How Does The PTC Affect Owners’ Repowering Call?
Although the federal production tax credit (PTC) has traditionally applied to new installations, the four-year extension of the PTC passed in 2015 has incentivized a number of asset owners to consider repowering or retrofitting existing wind power assets, according to a new report from MAKE.
The report says these asset owners are doing so in order to re-qualify projects under PTC eligibility guidance from the U.S. Internal Revenue Service so that they receive another 10 years of tax credits.[adright zone=’190′]
MAKE explains that repowering aging assets creates an opportunity to realize substantial returns from increased annual energy production, while also deploying significantly less capital than would be required for a new project.
To re-qualify an existing asset, owners must invest 80% of the fair market value of the asset; this is achieved through repowering or retrofitting.
MAKE estimates the total capacity likely to be repowered under this mechanism to be upward of 6 GW. In addition, this includes a capital investment of more than $2 billion per year.
Given the scale of an “80-20” campaign – in which the tower and foundation of a wind turbine are retained but a new nacelle and blades are mounted – MAKE will use the following methodology to account for such cases in its products and is publicizing it for the sake of transparency, clarity and standardization.
Traditional repowering, which has been practiced predominantly in California, where a large number of turbines were installed in high-wind sites before 1990, is defined as the complete removal of a wind turbine and its replacement with a modern unit. This includes foundations, towers, nacelles, blades and usually balance-of-plant facilities.
By contrast, MAKE’s methodology for repowering under the current PTC program (80-20 repowering) begins with the understanding of the nacelle as the central energy-producing component of a wind turbine; accordingly, if the nacelle is replaced in its entirety, the turbine is considered repowered, and the market share is assigned to the turbine manufacturer.
The foundation and tower, as non-productive components, may remain unchanged or enhanced if necessary in an 80-20 repowering, the report says.
Selective replacement and upgrade of components within the nacelle – a common strategy regarding older turbines in which the FMV is lower and fewer replacements are required for PTC qualification – will not be considered repowering but, rather, will be considered “retrofitting.”[adleft zone=’190′]
MAKE says retrofitted turbines will not contribute to the market share of turbine manufacturers in the year of installation or thereafter. Projects adjusted through a retrofit will not be considered new installations (for the purposes of MAKE’s databases and analyses, except in certain cases).
In these certain cases, the retrofitting of components within a turbine may lead to an enhanced capacity rating or rotor diameter, says MAKE.
Such cases will be accounted for in the manner of a traditional uprating or derating after initial project operation: The changes in capacity will not be considered part of a turbine manufacturer’s annual new capacity, but existing entries within MAKE’s installation database will be updated to reflect the new figures. In addition, MAKE’s market outlooks will be adjusted to reflect cumulative totals.
As an example, a retrofit of components within a GE 1.5 MW turbine with a 77-meter rotor that increases nameplate capacity to 1.6 MW and rotor diameter to 82.5 meters would be reflected in the “capacity,” “turbine capacity” and “turbine model” fields of the host project’s line in MAKE’s installation database.
Bill To Scrutinize Projects Sited Near Military Bases
A New York Republican congressman has proposed a bill that would prevent wind projects near military bases from obtaining tax credits. Specifically, U.S. Rep. Chris Collins cites “significant concerns from local residents and lawmakers” for an Apex Clean Energy project in western New York.
Complementing a companion bill from Sen. John Cornyn, R-Texas, Collins has rolled out the “Protection of Military Airfields from Wind Turbine Encroachment Act.” According to a press release from the congressman, the legislation would mandate that any new wind projects being built “within a 40-mile radius of a military installation” be ineligible for production tax credits.
According to Collins, Apex’s 200 MW Lighthouse Wind project – which the company expects to be completed in 2019 – could threaten the future of the nearby Niagara Falls Air Reserve Station, which “employs over 2,600 people and contributes over $200 million a year to western New York’s economy,” he says.
“I cannot condone any activity which puts the Niagara Falls Air Reserve Station’s future operations and viability at risk,” Collins says.
In a statement to North American Windpower, Apex explains that it has been diligently working with the U.S. Department of Defense (DoD) “to ensure [its] wind energy facilities do not adversely impact military missions.”[adright zone=’190′]
“Related to Lighthouse Wind, we have been consulting with the Department of Defense and Niagara Falls Air Force Reserve Station regularly to ensure that any concerns regarding the base’s operations are resolved before the project is built,” Apex says, adding that the project would be situated more than 25 miles from the military base.
The developer says it has even received a letter from the DoD Siting Clearinghouse in which the agency confirmed that Lighthouse Wind is “unlikely to impact military testing or training operations in the area.” Thus, Apex believes it is “appropriate to trust the expertise of the DoD Siting Clearinghouse, as well as that of local military experts and advisors, to assess the potential risk of wind energy projects to their own bases.”
However, Dan Engert, town supervisor for Somerset, N.Y., claims that the DoD has been “increasingly engaged to express either reservations or objections to potential wind projects across the country on the basis of military readiness issues and conflicts with military radar systems,” he explains in a press release.
“The Lighthouse Wind project in Somerset is very poorly sited for a number of reasons, and I do not think it’s in our government’s best interest to expand wind energy at the expense of military readiness,” Engert says.
The congressman, who adds that he will “do everything in [his] power to ensure the viability of the Niagara Falls Air Reserve Station,” notes that the U.S.’ military installations are “crucial to the security of our nation.”
“This legislation ensures that military installations like the Niagara Falls Air Reserve Station can fully operate without potential interference from wind turbines, some of which can be as tall as 600 feet,” he contends.
However, Apex says it has not yet chosen the turbines for the project, which is still in a pre-application phase. In addition, the developer points out that structures standing more than 200 feet tall in the U.S. are “required to undertake a rigorous system of review by the DoD and FAA” before construction can commence.
“When this final [project] proposal is made, the DoD and FAA will have the chance to weigh in again with their approvals through these review systems,” Apex adds.
Voicing support for Collins’ proposed bill, Pamela Atwater, president of Save Ontario Shores, says in a statement that her group “pledges its full support” for the bill and “look[s] forward to its enactment.”
“We are grateful to Congressman Collins for taking the initiative to propose legislation that will work to protect the future of our air base and the thousands of families and workers who rely on its continued operation,” says Atwater.
However, Apex maintains that the DoD does, indeed, know what it’s doing: “We believe our professional national security experts are doing their duty and acting in the best interest of our nation, the communities in which they operate and our armed forces.”
Markey, Merkley Propose 100% Clean Energy Bill
U.S. Sens. Edward J. Markey, D-Mass., and Jeff Merkley, D-Ore., have introduced a Senate resolution calling for generating 100% of the electricity consumed in the U.S. from clean and renewable energy resources by 2050.
Other senators supporting the resolution include Bernie Sanders, I-Vt.; Elizabeth Warren, D-Mass.; Al Franken, D-Minn.; Ben Cardin, D-Md.; Brian Schatz, D-Hawaii; and Mazie Hirono, D-Hawaii.
According to the senators, the resolution points to the enormous job creation potential of transitioning to renewable energy sources such as wind, solar and geothermal, particularly in communities with high rates of unemployment or underemployment.
“As a technological giant, the United States must continue to lead the clean energy revolution,” says Markey. “Moving to 100 percent clean energy will power job creation that is good for all creation. We can and will meet this goal, and now, more than ever, it is critical that we stand up and fight for our clean energy future.”
Merkley says the resolution “sends a message loud and clear to our Senate colleagues: It’s time to get serious about our climate efforts with big, bold and rapid moves to accelerate the clean energy economy.”
The Sierra Club agrees. In a statement, Christine Hill, the group’s deputy legislative director, says, “It’s long past time we set a national goal of moving to an economy fully powered by 100 percent clean energy.”
The organization, which heads the Ready for 100 campaign, points out that 20 U.S. cities are currently committed to reaching 100% renewable energy.
“Cities across the country have already demonstrated that achieving 100 percent clean, renewable energy is a goal well within our reach, and major corporations like Google are showing the same in corporate America,” says Hill. “The question isn’t if we can power our future with 100 percent clean energy – it’s how quickly we can get there.”
Florida City Unveils Renewable Energy Plans
The St. Petersburg, Fla., City Council has formally approved the city’s commitment to transition to 100% renewable energy. According to the Sierra Club, St. Petersburg represents the first city in Florida and the 20th city in the U.S. to make such a commitment.
In a unanimous vote, the City Council Committee of the Whole has allocated $250,000 of BP settlement funds from the 2010 Deepwater Horizon oil spill to an Integrated Sustainability Action Plan, which will chart a road map to 100% renewable energy in St. Petersburg.
In addition, the plan also incorporates components of a climate action plan and a resiliency plan and strategies for St. Petersburg to achieve a 5 STAR Community rating. The 100% clean energy road map builds on Mayor Rick Kriseman’s executive order establishing a net-zero energy goal for the city earlier in 2016.
“Working toward 100 percent clean energy and zero waste will help ensure that St. Pete remains a ‘city of opportunity where the sun shines on all who come to live, work and play,’” says Kriseman.
The Sierra Club continues working to get U.S. cities to fully commit to renewables through its Ready for 100 national campaign.
“The movement for clean energy in cities and towns across the country is now more important than ever,” comments Michael Brune, executive director of the Sierra Club. “St. Petersburg joins 19 other cities, from San Diego, Calif., to Greensburg, Kan., that will lead the way to support equitable and inclusive communities built on 100 percent clean, renewable energy for all. Whether you’re from a red state or blue state, clean energy works for everyone, and local leaders will continue to move forward to create more jobs, stronger communities, and cleaner air and water.”
The association’s local branch, Suncoast Sierra Club, heads the Ready for 100% St. Pete campaign, which develops residential and commercial pilot programs with partner organizations and raises public awareness of clean energy and climate planning in the city.
Campaign Manager Emily Gorman says, “This is a historic moment for St. Pete. We envision a city where families can raise their kids in communities free from toxic pollution – where everyone has the opportunity for a good job and access to healthy, affordable energy. The transition to 100 percent clean, renewable energy will ensure a more resilient, sustainable and equitable future for all our residents.”
Illinois Supreme Court To Hear Clean Line Case
It’s a yes from the Illinois Supreme Court: The rejection of Clean Line Energy Partners’ $600 million Rock Island Clean Line will soon be reviewed in court.
The Rock Island Clean Line, first proposed in 2010, was approved in 2014 by the Illinois Commerce Commission (ICC). However, opposition from Commonwealth Edison and various landowner groups resulted in the Third District Appellate Court’s reversing the approval.
Then, in September 2016, the ICC, Clean Line Energy Partners, the International Brotherhood of Electrical Workers, the Natural Resources Defense Council and Wind on the Wires asked the Illinois Supreme Court to take up the case on the project, which would deliver wind energy to power approximately 1.4 million homes annually, according to Clean Line.
According to the Chicago Tribune, the court has now decided to go ahead and review the reversal case.
Specifically, the developer anticipates that the 500-mile, high-voltage, direct-current transmission line will deliver 3.5 GW of wind from northwest Iowa and the surrounding region to communities in Illinois and other states to the east.
In a statement encouraging the Illinois Supreme Court to take up the case, Tom Kiernan, CEO of the American Wind Energy Association, said in September, “New transmission infrastructure is vital to the national need for more wind energy development, and Illinois is at the nation’s infrastructure crossroads. It is not good for Illinois or America for the state to close its borders to low-cost renewable energy.”