Neat Biodiesel (B100) Producers Fighting For Tax Incentive

About 70 biodiesel manufacturers and distributors have urged the IRS to allow 100 percent biodiesel (known as neat biodiesel or B100) to qualify for the recently enacted excise tax exemption for biofuels.

At issue for the ad-hoc biodiesel coalition was an Internal Revenue Bulletin 2005-2, dated January 10, 2005. In the bulletin the IRS interprets the new tax credits in a way that would exclude B100 from the Excise Tax Credit (one cent per percentage point of biodiesel blended with petroleum diesel for first-use oils and one-half cent per percentage for biodiesel made from other sources, like waste cooking oil.) Under the IRS interpretation, a 99 percent biodiesel blend would be eligible for the tax credit but B100 would not.

The biodiesel groups argued, "We believe the spirit of the Biodiesel Excise Tax Credit created by the American Jobs Creation Act of 2004 is to encourage growth of the biodiesel industry through financial incentives which bring the cost of biodiesel down for the consumer. The most direct and effective way to reduce the cost of biodiesel to consumers and encourage growth of the biodiesel industry is for the Excise Tax Credit to apply to all blends of biodiesel up to and including B100."

The groups urge the IRS to provide a broad interpretation of the term "blend". The group's comments note, "The common terminology in the industry is to refer to blends of biodiesel � B20, B50, B100; similar to grades of gasoline � regular, unleaded, premium. Since biodiesel is inherently a blended mixture, it seems appropriate that the Service broadly interpret "mixture" to include all biodiesel blends including B100."

Not allowing B100 to qualify for the tax credit according to the biodiesel groups would:

Comparing Solar Electric Policies in the U.S.

Top notch researchers, Ryan Wiser and Mark Bolinger, from Lawrence Berkeley National Lab have presented estimates showing how solar electric power goals established in California will beat the expected PV installations in six states (and Washington DC) that have solar power requirements as part of their renewable energy portfolio standards.

In their report, "Projecting the Impact of State Portfolio Standards on Solar Installations," the authors found that existing solar set-asides (not including California) may create demand for 180-337 MW of solar PV capacity by 2010. As of late 2004, California had 88 MW of installed solar electric capacity and a goal for 3,000 MW of solar capacity by 2018. The authors project that the other six states and Washington, DC, will have a solar market of between 553-792 MW in 2018.

Solar Set Aside Goals (non-California)
Arizona - 0.66% solar by 2007
Colorado - 0.4% solar by 2015 (half from customer-sited projects)
New Jersey - 0.16% solar by 2008
Pennsylvania - 0.5% solar PV by 2020
Nevada - 0.75% solar by 2013
New York - 0.1542% customer-sited PV, fuel cells, wind by 2013
Washington DC - 0.386% solar by 2021

The chart below from the presentation shows that California's 2004 generation from solar is comparably modest in terms of the state's population and electric load. But the future growth of solar power in California increases the electricity per capita from just over .1 percent to 2.4 percent (see chart below).

More

Report: High Value for Solar Power During Peak Times

A recent report done for the Vote Solar Initiative shows that on-peak solar electricity has a value of between 23 and 35 cent per kilowatt-hour. The January 2005 report was authored by Ed Smeloff, formerly on the board of the Sacramento Municipal Utility District (SMUD) and a long-time solar energy advocate.

The study found that the values of on-peak solar energy varied, in large part, on the location of system on the grid. This analysis provides a strong case for the the large-scale expansion of solar power in California that would be consistent with Governor Schwarzenegger�s Million Solar Roofs Initiative.

Included in the valuation of on-peak solar in California are the following five factors:

1. Solar power's ability to reduce peak demand for electricity
2. Solar power's ability to lessen the consumption of natural gas in power plants
3. Solar power's ability to avoid environmental damage from power plant emissions
4. Solar power's ability to help the electric grid operate more efficiently by reducing line losses
5. Solar power's ability to save investment capital by delaying costly upgrades to the electrical transmission and distribution system.

Other Non-Quantified Benefits of Solar Power

CPUC Moves to Protect Ratepayers from Future Greenhouse Gas Regulations

A decision by the California PUC directs the state's largest electric utilities to include CO2 costs between $8-25 per ton when evaluating the economics of future energy resource additions.

In a December 2004 decision [published formally on January 20, 2005] the California Public Utilities Commission (PUC) adopted a range of values to explicitly account for the financial risk associated with greenhouse gas (GHG) emissions. Investor-owned utilities [PG&E, Southern California Edison and San Diego Gas & Electric] are ordered to use a value between $8 to $25 per ton of carbon dioxide (CO2) in the evaluation of future fossil generation bids.

The adder is applicable to longer-term power acquisitions with contractual terms lasting more than five years. Through about the year 2011, up to 2,200 MW of capacity additions have been forecasted by the three utilities that would apply the CO2 adder.

The GHG value will be added to the prices bid in future request for offers (RFOs), and will be used to develop a more accurate price comparison between and among fossil, renewable and demand-side bids. The PUC order states, "Regardless of which bid is ultimately selected, the adder will not be paid to that generator or charged to ratepayers; it is an analytic tool only. Winning bidders are to be paid the prices that they bid. Thus, the effect of the adder is to potentially change which bids and resources are selected - not to change the price of selected bids."

The PUC concluded, "To further California's goal of promoting environmentally responsible energy generation and to protect customers from the financial risk associated with likely future regulation of GHG, it is reasonable to adopt a policy that reflects and attempts to mitigate the impact of GHG emissions in influencing global climate patterns and to direct the IOUs to employ a GHG adder when evaluating fossil generation bids and in future long-term power purchases (LTPPs). This method, which will be refined in future proceedings, will serve to internalize the significant and under-recognized cost of GHG emissions; help protect customers from the financial risk of future GHG regulation; and will continue California's leadership in addressing this important problem."

In addition to the GHG adder, the IOUs are directed to employ, when finalized and approved by the Commission, the additional environmental avoided cost values under development in the Avoided Cost Rulemaking (R.04-04-025). It is anticipated that these values will be adopted in approximately March 2005, and will include a fixed value for GHG (not simply a range) as well as values for other, non-GHG pollutants.

The PUC is also going to evaluate a cap-and-trade emissions system that may establish annual limits on carbon-based energy procurement. The PUC notes, "We will address the effectiveness of this proposal, as well as other approaches to "carbon caps" on utility procurement, to minimize utility contribution to climate change, in subsequent decisions in this rulemaking docket or other appropriate proceedings."

More

Board Says No Transmission Line on County Land

The Douglas, WI, County Board passed a resolution last night denying the use of county land for a controversial transmission line that has been proposed to run from Minnesota across Wisconsin. The line, know as Arrowhead-Weston, is a $420 million, 220-mile project proposed by the American Transmission Co. (ATC), Minnesota Power and Wisconsin Public Service.

There is a significant difference in opinion about how much land is now off limits to the transmission line. In 2004, the Wisconsin Public Service Commission gave state approval of the route for the line through Wisconsin. The approved route brings the line across 13 miles of Douglas County-owned land. ATC believes easements for an existing line on much of this 13 mile stretch allow it, without county permission, to begin construction on the new line. ATC argues that only about 2.5 miles of the route are subject to the resolution passed last night. The county disagrees with ATC's assessment and says that ATC cannot construct the line on any county land, period. The actions by the County Board set up a very interesting legal battle that will focus in on the issue of state vs. local authority over transmission lines as well the issue of condeming land using eminent domain powers.

ATC plans to immediately begin working with the WI Public Service Commission to re-route 2.5 miles of the project onto private land. Simultaneously, ATC will begin the condemnation process for the use of the 2.5 miles of county-owned land. "Ultimately, we hope the courts will allow us to condemn the county for the use of its land to avoid re-routing onto private land," said Mark Williamson, vice president of major projects for ATC.

According to the Douglas County (WI) Clerk's office, the resoution against the power line (copied below) passed on a vote of 15 yes, 11 no, 1 absent. The Board had originally alloted only a little over an hour for debate but in the end the hearing went over five hours. A second resolution to continue negotiating with ATC was tabled without discussion.

Supporters of the line argue the it is needed to ensure electric reliability and to spur economic development. Opponents argue that electric reliability can be improved and stabablized using more distributed generation in northwest Wisconsin and the line poses significant impacts on land values, health and the environment.

DOUGLAS COUNTY BOARD RESOLUTION #11-05

RESOLUTION BY THE ARROWHEAD TO WESTON POWER LINE COMMITTEE

Subject: Arrowhead to Weston Power Line Opposed

WHEREAS, the proposed Arrowhead to Weston Transmission Project crosses a substantial portion of Douglas County on its 210 mile route (25% of route in Douglas County), and

WHEREAS, the proposed route of approximately 55 miles in Douglas County is estimated to be 1/3 public and 2/3 private land, and

WHEREAS, Douglas County is concerned with the environmental destruction, quality of life degradation, property devaluation, public health and safety concerns, lost development potential, and future implications of corridor sharing involved with this project, and

WHEREAS, new easements would have to be granted on both new and existing right-of-ways for this project, and

WHEREAS, American Transmission Company, Minnesota Power, Wisconsin Public Service Commission, or any other utility do not have the right to condemn or build on Douglas County property without consent of Douglas County.

NOW, THEREFORE, BE IT RESOLVED that the Douglas County Board of Supervisors opposes the Arrowhead to Weston transmission project and does not grant permission to use Douglas County land for this project.

BE IT FURTHER RESOLVED that upon passage, copies of this resolution be sent to Governor Doyle, Wisconsin Public Service Commission, State Senator Robert Jauch, State Representative Frank Boyle, and the involved utilities.

Dated this 2nd day of February, 2005.

More

Instructive Lessons on Ethanol

ILSR's vice president David Morris gives the West Wing writers a piece of his mind and gives the rest of us an important lesson on the renewable fuel called ethanol.

Critics of ethanol often used outdated information and unsubstantiated rumors in arguments against the renewable fuel. Myths about the negative aspects of ethanol have persisted for decades even though the vast majority of studies continue to show the environmental, security and economic development benefits that the fuel provides. My colleague David Morris' recent column is instructive reading.

West Wing's Ethanol Problem - by David Morris, published on Alternet, February 2, 2005

More

FERC Issues Proposed Rules for Wind Power Interconnection

The Federal Energy Regulatory Commission (FERC) is proposing to amend its regulations to require public utilities to include specific technical provisions for wind energy in their open access transmission tariffs (OATTs). The new rules will allow wind power projects to be integrated more firmly into the existing transmission system.

The main feature of the new rules is to allow wind projects to ride out disturbances and remain connected to the transmission grid - a process called low-voltage ride through. Once the new standard is approved, all wind projects 20 MW and larger will have to have electronic equipment that will monitor and support the transmission grid during periods of disturbance.

On the issue of low-voltage ride through, FERC's proposal reads:

Prior to the advent of larger wind plants generally consisting of multiple wind generation turbines, individual wind turbines were designed to go offline if there was a sudden change in voltage on the transmission system. However, now there are larger aggregated wind plants with a greater penetration level on the Transmission Provider's systems in certain areas, and significant stability problems can occur on the transmission system if such large plants become unavailable during a low voltage excursion. As a result, Transmission Providers need large wind plants to remain online during low-voltage occurrences for reliability reasons.

The Commission is proposing to require that large wind plants seeking to interconnect to the grid demonstrate low voltage ride-through capability, unless waived by the Transmission Provider on a comparable and not unduly discriminatory basis.

FERC is also seeking comments on proposed changes to the requirements for Supervisory Control and Data Acquisition (SCADA) Capability and Power Factor Design Criteria (Reactive Power).

FERC writes:

Previously, Transmission Providers generally did not require wind generators to have remote supervisory control and data acquisition (SCADA) capability because of their small size and minimal effects on the transmission system. Now that there are more large wind plants, Transmission Providers may need SCADA capability to ensure the safety and reliability of the transmission system during normal, system emergency, and system contingency conditions, and to acquire wind facility operating data.

The Commission proposes to require that large wind plants seeking to interconnect to the transmission grid possess SCADA capability. Particularly, the Commission seeks comments on whether there is any basic essential SCADA information that large wind plants should be required to provide, and if so, what that information should be (such as information needed to determine how the plant's maximum megawatt output and megawatt ramp rate vary over time with changes in the wind speed, and/or information needed to forecast the megawatt output of the plant).

Previously, Transmission Providers did not require wind generators to have the capability to provide reactive power because the facilities were generally small and had minimal impact on the transmission grid. Because of the larger size of many of the wind plants currently operating and the increased penetration of wind energy on the transmission system, Transmission Providers may need to require wind plants to operate within a specified power factor range to help balance the reactive power needs of the transmission system.

The Commission is proposing to require that wind plants maintain a power factor within the range of 0.95 leading to 0.95 lagging (as required by Order No. 2003), to be measured at the high voltage side of the substation transformer. Additionally, the Commission proposes to allow the Transmission Provider to waive the power factor requirement for wind plants where such capability is not needed at that location or for a generating facility of that size, provided that such waiver is not unduly discriminatory and is offered on a comparable basis to similarly situated wind plants.

Comments on FERC's proposals are due March 2, 2005. Reply comments will be due 30 days thereafter. Here is a link to FERC's Proposed Rule for Wind Power Interconnection. Comments may be filed electronically using e-Filing on the Commission's Web site.

The new rules are expected to be minimally disruptive for wind turbine manufacturers and the costs of the new technology is not expected to be significant. Many of the proposed rules were put forward by the wind industry's trade association - The American Wind Energy Association.

More