Renewables Law Blog

It's no secret that coal plants have had trouble competing with cheaper renewables and natural gas in recent years. Unexpectedly low prices from PJM's latest capacity auction spurred a fresh wave of retirement announcements this month. But Talen Energy has decided that rather than retire coal plants and walk away, it would convert those sites to be used for other renewable energy-related projects. While Talen promised in November 2020 to shut down roughly 5 gigawatts of coal capacity in the 2020s, the company wanted more of a comprehensive strategy for this transition.  “This is the first of hopefully many unit transitions from coal to lower-carbon sources and battery,” said Cole Muller, who oversees Talen's fossil-powered fleet in the territory of regional transmission organization PJM. “It’s really about decarbonizing, ...investing in the communities and continuing to provide opportunities for our people.” After that project, Talen plans to build a 1-gigawatt battery fleet in the next three to five years on its existing properties, using individual batteries as large as 300 megawatts. “If you just retire it, you have a significant loss to both jobs and the tax base, and the communities at large,” Muller said. Talen tapped battery developer Key Capture Energy to build a 20-megawatt system as a demonstration of the concept. That smaller size allows for a streamlined approval process, Muller noted. But the battery will act just like any other commercial power plant, bidding into PJM's markets for capacity, ancillary services and energy arbitrage. Assuming that goes well, Talen can add up to another 115 megawatts of battery storage to fully utilize the coal plant's grid connection capacity. That's a distinct advantage for developing batteries at an older power plant. The site has been cleared to export a certain amount of power to the grid, so there's less risk of having to pay for hefty network upgrades as developers must do at greenfield sites. The coal-to-battery switching remains too nascent to be labeled a trend. But we hopefully will see more of these transitions in the future making the switch from coal to renewable energy a win for everyone.

A power plant in Maryland ditches coal for batteries, a first for the US (canarymedia.com)

Developers of renewables projects are once again facing regulatory uncertainty regarding the scope of the Migratory Bird Treaty Act (“MBTA”) as a result of a proposed rule issued on May 7 by the U.S. Fish and Wildlife Service (“USFWS”).  The proposed rule, if finalized as issued, would revoke a rule issued in the last days of the Trump administration stipulating that deaths of migratory birds occurring incidental to lawful activities (i.e., incidental take) are not prohibited under the MBTA.

The proposed rule represents the latest development in a long-running debate.  At issue is whether the MBTA, a law passed in 1918 that was originally intended to prevent the extinction of migratory bird species due to commercial trade and hunting practices, prohibits the incidental taking of protected birds as a result of activities that are otherwise lawful, such as the operation of wind turbines or the clearing of land for a solar project, or whether the law prohibits only the intentional take (i.e., purposeful killing) of protected species.  The issue has resulted in a split among U.S. Circuit Courts of Appeals, as well as completely opposite legal interpretations issued by two Solicitors of the Department of Interior within the span of one year in 2017.

By revoking the prior rule, the USFWS would revert to interpreting the MBTA to prohibit incidental take of birds protected under the act, and to employing agency discretion in determining whether an incidental take of such birds warrants an enforcement action.  The proposed rule highlights the need for renewable project developers to implement best practices for avoiding the unintended take of protected migratory birds as a means of qualifying for agency enforcement discretion and thus avoiding fines for noncompliance.  For wind energy projects, this can largely be accomplished through complying with the USFWS’s Land-Based Wind Energy Guidelines, although there is no guarantee that such compliance will preclude an enforcement action.  There are no solar-specific guidelines currently in place.  While the risk posed to migratory birds from solar projects is less than that for wind projects, solar developers should nonetheless implement best practices for reducing impacts to birds, including the general Nationwide Standard Conservation Measures for project development.

With the development of large-scale renewable energy projects, municipal land use officials and private developers face the dilemma of how to classify and address such uses when zoning ordinances do not expressly mention them. Such omissions may be intentional, or, more often, may simply be the result of failures to update their ordinances to account for the changing energy production market.

A recent example of how these issues play out was a decision by the Lower Mount Bethel Township, Northampton County Zoning Hearing Board. There, Glidepath Ventures, LLC d/b/a Prospect 14, desired to construct a 61,000 solar panel facility to generate electricity for public consumption within the Township. The developer had targeted a 130-acre property located largely within the Township’s Agricultural District, and partially within its Conservation District. The Township zoning ordinance does not permit solar panel facilities in any district but does permit “any other use not otherwise listed in any zoning district” as a conditional use within the Township’s Industrial District. Although the developer argued that there was no suitable undeveloped property within the Industrial District, the Township’s expert testified that there was a suitable site within that zone, although the undeveloped space was limited.

At bifurcated hearings spanning several months, the Developer initially sought a use variance to allow the solar facility in the Agricultural and Conservation Districts or, in the alternative, challenged the validity of the Zoning Ordinance, alleging that it was legally defective by excluding the proposed use. After finding that the developer had failed to establish the requisite unnecessary hardship for the grant of a use variance, the Board considered whether the use was either de jure or de facto exclusionary by either expressly or in practice prohibiting the legitimate solar facility use. Ultimately, the Board held the ordinance was not exclusionary because it did not expressly prohibit solar facilities, and the proposed use could be permitted as a conditional use in the Industrial District because it was not otherwise listed in any zoning district.

The Board issued its written decision on April 28. As of this date, no appeal has been filed.

The decision in Glidepath Ventures highlights the need for municipalities and developers alike to consider how they classify and define renewable energy uses. By failing to provide for a legitimate use, the Township was placed in a precarious situation, and if it had not included a provision permitting all other uses within the Industrial District, the ordinance may have been found to be de facto exclusionary and therefore invalid. In addition, the decision is indicative of the disconnect between the type of use and land considered by developers to be functional for larger renewable energy products, and what zones municipalities believe to be suitable from a zoning context. How municipalities classify and define renewable energy uses will likely continue to evolve as renewable energy development increases and cases such as Glidepath Ventures become more prevalent.  

Bank of America last week more than tripled its environmental financing goal, saying it wants to deploy more than $1 trillion by 2030 to accelerate the transition toward a low-carbon, sustainable future, according to a recent press release. Since launching its environmental business initiative in 2007, the bank said, it has financed $200 billion in sustainable activities, including asset-based lending, tax equity investments and capital raising in the energy and transportation sectors, among others. It pledged to back $300 billion in low-carbon activities between 2019 and 2030. The $1 trillion pledge is in addition to $500 billion the bank aims to put toward socially inclusive development, including affordable housing, community development, healthcare, education, and racial and gender equality. Karen Fang, Bank of America’s head of global sustainable finance, said the commitment "demonstrates our belief that there is opportunity for exponential market growth in [environmental, social and governance]-themed products and services as well as market share growth." Bank of America has helped more than 225 clients support their sustainable business needs by raising upward of $300 billion through more than 400 ESG-themed bond offerings. BofA’s commitment is consistent with the United Nations Sustainable Development Goals, to spur transformative change nationally and around the world. Beyond the $1 trillion climate-related finance, the balance of the sustainable finance goal is focused on social inclusive development, scaling capital to advance community development, affordable housing, healthcare, and education, in addition to racial and gender equality. Banks have markedly ramped up their sustainability goals over the past two years. Between September and March, each of the six largest U.S.-based banks has pledged to achieve net-zero greenhouse-gas emissions in financing activities by 2050. Bank of America boosts its ESG financing goal to $1 trillion by 2030 | Utility Dive

In an effort to ensure that owners of solar and wind energy facilities (“renewable energy facilities”) do not decommission production facilities without completing proper reclamation, on April 10, 2021, the West Virginia Legislature enacted Senate Bill 492, creating the West Virginia Wind and Solar Energy Facility Reclamation Act (as new Article 32 of Chapter 22 of the West Virginia Code (“Reclamation Act”)). The Reclamation Act (effective July 9, 2021) generally requires that an owner of a wind generation facility or a solar generation facility submit certain information to the West Virginia Department of Environmental Protection (“DEP”), including the date the facility commenced operation; a proposed decommissioning plan (prepared by a “qualified independent licensed professional engineer”); and a cost estimate for execution of that plan. The DEP will use that and other relevant information in preparing (or approving) a decommissioning plan for the site and in determining an appropriate reclamation bond amount for the facility. Click here to read full article. 

The West Virginia Legislature has passed a bill that will make it easier for retail electric customers to establish on-site solar energy facilities.  Sponsored by Babst Calland Shareholder and House Judiciary Chairman Moore Capito, House Bill 3310 states that solar energy facilities designed to power only the premises where they are located are exempt from the jurisdiction of the West Virginia Public Service Commission under certain conditions.  This means that the PSC is not involved in regulating the rates and other aspects of qualifying solar facilities.  To be exempt, power generated from such a facility must be subject to a “power purchase agreement” with the retail electric customer.  A PPA generally governs the design, permitting, financing, and installation of a solar facility at a retail electric customer’s location by a solar energy developer.  Under a PPA, a retail customer purchases the power generated by the facility at an agreed upon rate.  In addition to receiving revenue generated from the energy produced, the developer is also eligible for renewable energy tax credits.  The bill is intended to promote solar installations at residences, small businesses, and industrial sites by allowing third-party developers to design and finance the installation of solar panels and then sell the electricity generated to the consumer. To be exempt from PSC jurisdiction, an on-site solar facility must be “located on and designed to meet only the electrical needs of the premises of a retail electric customer” and be designed not to exceed certain generation limits: 25 kilowatts for residential customers; 500 kilowatts for commercial customers; and 2,000 kilowatts for industrial customers.  The legislation also establishes a cap on the aggregate amount of exempt on-site solar energy generation within West Virginia.  The total of all solar PPAs and net metering arrangements cannot exceed 3% of an electric utility’s aggregate customer peak demand in the state during the previous year.  Under a net metering arrangement, a retail customer who generates more power through an on-site solar facility than the customer uses will receive a credit for the excess power that is sent out to the grid rather than consumed. Before entering into a PPA for an on-site solar facility, a retail customer must notify the electric utility.  If the electric utility does not notify the customer within 30 days that a cap has already been reached, the customer may proceed with the project. If you have any questions about House Bill 3310 or solar development in West Virginia, please contact Robert M. Stonestreet (681.265.2117; rstonestreet@babstcalland.com) or Moore Capito (681.205.8953; mcapito@babstcalland.com)

On March 21, 2021, Pennsylvania Governor Tom Wolf announced the Pennsylvania “Project to Utilize Light and Solar Energy” (“PULSE”), a renewable energy project consisting of seven new solar farms totaling 191 MW in capacity to be constructed in various counties across the Commonwealth by 2023. Upon completion, the PULSE Project is expected to provide upwards of 360,000 MWh of electricity each year, estimated to be enough to supply nearly half of the state government’s annual electricity consumption. Billed as the largest solar commitment by any government in the US, 16 Commonwealth agencies are expected to use electricity generated from the PULSE Project, including, among others, the Pennsylvania Departments of Environmental Protection, Conservation and Natural Resources, Transportation, and Health, as well as the Game and Fish & Boat Commissions. Part of Governor Wolf’s “GreenGov” initiative, the PULSE Project is a public-private partnership between the Commonwealth, Lightsource BP, and Constellation. Under the project, Lightsource BP will finance, construct, own and operate the solar farms, which will be built in Columbia, Juniata, Montour, Northumberland, Snyder, and York Counties.  Pursuant to a Power Purchase Agreement, Constellation, an electricity supplier, will purchase electricity generated from the solar farms and distribute it to the Commonwealth’s participating agencies under a 15-year fixed-price supply agreement.  Expected benefits of the PULSE Project include an estimated reduction of 157,000 metric tons of carbon dioxide emissions each year and creation of over 400 jobs.

On March 25, 2021, the Department of Energy (DOE) announced plans to reduce the cost of solar energy technologies by 60% over the next 10 years by setting new cost targets and establishing funding opportunities.  The DOE accelerated its cost target for utility-scale solar by establishing a new goal of driving down the current cost of 4.6 cents per kilowatt-hour (kWh) to 3 cents/kWh by 2025 and 2 cents/kWh by 2030.  The DOE also announced $128 million in funding and initiatives aimed at lowering costs, improving performance, and speeding up the deployment of solar energy.  Specifically, the DOE announced funding for advancing solar photovoltaic (PV) materials and a prize competition for perovskite technologies, increasing the lifetime of silicon-based PV systems, and supporting several concentrating solar-thermal power projects.    The DOE stated that in order to meet the Biden Administration’s goal of 100% clean electricity by 2035, lowering the cost of solar energy technologies is needed to accelerate investment and deployment.  More information about DOE’s funding opportunities can be found here: https://www.energy.gov/eere/solar/funding-opportunities

A bipartisan group of federal lawmakers recently introduced a bill aimed at jumpstarting growth in the energy storage sector.  If enacted, the Energy Storage Tax Incentive and Deployment Act of 2021 would broaden the investment tax credit program, which is widely credited with stimulating considerable growth in the solar sector, to include standalone energy storage projects.  The tax credit is currently only available for energy storage projects that are charged directly from other clean energy projects that qualify for the credit, such as solar.  In contrast, the proposed legislation would revise the investment tax credit so that it covers residential battery systems as well as large commercial and utility-scale storage projects, including batteries, pumped hydropower, hydrogen storage, thermal energy storage, and regenerative fuel cells, regardless of whether they are coupled with a qualifying solar project.  Expanding the credit to standalone projects is intended to drive investment to storage projects with greater charging flexibility, potentially allowing storage systems to access a larger piece of the energy market. The large-scale deployment of domestic energy storage systems is largely viewed as critical to the continued growth of the renewables sector, as well as a key component of achieving the nation’s energy reliability and resiliency goals.  While it may be unrealistic to expect that extension of the tax credit to energy storage projects would result in the stratospheric levels of growth enjoyed by the solar industry over the past decade, the tax credit’s proven track record for stimulating renewables development has energy storage advocates hopeful that the proposed legislation would drive significant investment in the sector, resulting in a meaningful increase in energy storage deployment.