 2001 by Scott White, the Kansas Energy Information Network (KEIN) has become the first stop for those who seek energy information related to Kansas and the surrounding region on the internet. The primary purpose of KEIN is to promote energy efficiency, renewable energy and a better understanding of energy issues by making reliable information available to the public.

“Polsinelli Shughart is one of the premier law firms for energy issues in the Midwest, and Kansas in particular. They have extensive knowledge and experience relating to Kansas energy issues, and their on-going involvement in the development of traditional and renewable energy resources in the state will undoubtedly continue to contribute to the success of these industries. It pleases us that Polsinelli is collaborating with KEIN and again demonstrating their commitment to the growth and strength of Kansas’ energy industries,” said Scott White, founder and executive director of KEIN.

“For years, we have followed and used the great information included on the Kansas Energy Information Network site. Scott has a great understanding of the issues and developments affecting energy projects in Kansas. We are very pleased to partner with him to build upon his solid work to continue making KEIN the preeminent source for information about Kansas energy projects,” said Britton Gibson, a shareholder in the Polsinelli Energy Practice Group.

Polsinelli Shughart’s Energy law practice is one of the leading energy practices in the Midwest and has widespread national experience representing energy companies, developers, lenders and investors in connection with the acquisition, development, finance and operation of a variety of energy facilities – including oil, gas and electric facilities and wind, solar, geothermal, biomass and biofuel renewable energy projects. The Polsinelli Energy group includes attorneys with a broad range of interdisciplinary experience and depth of knowledge. Polsinelli’s energy attorneys’ vast experience in real estate, environmental, construction, land use, finance, regulatory, business, and litigation issues is an invaluable resource for meeting energy clients’ objectives.

RELATED CONTACTS

Alan Anderson, T. 913.234.7464, aanderson@polsinelli.com

Scott W. White, T. 785.424.0090, Scott@KansasEnergy.org

About Polsinelli Shughart 

With more than 600 attorneys, Polsinelli Shughart (www.polsinelli.com) is a national law firm and recognized leader in the areas of health care, financial services, real estate, life sciences, energy and business litigation. Serving corporate, institutional and individual clients, the firm builds enduring relationships by creating value through our legal services – with passion, ingenuity and a sense of urgency. The firm has offices in Chicago; Dallas; Denver; Kansas City; Los Angeles; New York; Phoenix; St. Louis; Washington, D.C.; and Wilmington, DE. In California, Polsinelli Shughart LLP.

Love him or hate him, there is no denying that yesterday former President Bill Clinton delivered powerful advice for advocates of every renewable industry.

In his hour-long remarks at Solar Power International, President Clinton touched on a wide range of topics, from recent successes in the solar industry, the potential for solar to assist the poorest members of communities at home and abroad, the industry’s response to the Solyndra scandal, and, of course, the potential impact of the current presidential election on renewable policies in the U.S.  In particular, President Clinton gave one piece of advice that warrants a bit of additional commentary.

“Get the basic facts in front of the American people”

We live in a world of partisan talking heads and 10-second sound bites, and there is no one on the planet that understands that better than Bill Clinton. Unfortunately, as anyone who works in a energy industry knows, renewable energy is not always easy to discuss in short bursts of information.  A true description of an average project requires a decent grasp of engineering jargon, economic analyses, complicated business models, and a staggering variety of statutes and regulations.

However, thankfully, the results of this perfect storm of jargon are two concepts that (most) everyone can instinctively understand and appreciate:

1.)    Renewable energy helps the environment; and

2.)    Renewable energy can create jobs and bolster the economy.

Let’s not mince words…If these concepts are not the first thing that cross the average person’s mind when they hear about a solar, wind, or biomass project, then we have failed as advocates.  The fact that there is any debate about these points means that we are losing theBattleof the Sound Byte.

Fortunately, President Clinton provides us with the following suggestions for how we can begin to regain the public opinion.

You can be proud of yourself. . .

Get the positive facts out there. . .

Provide visible manifestations of progress.

Though these comments sound like they come from a self-help book, they perfectly capture a major obstacle for renewable energy industries.  President Clinton sums it up nicely…

Most Americans don’t know that the solar industry employs more than 100,000 people – more than the coal industry.  They don’t know that renewable energy sustained an eight percent growth rate through the worst years of the recession. . . . and they don’t know that  theUnited Statespays $22 in subsidies to oil, coal and nuclear power for every $1 invested in renewable energy. . . An enormous number of people don’t know that solar is affordable now.

In order to offer any sort of meaningful rebuttal to opponents of renewable energy, it is vital that we recognize and tout the overwhelming benefits that solar, wind and biomass projects can provide, and emphasize the numerous successes that have already been achieved.

For excellent recaps of President Clinton’s remarks, take a look at this PV Magazine post by Hans-Christoph Neidlein, and Anne Fischer’s excellent recap on the Solar Novus blog.

Thoughts, questions or comments?  Leave a comment or contact me at lhagedorn@polsinelli.com.

Literally and figuratively, Kansas and Missouri stand at the crossroads of the United State’s quest for an “all-of-the-above” energy policy. Located in the heartland of the United States, these states enjoy abundant access to traditional and renewable energy resources. Just as importantly, the central location of Kansas and Missouri place these states in a critical segment of the national infrastructure that is needed to transport those resources to population centers across the country. With proper planning, these critical investments create an excellent opportunity to create jobs and bolster the economies of communities throughout the region.

Generation and Production

Renewables

With the second best wind resource in the United States, the State of Kansas has made great strides in developing a robust wind industry over the last few years. In 2011 in particular, Kansas boasts eight major wind projects under construction, is set to nearly double its installed capacity in the span of a single year and leads the country in wind project construction.

In Missouri, the most recent successes involve solar energy. Based in large part on a solar carve-out in the state Renewable Energy Standard and a $2.00 per kilowatt rebate for net-metered solar installations, both of which were introduced as part of an overwhelmingly approved 2008 voter ballot initiative, Missouri has enjoyed a recent surge in small to mid-sized solar projects over the last year.

Oil & Gas

As with renewables, the Midwest region is ideally located to reap tremendous benefits from its access to traditional fuel resources. In particular, due to its prime location on the Mississippian Lime Play, Kansas has enjoyed a surge in oil and gas developments across the state. From March to July of 2012 alone, the Kansas Corporation Commission approved roughly 3,000 Notice of Intent to Drill filings.

Transmission & Pipeline Infrastructure

Regardless of whether it is moving north, south, east or west across the country, a significant amount of the electricity, oil, natural gas, or coal produced in the United States will pass through Kansas or Missouri at some point. As a result, it is vital that both Kansas and Missouri adopt well-reasoned policies to ensure that the states can enjoy the economic benefits that come with this infrastructure, and to avoid any bottlenecking of these valuable resources.

Transmission

It is no surprise that the renewable energy being generated in remote locations across the Midwest is only useful if it can be transported to consumers. Fortunately, there are a number of companies currently constructing transmission lines that create a modern, robust electricity grid across the region. These projects include Clean Line Energy’s 700-mile Grain Belt Express Clean Line, Kansas City Power & Light’s and the Omaha Public Power District’s proposed 190-mile Missouri to Nebraska line, ITC Great Plain’s 225-mile KETA Project, and the 122-mile “V-Plan” line being built by ITC Great Plains and Prairie Wind Transmission, a joint venture of Westar Energy and Electric Transmission America.

Pipelines

Just as with the electricity transmission lines, the influx of new oil and natural gas projects across the Midwest have dramatically increased demand for a strong pipeline infrastructure. Both Kansas and Missouri have made great strides in this regard recently. For example, Missouri hosts portions twelve interstate natural gas pipelines, including the largest state-to-state pipeline in the region, the Southern Star Central Gas Pipeline Company’s line. Other notable interstate pipelines include those developed by ANR Pipeline Co., Centerpoint Energy Gas Transmission Co., Mississippi River Transmission Corp., Panhandle Eastern Pipeline Co., and Texas Eastern Transmission Corp.

An Energy Policy for the Future

Whether you look at renewable resources or traditional fuel resources, it is clear that Kansas and Missouri are ideally located to play a national role as both a producer and courier for our nation’s future energy supply. All that is required is a well-reasoned set of policies that ensure that these industries can develop at their full potential, and that local communities that host these developments receive appropriate economic rewards. Standing at this crossroads in our nation’s energy policy, the key question is which paths these states will choose to best secure their place as a key player in the United State’s energy future.

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.

The legislature of the State of Colorado has been very active on renewable energy issues over the last few weeks.  Three bills have been making steady progress through the House and Senate in Denver, each of which could have a noticeable effect on the renewable industries in the state.

I.   Coal-Mine Methane as a Renewable Energy Source

House Bill 1160 seeks to amend Colorado’s renewable energy standard to include electricity generated by burning captured coal-mine methane.  The legislation has passed in the House, and is now being considered by the Senate Local Government Committee.  The bill faces strong opposition by many environmental and renewable energy advocacy groups, including Western Resource Advocates (“WRA”), based in Boulder, Colorado.  In a March 23, 2012 guest commentary in the Denver Post, John Nielsen, the Energy Program Director at WRA stated as follows:

By allowing coal-mine methane to qualify as “renewable energy,” something it is not, HB 1160 would diminish further investments in Colorado’s wind and solar resources. Those resources are sustainable, emission-free, use little or no water, provide important health and economic development benefits, and reduce greenhouse gases.

II.   Prohibition on Severance of Wind Rights

House Bill 12-1105 seeks to establish a non-severable wind energy right in real property.  Essentially, under this proposal a landowner would not be able to sell fee simple title to the wind rights on his or her property, but must instead execute a lease, license, easement or other agreement to develop or participate in the income from or the development of a wind project on the property.  The legislation has passed in the House, and is now being considered by the Senate Local Government Committee.  This proposal 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.  Interestingly, however, this legislation seems to expressly contemplate and allow for the transfer of the rights to receive the income from the wind project to a third-party, which could potentially lead to many of the same down-stream ownership concerns that commonly give rise to severance restrictions in the first place.  K.K. DuVivier, professor of law at the University of Denver Sturm College of Law and author of the excellent resource “The Renewable Energy Reader,” was recently interviewed by Colorado Public Radio about this legislation.

III.   Ending PUC’s Authority Over Transmission Siting Issues

House Bill 12-1312 seeks to modify the Colorado Public Utilities Commission’s approval process for transmission line certificates of convenience and necessity, so that the PUC no longer has jurisdiction over the land use rights or siting issues related to the location or alignment of the proposed transmission lines.  Instead, those issues would be left to the discretion of the county and local governments.  Ms. Becky Quintana, a representative of the PUC, recently testified before the House Committee on Transportation about this legislation and stated that the PUC neither supported nor opposed the legislation.  From the PUC’s perspective, the legislation does not restrict the authority of the PUC, but rather more clearly defines the jurisdiction of the PUC and local governments, though she noted that, under the proposal, any transmission project that spanned multiple counties would require inter-governmental agreements as each county’s jurisdiction would end at the county line.

Do you have any questions or comments about any of these bills or about developing renewable energy projects inColorado?  If so, leave a comment below or contact me directly at lhagedorn@polsinelli.com.

President Barack Obama delivers the State of the Union address in the House Chamber at the U.S. Capitol in Washington, D.C., Jan. 24, 2012. (Official White House Photo by Pete Souza)

On Tuesday, President Barack Obama presented his annual State of the Union address. One of the most interesting topics discussed, at least to my biased ears, was the importance of pursuing an “all-of-the-above” strategy for developing every potential energy resource at the country’s disposal.

While I’m always thrilled when renewable energy policy gets a prominent place in our public discourse, the President’s remarks necessarily only skimmed the surface of the issues that the administration will face when seeking to continue promoting renewable energy in 2012, especially in light of the significant uncertainty caused by the PTC issue.  So, I went digging for more information.  Fortunately for me, the White House has released a “Blueprint for An America Built to Last”, which contains additional information about the President’s energy policy.  This is in addition to the “Blueprint for a Secure Energy Future” issued by the White House last March.  Boiling these documents down into the main points, it appears that the administration is planning on focusing its renewable energy efforts on the following:

Implementing a federal clean energy standard: During the State of the Union address, I was surprised and pleased to see the President renew the call for a federal Renewable Energy Standard, something which has been introduced numerous times through legislation but has failed to gain any serious traction among the legislators.  We have discussed state-level Renewable Energy Standards at length on this blog, but action taken at the federal level would provide much needed regulatory uniformity and a more robust and consistent REC market, both of which would make it quite a bit easier for projects to get financing from risk-averse lending institutions.

Targeted tax incentives: The President briefly called upon Congress during the State of the Union to “[p]ass clean energy tax credits.  Create these jobs.  We can also spur energy innovation with new incentives.”  The most obvious example of a program that needs a life-line from Congress is the Production Tax Credit originally set forth by Section 1603 of the American Recovery and Reinvestment Act of 2009.    These credits have been a major driver of project financing for the last few years, and the uncertainty surrounding their extension has put a major damper on the number of projects in the pipeline past 2012.

Opening public lands:  Community-level opposition has long been an obstacle that many renewable projects have faced.  President Obama’s energy plan seeks to assuage some of this resistance by opening up sizable tracts of public lands to renewable developers.  To this end, the President has directed the Department of the Interior to commit to issuing permits that will enable the generation of 10 gigawatts of renewable generation capacity.  Of course, projects that are developed on these lands will also introduce additional regulatory burdens, including compliance with the National Environmental Policy Act (“NEPA”).

Powering the U.S. military with renewable energy: During the State of the Union, President Obama announced that the Department of the Navy will make a 1 gigawatt renewable energy purchase.  As the largest consumer of goods and services in the world, the Federal Government consumes an enormous amount of energy.  Additionally, the government often asserts requirements upon its agencies and departments to take into consideration societal benefits rather than pure price points when making its purchasing decisions, as is seen through the “Buy American” mandates and small and disadvantaged business requirements in federal procurement.  Ultimately, as far as the renewable industries are concerned, the more heavily-invested the various departments and agencies become in renewable energy, the better.

Ultimately, the President’s energy plan will not guarantee a bright future for renewable energy, but such guarantees are exceptionally rare in the business world (if you know of any, my contact information is below).  The key question that must be answered is whether or not this plan will incentivize the development of renewable projects.  To answer that question, we have to take a step back and look at the plan’s impact on the most significant risks that all renewable projects face, such as:

1.) Finding land for the project, and overcoming any community-level resistance.  The President’s plan reduces this risk by opening up public lands for development.

2.) Finding buyers.  The plan would increase the number of buyers by implementing a federal renewable energy standard and allowing the federal government to be a major consumer of renewable energy.

3.) Making a profit.  If tax incentives are increased, projects make more money.  Additionally, introducing a federal RES and opening up a federal REC market could potentially increase profits.

4.) Acquiring financing.  Lenders don’t like to lend money to risky ventures.*  However, by decreasing the risks discussed above, the President’s plan should increase the level of financing available to new projects.

* stunningly insightful analysis, I know, but you get what you pay for.

Taken as a whole, this plan appears to address a number of key areas of risk that renewable developers face over the life of their projects and this should help the various industries as they continue to grow.

Now, if only we could convince the federal legislature . . .

If you have any questions or comments about the information discussed above or about renewable project development generally, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com.