CA Self-Generation Incentive Program Extension Signed Into Law

California’s Governor Jerry Brown signed SB 700 into law on September 27, 2018, extending the Self-Generation Incentive Program (SGIP) for an additional five years.

As previously discussed in our blog post here, SGIP extends the current January 1, 2021 expiration date until January 1, 2026, and provides rebates for the installation of energy storage systems and certain eligible technologies including wind turbines, pressure reduction turbines, fuel cells, waste heat capture and combined heat and power, internal combustion engines, microturbines and gas turbines (although the bill provides that after January 1, 2020, nonrenewable generation technologies will not be eligible for rebates under the SGIP). 75% of total rebates under the program are designated for energy storage technologies.

The new law will take effect on January 1, 2019.

CA Enacts 100% Carbon-Free Energy Standard

Governor Jerry Brown signed SB 100 into law on Monday, setting in place a 100% renewable electricity target for California by 2045.

The law, which we discussed in our prior blog post here, calls for a state-wide renewable energy target of 60% by 2030, with an interim target of 50% by the end of 2026 and a final 100% target by 2045. At the signing ceremony, Brown also announced an executive order directing California to achieve carbon neutrality, meaning it would remove as much carbon dioxide from the atmosphere as it emits, also by 2045. The order, which could be rescinded by a future governor after Brown terms out in 2019, instructs the California Air Resources Board to develop a framework for reaching carbon neutrality.

The law will take effect in January, and California will then join Hawaii as the only two states that have pledged to eliminate fossil fuels from their electric grids by 2045.

California Self-Generation Incentive Program on Verge of Five Year Extension

It has been a busy week for California State legislators on the clean energy front. Following closely on the heels of the California Senate’s approval of SB 100, the California Senate on Thursday by a vote of 25-13 passed SB 700, a bill that according to the California Solar and Storage Association (CALSSA) could result in an additional 3 GW of behind-the-meter energy storage systems in California by 2026. The bill, which has been the subject of intense lobbying by CALSSA and other solar industry advocates, also passed the California Assembly on Wednesday by a vote of 57-18. It now will be forwarded along to Governor Jerry Brown’s desk for consideration, where it is widely expected to be signed into law.

SB 700 would extend California’s Self-Generation Incentive Program (SGIP) for an additional five years, from the current January 1, 2021 expiration date until January 1, 2026. SGIP provides rebates for the installation of energy storage systems and certain eligible technologies including wind turbines, pressure reduction turbines, fuel cells, waste heat capture and combined heat and power, internal combustion engines, microturbines and gas turbines (although the bill provides that after January 1, 2020, nonrenewable generation technologies will not be eligible for rebates under the SGIP). 75% of total rebates under the program are designated for energy storage technologies.

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CA Votes to Go 100% Carbon-Free by 2045

Earlier this week, the California Assembly took aggressive steps to limit greenhouse gas emissions as legislators voted to require that 100 percent of the state’s electricity come from carbon-free sources by 2045. If signed into law, California would become the most populous state to go completely green in terms of energy production.

SB 100, authored by State Senator Kevin de León, gradually raises California’s renewable energy target to 60 percent by 2030 with interim targets, and gives the state until 2045 to generate the rest of its electricity from carbon free sources. The California Senate already passed an earlier version of the bill last year, 25 to 13, and the Assembly version now heads back to the Senate for final approval before heading to Governor Jerry Brown’s desk. Continue reading this entry

U.S. Court of Appeals Rules for the Government in Alta Wind Case

On July 27, 2018, the United States Court of Appeals (the “Court”) published its long awaited decision in the case of Alta Wind I Owner-Lessor C et al. v. United States, 2018 U.S. App. LEXIS 20931 (Fed. Cir. July 27, 2018) (“Alta”). The Court vacated and remanded the lower court decision, holding that allocation of the purchase price should be made using the residual method of Section 1060 of the Code.

In Alta, the developer (the “Seller”) of several wind farms (the “Projects”) sold the Projects to an investor (the “Buyer”) shortly before the Projects were placed into service and immediately leased the Projects back from the Buyer. Once the Projects had been placed in service, the Buyer applied for grants under Section 1603 of the American Recovery and Reinvestment Act of 2009 (“Section 1603 Grants”). The Section 1603 Grant program was created to increase investment in domestic, clean energy production. Under Section 1603, Treasury made payments in lieu of investment tax credits to eligible applicants for specified energy property used in a trade or business or for the production of income. The purpose of the 1603 payment was to reimburse eligible applicants for a portion of the cost of installing the specified energy property, including solar, wind, geothermal, biomass, fuel cells, hydropower, combined heat and power, landfill gas, municipal solid waste, and microturbine property. In the case of Alta, the Buyer treated virtually the entire purchase price as eligible basis for purposes of the Section 1603 Grants and claimed a total of over $700 million in Section 1603 Grants. In turn, Treasury reduced the amount of Section 1603 Grants to approximately $495 million, a reduction of over $206 million. Treasury based its determination based on the actual development and construction costs of eligible property, plus a “turn-key premium since the Projects were complete and ready to operate. The Buyers filed suit in the Court of Federal Claims (the “Claims Court”) to recover the $206 million shortfall and the government counterclaimed, stating that it had overpaid plaintiffs by $59 million.

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