By David Wagman
The sixth annual Renewable Energy World North America took place in Las Vegas March 10-12. Highlights gleaned from David Wagman's reporter's notebook include:
1. Barry Worthington, Executive Director of the U.S. Energy Association, said that in 30 years there has "never been a brighter day" for renewable energy. As proof he pointed to an unprecedented set of economic and political circumstances. In particular, he said renewable energy has never had a more supportive team in the White House in the personas of Steven Chu, Carol Browner, Ken Salazar, Nancy Sutley and Lisa Jackson. As in the Bush administration, the Obama administration appears to be running climate change initiatives directly from the White House. Some wonder whether Energy Czar Carol Browner will be the equivalent of a "green" Dick Cheney.
2. Worthington said the U.S. Environmental Protection Agency could have a "stunningly important role" on climate change, with its presumed authority to regulate carbon dioxide should Congress fail to act on the issue.
3. Adam Umanoff, attorney with Chadbourne & Parke, said the renewable industry has felt the effects of frozen capital markets. Beginning around last October 1 and extending into early 2009 securing major loan commitments were almost impossible to secure. European banks, which had financed many U.S. renewable energy projects, largely retreated to their home markets as economic conditions in the U.S. and elsewhere worsened.
4. Umanoff said much new renewable energy development is based on tax credits. All that's great, he said, but the model assumes investors have taxable income they need to shelter. With profits down, taxable income has suffered and capital from such sources has been difficult to secure. For example, last summer around 30 large institutional tax equity investors were active in the renewable energy market. As of January 1 the number had shrunk to four and those were largely on the sidelines. The scale of this "dramatic dislocation" of capital "put the fear of god" in many chief financial officers, he said.
5. Umanoff called the stimulus package a "transcendent" piece of legislation targeted toward dislocations in the debt and capital markets. He said the stimulus uses four primary tools: tax incentives, cash grants, loan guarantees through the Department of Energy and direct spending.
6. For construction projects starting work before September 30, 2011, federal loan guarantees may be sought. The stimulus bill sets aside $6 billion for loan loss reserves, opening up anywhere from $60 billion to $100 billion in financing capacity. "It will be interesting to see how quickly (the Department of the) Treasury can step up" to write rules and make the loan guarantees available, Umanoff said.
7. Panel members warned against underestimating the difficulty of siting new transmission resources, a key element in exploiting renewable resources. At present, the FERC can intervene in siting only if a state rejects a transmission project within an existing right of way. Talk is underway in Washington to allow the federal government to overrule state transmission decisions, using its eminent domain powers. But expect legal challenges to that presumed federal superiority. "We have a long way to go on transmission development," Umanoff said.
8. Congressional leaders also are pushing for quick work on greenhouse gas legislation. House leaders want a climate change bill out of committee by Memorial Day. The goal may be ambitious, however, given the nature of talks last summer surrounding climate change bills, such as Warner Lieberman. Reaching a consensus over an economy-wide approach to greenhouse gases could prove difficult, Worthington said. In particular, a cap and trade approach is by no means the unanimous choice for regulating carbon. Renewed interest in a carbon tax is growing. Congressional leaders hope to have an approach adopted before the international Copenhagen climate change summit convenes in December to revamp Kyoto goals. "It will be hard to imagine how the U.S. negotiating team can endorse a new (climate change) treaty without clear signals from Congress on what will be acceptable," Worthington said.
9. If greenhouse gas legislation faces an ambitious timetable, "underambitious" is how Worthington describes the goal of having 1 million electric vehicles on the road. He said the even in the current down economy Detroit still plans to produce around 13 million units. The goal of 1 million electric vehicles is small considering the base of 250 million vehicles in the United States, Worthington said.
10. Richard Miller, from Devine Tarbell & Associates, said pumped storage can reach full generation in 10 minutes, enabling the resource to smooth supply bumps such as those caused by wind's intermittency. Utility generation planners used to worry only about variable demand. But with so much intermittent wind in many systems, planners now must also weigh the effects of variable supply. He said 25,000 MW of pumped storage proposals are in front of the Federal Energy Regulatory Commission at present and that the permitting cycle can represent a five- to eight-year process. As a result, "patient capital" is required.