Monday, April 22, 2013

Renewable Energy Law News - Week of April 15, 2013

Vermont Representative introduces legislation to make it easier to finance renewable energy projects

Joined by Vermont renewable energy companies that are putting Vermonters to work and charting a cleaner energy future, Rep. Peter Welch has announced bipartisan, bicameral legislation that will make it easier to finance renewable energy projects in Vermont and throughout the country.

"MLPs provide the opportunity for increasing capital for renewable energy projects, driving down their cost and helping make projects happen," says David Blittersdorf, president and CEO of AllEarth Renewables, a solar tracker manufacturer based in Williston, Vt. "It makes common sense to extend this financing option currently available for fossil fuels to renewable energy."

At AllEarth Renewables in Williston, Welch outlined his Master Limited Partnership Parity Act, which would allow renewable energy companies to take advantage of a key financing tool used by the energy sector known as master limited partnerships (MLPs). For nearly 30 years, MLPs have driven investment in oil, gas, and coal projects. Under current law, renewable energy projects cannot take advantage of MLPs. Welch’s bill expands the definition of qualified projects to include renewable energy.

“Expanding MLP financing to renewable energy projects will be a boost for the renewable industry and for a cleaner energy future. If oil, gas, and coal projects can take advantage of this important tool, there is no reason why renewable projects should be excluded. This is a simple, common sense idea that will drive investment in renewable energy projects for years to come,” Welch says.

An MLP is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market. Whereas profit from publicly traded corporations is taxed at both the corporate level and the shareholder level, income from MLPs is taxed only at the shareholder level because it is treated as a partnership for tax purposes. 

IRS Defines Start of Construction for the Production Tax Credit

The Internal Revenue Service explained today what developers must do this year to be considered to have started construction of new renewable energy projects.

The IRS adopted roughly the same definition for start of construction as under the Treasury cash grant program.

Wind, geothermal, biomass, landfill gas, incremental hydroelectric and ocean energy projects that are under construction by December 2013 will qualify for 10 years of production tax credits on the electricity output or an investment tax credit upon project completion for 30 percent of the project cost.

There is no deadline to complete projects that start construction this year.

The IRS departed from the Treasury cash grant rules in one significant respect.

There are two ways to show that a project is under construction in time.

One is by showing that “physical work of a significant nature” commenced at the site or at a factory that is making equipment for the project. Work at the factory counts only if done after the project has placed a binding equipment order with the manufacturer.

The other is by showing that the developer “incurred” at least 5 percent of the total project cost. Costs are not usually “incurred” merely by spending money; the developer must take delivery or title to services or equipment.

Many developers gravitated toward the 5 percent test under the Treasury grant program because anyone relying on the physical work test had to show a continuous pattern of construction after work started. There was no similar requirement for the 5 percent test. This let tax equity investors and lenders determine with more certainty at the outset whether a project was under construction in time.

The IRS said it will require developers relying on the 5 percent test to show “continuous efforts” in the future on a project. Developers relying on the physical work test will have to show “continuous construction.”

Renewable energy bill passes House, heads to Senate's rocky ground

Florida - A bill exempting renewable energy improvements from property tax assessments passed the House Wednesday, but the bigger hurdle may be in passing the Senate.

HB 277 is the only legislation dealing with renewable energy that is moving in the Legislature.

The bill would implement a constitutional amendment that passed in 2008 with 61 percent of the vote. The amendment also exempted improvements for wind resistance from property tax assessments.

Similar legislation implementing a 2008 constitutional amendment passed the House the three previous years but those bills didn't pass the Senate.

Rep. Michelle Rehwinkel Vasilinda, D-Tallahassee and HB 277 sponsor, said she doesn't know why the bill hasn't passed the Senate but she thinks its prospects are better this year.

That's because it doesn't include exemptions for wind resistance improvements, which could increase the loss of tax revenue for cities and counties.

"I think it makes common sense," she said of the bill. "When people want to make some improvements to their home to lower their utility bills and take part in energy conservation and renewable energy decisions, they shouldn't then have their property values raised for ad valorem taxes."

The Senate companion, SB 1064, has passed two committee stops without opposition votes and has one more stop before it reaches the Senate floor.

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