Rich May: News

March 2008

Opening Presentation for the 5th Annual NECA Renewable Energy Conference, March 5, 2008, Westborough, MA

Good morning and welcome to the 5th annual NECA Renewable Energy conference.

I’m an attorney with law firm Rich May in Boston and until last month when my term ended I was the co-chair of the Renewable Energy and Distributed Gen Committee of NECA.

Our panels today will be talking a lot about these opportunities: First we’ll hear about the push renewable energy gets from government legislation and programs and the infrastructure development needed to deliver energy generated from new renewable sources to consumers. Next we’ll hear about some exciting new technologies that establish a promise to provide additional renewable supplies in ways that perhaps can be sited more easily. We’ll then hear how these projects and technologies can be financed. Finally, we’ll hear about actual projects and what hurdles developers face and how they overcame those hurdles.

I’d like to set the stage a bit by noting a variety of interesting developments and trying to divine a few trends.

First, in the last week:

(1) Oil hit $104 a barrel – not much to comment on here, but to note that such prices make renewables more economic, even if the price abates when demand responds to the prices.

(2) U.S. House of Representatives passed HR5351 the Renewable Energy & Energy Conservation Tax Act of 2008 ($18 Billion) which would:
- Extend PTC through 2011
- Extend an energy tax credit for solar and fuel cell property through 2016
- Extend tax credits on various energy efficient property expenditures
- Extend credits on biodiesel and alternative vehicle expenditures
- Establish New credits for Clean Renewable Energy Bonds and Plug-In hybrid vehicles
- All funded by reduction in financial support for oil industry
- President Bush vowed to veto such legislation

(3) 2/25/08 Local company Verenium, was awarded one of four grants under the Federal Dept of Energy $34M cellulosic ethanol production program; also this past week Verenium announced sale of $54M of senior convertible notes.

(4) Recently, local newspapers reported that Massachusetts Legislature held hearings on the Ocean Management Act and an amendment that would facilitate the proposed Buzzards Bay windfarm, and that such amendment was adopted by House and now is at a conference committee awaiting action. Also, related to offshore energy development was the MA DEP’s issuance of proposed regulations a couple weeks earlier that would remove variance requirements for transmission cables from offshore facilities.

(5) New Hampshire Ski Resort Loon Mountain announced its SkiGreen Tags program: add $2 payment to your lift ticket and essentially purchase the renewable attributes associated with 100 kwh of wind energy (incidentally 140 lbs of global warming pollution or impact of driving 150 miles in an average mpg car.

In the last month or so:

(1) 1/28/08 MA announced Commonwealth Solar Program: goal of 27 MW over next 4 years through rebates ($2/watt) to residential, commercial, industrial and municipal consumers who install new solar PV capacity; Total program cost of $68M, funded through small increase in MTC’s support of PV and from $28M from DOER by alternate compliance payments. This is first step in Massachusetts’ commitment to increase installed solar power from 5MW to 250 MW by 2017, which was made in connection with the Evergreen Solar commitment to locate its first full scale manufacturing facility in MA.

(2) In mid January, National Grid in RI stated a willingness to enter long term contracts with renewable energy providers in connection with prospective compliance with the RI RPS.

(3) 2/11/08 Connecticut Clean Energy Fund released its Draft 2008-2010 Comprehensive Plan.
Highlights: - Connecticut’s efforts to develop On-site renewable Distributed Generation; it reports that so far the CCEF has funded more than 20 projects.
- Project 150 – conclusion of Round 2 solicitation for approval of over 100 MW of new projects for long term contracts, noting impending Round 3 to reach goal of 150 MW.

(4) Over the last several months, NY and ME gave permits for several different wind farms, including Projects developed by Noble Environmental Power (speaking here today) and Sheldon Wind in NY and UPC’s Stetson Project in ME. (UPC is also speaking here today).

(5) 2/15/08 US Mineral Management Service issued draft EIS for Cape Wind, finding no major negative impacts on birds, marine life, fishing, navigation etc. In public comment review now.

(6) 12/21/07 Massachusetts Senate issued its version of the new wide ranging energy legislation, which is a proposed Redraft of the House’s Green Communities Act issued in November 2007. Notably this proposed legislation would:
- Modify Renewable Portfolio Standard to allow existing facilities and establish a new “alternative portfolio standard” including a variety of different generation technologies and addressing how imported energy treated for RPS purposes.
- Allow potential utility ownership of limited amounts of renewable generation
- Increase behind the meter renewable generation through net metering credits
- Establish pilot programs for electric utility companies to enter long term contracts with renewable generators
- Establish pilot program for consumers with retail access to directly buy renewable generation attributes
- Establish pilot program for consumers to purchase and install renewable generation products and energy efficiency products

(7) 2/14/08 The Maine Governor’s task force on wind power issued a draft report recommending reduced permitting requirements on wind projects throughout most of Maine and barring development in other more sensitive areas. That report also set goals of 2000MW of new wind generation by 2015 and 3000MW by 2020.

(8) On December 19, 2007, the US Congress enacted new energy legislation, Energy Independence and Security Act, that omitted various financial support for the renewables industry, but it did provide strong support for ethanol production and energy efficiency measure and did increase motor vehicle mileage standards, for the first such increase in decades. Also in December, the Climate Security Act, which deals with greenhouse gas reductions, was voted out of committee to the full senate with bipartisan support.

(9) And for the last piece of recent news I want to highlight, we have to travel to Glendale Arizona and a Sunday that most of would rather forget – Super Bowl Sunday. I won’t comment on the game, but there was a fairly significant PR effort by the local utility and the National Football League regarding the fact that the Super Bowl was powered 100% by green energy (specifically a combination of solar, wind and geothermal energy).

So how do these various developments relate to our conference today and what do they tell us about what is happening with renewable energy and what the future might yield?

(1) Energy prices (not just oil, though that gets the headlines and there is something of a disconnect with natural gas prices) are very high and even if driven by a weak dollar and even if they fall back, we are entering a new environment regarding energy sources and prices. This should help push development and governmental and public support for renewable energy projects and technologies.

(2) There are significant, but not uniformly supported governmental efforts at the Federal and state levels to support further renewable energy project development. The passage of the Energy Independence and Security Act shows that our government agrees that there’s a problem, but its omission of renewable tax credits show a disagreement on how to address the problem. I don’t think that many people expect the Renewable Energy & Energy Conservation Tax Act of 2008 to become law as long as the support for renewables comes at the cost of the oil industry.

At the state level, there are many efforts, even beyond what I’ve mentioned above, all of which seek to drive more development of renewable energy and support for energy efficiency. Some of these efforts involve funding of specific renewable energy projects and technologies, while some establish a framework that should engender more renewable energy development via long term contracts and the Renewable Portfolio Standard. We’ll hear more about both later today.

All these factors will push renewable energy development along further and faster.

(3) Projects are getting siting permits and are getting built, often by very well-funded, solid companies. This fact should not obscure the challenges facing developers, which famously includes significant NIMBYism, need for transmission infrastructure and administrative hoops of interconnection requirements by the ISO and local electric distribution companies. Another issue is the increases in costs of renewable generation equipment and the difficulties of timely obtaining such equipment (notably wind turbines). Ms. Hong will discuss this important issue at length this afternoon.

(4) The Verenium news I highlighted because a significant trend and opportunity is the existence of new technologies and the efforts of government authorities to help develop those technologies, like the Massachusetts deal with Evergreen Solar. A related significant point is the availability of large amounts of investment capital interested in these new technologies. A recent Cambridge Energy Research Associates study projecting the potential for $7 Trillion of investment in the clean energy sector by the year 2030.

(5) Finally, I mentioned skiing and football to show the extent to which going “Green” and that the public dialogue about using and buying clean renewable energy is becoming pervasive. There’s hardly a week that goes by without some major corporation announcing its clean and green credentials (I find the Google efforts particularly interesting) and many of these efforts have the potential to yield real benefits – not only for our planet and energy mix, but for the companies themselves who in certain cases are seeing a way to do well by doing good.

So to conclude, I see many factors that will only push renewable energy development further along at a faster pace. There are tremendous opportunities for all of us whether we are investing our monetary or sweat equity into project or technology development, or whether we provide services to help those developers make their dreams a reality.

With that I’ll turn it over to Paul Cleri to introduce the first panel.