Final Economic Recovery Bill With Key Wind Provisions Clears House; Senate Coming

After a frenetic week of compromises and edits to the legislation, the U.S. House and Senate reached a compromise on legislative language for the economic recovery package that includes numerous critically important provisions to support the continued development of renewable energy. The House approved the compromise this afternoon and the Senate is expected to vote on the legislation this evening or sometime tomorrow.   Senate passage is seen as virtually certain.  President Obama is likely to sign the legislation into law in the next several days.

The Senate and House spent the better part of the week working to unify the versions of the package that came out of each chamber. The legislation includes a three-year extension of the production tax credit (PTC), the longest in the history of this primary policy support mechanism for wind power. Perhaps most importantly, given the immediate pressures of today’s economy, the legislation includes a new program that allows renewable energy developers the option of forgoing the PTC and instead securing a grant from the Treasury department in the amount of a 30% investment tax credit (ITC). The grant is available for projects placed in service in 2009 or 2010, or placed in service before 2013 provided construction begins in 2009 or 2010. 

This program to help monetize renewable tax credits is considered critical for the wind industry to continue its growth in the face of the economic downturn, which has dramatically reduced the ability to secure value for renewable tax credits.

Also part of the legislation is a new $6 billion U.S. Department of Energy (DOE) loan guarantee program as well as an additional year of bonus depreciation for 2009, a $1.6  billion increase in the clean renewable energy bonds (CREBs) program (a mechanism for tax-exempt utilities such as rural cooperatives that have no use for the PTC), $1.25 billion in undesignated funding for DOE’s Office of Energy Efficiency and Renewable Energy, and targeted provisions to encourage transmission for renewables. And, importantly for the growing small-wind industry, the bill would eliminate the cost caps for the small-wind tax credit.

“We’re very confident that this bill will move forward into law,” said Gregory Wetstone, AWEA’s senior director of government and public affairs. “This is a critically important bill for wind power and renewable energy. We look forward to working closely with the new Administration to ensure the new programs created through this legislation are carried out in the most constructive fashion possible, to help the wind industry do its part in meeting the President’s goal of doubling the use of renewable energy in three years.”

The legislation, not surprisingly, does not deliver on all items for which the wind industry advocated. Not included was a 10-year carry-back of general business credits, including the PTC (that is, the ability to count tax credits toward past year’s taxes—another mechanism to counter the devaluation of the credits during the economic downturn).  The Senate version of the economic recovery bill included a five-year carry-back provision that ultimately was removed on the Senate floor during the debate over the final package.

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An investment in the power grid to enable wind to supply 20% of the electricity needs of the eastern U.S. would save consumers $12 billion annually, recovering capital costs in as little as seven years while reducing greenhouse gas emissions and making the power grid more reliable, according to a study released this week.

The Joint Coordinated System Plan (JCSP) study found that the wind resources brought online by the upgraded transmission network would reduce carbon dioxide emissions in the Eastern U.S. by almost 3 billion tons per year—savings that would potentially be worth tens of billions of dollars under a carbon tax or cap-and-trade system.

“AWEA is pleased to see that yet another study has found that upgrading our power grid to put the nation’s wind energy resources to use saves consumers money, reduces greenhouse gas emissions, and makes the power grid more reliable,” said AWEA Policy Director Rob Gramlich.  “The study reinforces what we’ve been saying for some time: upgrading the power grid to access our nation’s world-class wind power resources is a win-win for consumers and the environment.” 

The study also found that the need for new coal-fired, baseload power plants would be cut in half under the wind and transmission scenario—dispelling the outdated assumption that renewable energy cannot reduce the need for such power. Moreover, the reliability of the power grid would be enhanced, reducing the likelihood of events like the August 2003 blackout that cost consumers and businesses billions of dollars, the study concluded.

In that regard, it is generally agreed that a renewed investment in transmission is needed regardless of the need to accommodate new wind energy. The JCSP study, in fact, found that the cost of transmission needed under a scenario of only 5% wind energy penetration is still $50 billion. Thus, given the significant economic and environmental benefits of accessing the world-class wind resources that are currently trapped in the middle of the country, making a slightly larger initial investment in the nation’s power grid to tap those resources would pay for itself many times over, wind energy advocates pointed out.

Although the study did not calculate job creation or economic development benefits of the wind and transmission scenario, other studies like the U.S. Department of Energy’s “20% Wind Energy by 2030” report have shown that obtaining 20% of the nation’s electricity from wind power would create over 500,000 jobs and generate $80 billion per year in economic activity.

“A forward-looking investment in our nation’s power grid to access renewable energy is a powerful solution to the three largest challenges facing our country today:  the economic downturn, decreasing energy security, and the urgent need to address climate change,” said Gramlich. "We look forward to the administration and Congress taking up national transmission policy this spring."

The report was prepared by a host of system operators and reliability organizations covering a wide chunk of the U.S., including the Midwest Independent System Operator, SERC Reliability Region, PJM Interconnection LLC, the Southwest Power Pool, the Mid-Continent Area Power Pool and the Tennessee Valley Authority.

Transmission has been a hot topic of late, with several announcements coming this week (see related stories). Also released this week was a report from the Lawrence Berkeley National Laboratory today released a new report: “The Cost of Transmission for Wind Energy: A Review of Transmission Planning Studies.”

In addition, AWEA will hold a national workshop on Wind Power Transmission on March 17 - 18 in Overland Park, Kans.  Kansas Governor Kathleen Sebelius will be a keynote speaker, and the workshop will address the full range of transmission issues, from interconnection queue logjams to proposals for national transmission policy. For more information, go to  http://www.awea.org/events/transmission09/.

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Stating that it is considering additional renewable energy resources, Westar Energy, Inc., issued a request for proposal (RFP) seeking bids for as much as 500 MW of renewables.

Westar said it is evaluating the possibility of up to 200 MW of the generation being online by late 2010 and the remainder online by late 2013. The utility now has 295 MW of wind resources, amounting to 6% of its customers’ peak demand. An additional 200 MW would bring the utility to 10% renewables.

“Westar Energy continues to seek additional generation resources to provide for Kansas’s electricity needs with clean, renewable energy,” said Bill Moore, Westar Energy chief executive officer. “This is an important step in our support of our renewable energy goals.”
 
The RFP invites firms to submit proposals under which Westar Energy would own the facility after development and construction, although bidders may also provide other options to Westar including entering into an agreement to sell to the utility the electricity produced at the facility, as well as other options bidders believe would be attractive to Westar and its customers.

Westar requires that wind power proposals adhere to the guidelines set forth by the Kansas Energy Council. Westar is also requiring that all proposals address potential environmental impacts at proposed locations.
 
Proposals will be due March 30. Westar’s ultimate decision to add more renewable resources will hinge on overall costs, the status of state and federal policy on renewable resources, and regulatory treatment, the utility said.  For a copy of the RFP, go to www.WestarEnergy.com .

  

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Michigan Governor Jennifer Granholm (D) signed an executive order on February 6 creating a multi-stakeholder advisory body to help identify areas in the Great Lakes suitable for wind energy projects and facilitate the inclusion of the public in the process.

Housed within the state’s Department of Energy, Labor, and Economic Growth,  the Great Lakes Wind Council is to provide citizens with a public forum to begin to identify where in the Great Lakes wind energy systems may be prudently sited. In addition to looking at ways to best engage the people of Michigan in a public dialogue about offshore wind so that statewide interests are considered, the council will identify criteria that can be used to review applications for offshore wind development. The council will also identify criteria for mapping areas that should be excluded from development and areas most favorable for such development. The group is to provide a full report to the governor by September 1.

"The Great Lakes are Michigan's most precious natural resource, and they provide tremendous economic value to the citizens of Michigan," Granholm said.  "The availability, consistency, and velocity of wind in the Great Lakes make their waters uniquely attractive to wind energy developers seeking to build offshore wind energy systems—but we want to make sure we are prudent in this process of approval."

The list of appointees, which includes a diverse range of stakeholders, includes such prominent names as Joseph L. Welch, chairman, president and CEO of ITC Holdings Corp., who was appointed to represent independent electric transmission companies. Adesoji Adelaja, director and founder of the prestigious Michigan State University Land Policy Institute, is representing “other residents” of the state. Representing the wind energy development industry is Marty Lagina, CEO of Heritage Sustainable Energy, LLC.

Electric utilities will be represented by the heads of the state’s two biggest energy companies: Steven Kurmas, president and CEO of Detroit Edison, and John Russell, president and CEO of Consumers Energy.

In addition to Adelaja, representing “other residents” of the state will be Richard F. Vander Veen, III, president of Mackinaw Power, and Jack Knowles, III, vice president of Dietrich, Bailey and Associates, P.C.

The governor’s appointments also include representatives from statewide environmental organizations, Native American tribal governments, the charter fishing industry, commercial shipping, local government, and the tourism industry.

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About 180 AWEA members took their pro-wind arguments to about 120 House and Senate offices on Wednesday as part of the association’s second annual Lobby Day. The visits came at the right time—Congress was in the final stages of acting on the economic stimulus package, which included key incentives to promote wind energy (see lead story).

In particular, AWEA members stressed the importance of supporting a Department of Energy grant program in the stimulus bill, which passed two days after their lobbying. The grants are supposed to make up for the fact that the production tax credit is not attracting investment because of the poor economic conditions.

In small group meetings with members of the House or Senate or their staffs, AWEA members were also urged to talk up the fact that wind energy creates jobs, and to remind members of Congress of the wind-related facilities in their states and districts.

“We had a great turnout of members, which enabled us to cover a lot of ground on Capitol Hill in a single day,” said Bree Raum, AWEA’s manager of grassroots advocacy, who helped organize the event.

Before heading to Capitol Hill, AWEA members were briefed by Representative Edward Markey (D-Mass.), a wind supporter who chairs the key Energy and Environment Subcommittee. He noted that while the mood in Congress right now is favorable toward wind and other renewables, there is still an education gap. “Make sure you tell the members that 42% of all new electric generating capacity last year was generated by wind,” he said.

Members also received briefings on the status of wind legislation from AWEA staff members and pointers on lobbying from several Congressional experts.

The night before Lobby Day, about 50 AWEA members attended a dinner hosted by WINDPAC, AWEA’s political fundraising arm. Rep. Jerry McNerny (D-Calif.), a former wind industry engineer who was elected to the House in 2006, spoke at the event. 

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Conference Watch: Event Highlights Job Creation

WINDPOWER 2009 Exhibition Floor Grows Again!

Don’t miss your chance to save on your hotel costs and your registration fee! Make your hotel arrangements at the Sheraton Overland Park by February 20, 2009. Discounted rooms, at a rate of $129 plus applicable taxes, will be available while rooms remain, up to the deadline. To book your room click here or call (913) 234-2100 and indicate you are with the American Wind Energy Association.

The AWEA Wind & Transmission Workshop, March 17 - 18, 2009 in Overland Park, KS, will help attendees learn how to better design and interconnect wind projects; the event will bring together leading experts and notable policy makers such as Federal Regulatory Energy Commission (FERC) Commissioner Philip D. Moeller and Kansas Governor Kathleen Sebelius.

Limited exhibition and sponsorship opportunities are still available at this workshop. If you would like more information, please contact either: Mike Swinburne at mswinburne@awea.org or (202) 383 – 2502 or Lori Rugh at lrugh@awea.org or (661) 821 – 2149.

For additional program information, visit http://www.awea.org/events/transmission09/agenda.html. For additional questions, please contact us at conference@awea.org or (202) 383-2512.

 

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Recruit at WINDPOWER 2009 Job Fair -- Chicago IL -- May 5-7, 2009