Energy Policy Act of 2005

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Energy Policy Act of 2005

• Better or Bitter for Renewables?
• Highlights Affecting Renewable Energy

Northeast Energy and Commerce Association Renewabl
e Energy Committee September 13, 2005
Eric J. Krathwohl, Managing Director Rich May,
P.C. 176 Federal Street, Boston, MA 02110
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Renewables / EnvironmentalAdvocates Disappointed

• No National RPS (Some consultants estimate that a
  national RPS would triple the amount of renewable
  energy by 2025)
• No CAFE
• Not much on ways to address climate changes
• Apparently much more support for big oil and coal
• Lack of Comprehensive plan

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Plenty of Good News

• 19 of tax benefits go to renewables
• Production Tax Credit Extended and Expanded
• Federal Purchases / Generation
• Clean Renewable Energy Bonds 800,000,000 through
  2007 (section 1303)
• Big dollars to research, development,
  demonstration and commercial implementation
• Funding of renewables in State and local
  buildings (up to 40 of cost)
• Demonstration and Technology Transfer Program
  (Section 935)
• Other Benefits

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Production Tax Credit

• Qualified Facilities get PTC for 10 years
• Must be in service by 12/31/2007
• Covers Wind, Open-Loop and Closed-Loop Biomass,
  Landfill Gas, Geothermal, Incremental Hydropower,
  Wave, Current, Tidal, Ocean Thermal
• Impact All wind turbines manufactured are sold
• Solar Only if in service by 12/31/2005 but
  comparable benefit, investment tax credit
  equaling 30 of cost of equipment installed in
  2006 and 2007

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RPS Light

• However, Quasi RPS for Federal Government
  (Section 203) to the extent economically
  feasible and technologically practical.
• Federal Government to buy at best,
• 3 renewables in 2007-2009
• 5 renewables in 2010-2012
• 7.5 renewables after 2013
• double credit if produced on site
• Sense of Congress to have approved 10,000 MW of
  renewable generation on Federal Lands in next 10
  years (Section 211)
• Also, 50,000,000 authorized for 2006-2010 to get
  Photovoltaics in 20,000 Federal buildings
  (Section 204)
• 10,000,000 authorized over same period to
  evaluate
• DOE to establish rebate program for installation
  of renewable energy system in residence or small
  business (Section 206c) 25 of cost or 3,000
• Some question, however, will money actually be
  appropriated

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Clean Renewable Energy Bonds (Section 1303)

• Put municipal electrics and coops on same footing
  as entities that are taxed
• Some analysts suggest better to bring in taxable
  entity for tax benefits and get cheaper
  electricity
• Interest free, but bondholders get tax credits
• Comparable to certain bonds for improvements to
  schools serving low income students
• As of August 2005, credit rate and term
  comparable to 5.3 and 16 years
• 800,000,000 pro rated over states
• Waiting for Treasury Department rules

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Research and Development

• DOE shall conduct programs of renewable energy
  research, development, demonstration and
  commercial application (Section 931)
• DOE to consider
• Increased efficiency
• Decreased costs
• Promoting energy diversity
• Decreasing environmental impact
• Covers Solar Wind, Geothermal, Hydro, Tidal,
  Combination Renewable Hydrogen Production/Coal
  Gasification
• Authorized 632 million 2007
• 743 million 2008
• 852 million 2009
• Some specification of allocation to solar and
  bio-energy
• Various other bio-energy, hydrogen initiatives
• Distributed Energy (including micro-cogeneration)
  (Section 921) more than 750 million over
  2007-2009

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Hydro-Electric

• Revival of old PURPA program to develop small
  hydro (30,000 kw at dams existing 7/22/05)
  (Section 241)
• Streamlining hydro licensing timing,
  conditions, forum (Section 241)
• Other hydro incentives (improvements to existing
  facilities to increase efficiency more than 3)
  (Section 243)

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Hydrogen (Title VII)

• Studies, Plan, RD (Section 804, 805), Task Force
  (Section 806)
• Goal Vehicle, Utility, Industrial, Commercial
  and Residential Use
• Mass use in vehicles with supporting
  infrastructure by 2020
• 100,000 Hydrogen cars by 2010

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Geothermal

• Mostly concerning leases and royalties on use of
  Federal lands (competitive leasing)
• Generally parallel to benefits to oil and coal
• Other actions to facilitate geothermal development

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Other

• Act provides for ongoing assessment of renewable
  energy resources
• Programs to encourage Biomass on Federal and
  Indian Lands
• Sets Renewable Fuels Targets

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PURPA

• Existing (pending) Qualifying Facilities (QFs)
  grandfathered
• Prospectively utilities are relieved of
  obligation to buy from QFs IF and AFTER FERC
  finds there is sufficiently competitive market
  (day-ahead, auction or comparable) overseen by
  FERC approved ISO
• 90 day process can be blanket approved or
  specific
• Federal right to recover QF contract payments
• Harder now to qualify as QF
• No ownership limits on QFs

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General Electric Industry Impacts

• PUHCA Repealed, but FERC and states still have
  some oversight. Biggest hurdles to large company
  mergers are removed. Some say this is biggest
  deal and will lead to further consolidation.
• Electric Transmission Siting (Eminent Domain and
  FERC review), Reliability and Rate Reform
  Provisions
• Electric Market Transparency and Enforcement
• Significant focus on energy efficiency in
  buildings

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Conclusions

• Theme of helping new technologies along toward
  commercialization, diversity, see if winner
  emerges in 5 years
• PTC Expansion and Extension very positive
• Federal Procurement, Grants, RD, Test Programs
  all will help
• Wait and see if monies are spent and how programs
  implemented
• No political consensus to go farther right now,
  though gap between fossil advocates and renewable
  advocates decreasing

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For More Information..

• Eric J. Krathwohl
• Rich May, P.C.
• 176 Federal Street
• Boston, MA 02110
• Tel [phone]
• E-Mail ekrathwohl_at_richmaylaw.com
• Website www.richmaylaw.com

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www.capewind.org