In a win for the rooftop solar PV industry, FERC recently confirmed that it would not exercise jurisdiction over certain net metering arrangements with rooftop solar PV installation.
In the proceeding, Sun Edison LLC requested a declaratory order that its retail sale facilities were non-jurisdictional. Sun Edison’s retail facilities involved the installation of solar PV systems and the sale of that energy output directly to the on-site end-use customer. In turn, these customers entered into net-metering relationships with local utilities. At some of the locations, the solar PV facility’s production temporarily exceeded the customer’s retail load. Sun Edison sought a declaratory ruling that FERC would not assert jurisdiction over the flow of power to the grid occurring under the auspices of a state net metering program as long as there is no net sale over the course of the relevant billing period.
FERC agreed that as long as the net metering participant (i.e., the end-use customer that is the purchaser of the solar-generated electric energy from Sun Edison) did not, in turn, make a net sale to a utility, the sale of electric energy by Sun Edison to the end-use customer was not a sale for resale, and the transaction was not FERC-jurisdictional.
Sun Edison additionally requested that FERC grant blanket waivers from the requirement to make filings claiming qualifying facility (QF) status. FERC denied this request, but noted its ongoing rulemaking proceeding, which is considering an exemption for generating facilities one MW or smaller claiming QF status from the requirement that they file to be a QF. Though this proceeding is currently ongoing, it creates the potential to reduce some of the legal and regulatory costs associated with the development of distributed solar PV generation systems.
FERC issued an order authorizing Montana Alberta Tie Ltd. (MATL) and MATL LLP to grant to Western Area Power Administration (WAPA) capacity and ownership rights in their merchant transmission line as part of a financing arrangement for the construction of the line. The 214-mile, 230 kV merchant transmission line would extend from Great Falls, Montana to Lethbridge, Alberta, Canada and would link consumers with electricity generated by renewable energy. The financing arrangement with WAPA was made possible by the American Reinvestment and Recovery Act of 2009.
Previously, FERC authorized under Section 204 of the Federal Power Act an aggregate amount of $161 million in debt securities and the assumption of obligations and liabilities pursuant to a financing arrangement for construction of the transmission line. The financing agreement consists of a construction loan whereby WAPA will advance construction draws to MATL and MATL LLP to pay for the construction cost of the line. As part of the financing arrangement, MATL and MATL LLP are now authorized by FERC to grant WAPA a 1/12th ownership interest in the project, comprising approximately 18 miles of the 214-mile line and a conditional ownership interest in perpetuity for 50 MW of southbound capacity. WAPA’s right to southbound capacity is subject to the pre-existing arrangements for 300 MW of southbound transmission service with existing interconnection customers and any necessary regulatory approvals. To the extent WAPA acquires 50 MW of southbound transmission rights, its use or sale of these rights will be pursuant to WAPA’s cost-based-rate tariff. In addition, if WAPA does not use these rights, they will be released to MATL for sale, pursuant to MATL LLP’s Tariff. This would prevent any unsold capacity from being withheld from the market.
FERC found that the financing arrangement, viewed as a whole, represents a just and reasonable way to advance the project, currently in the late stages of development, to the construction phase.
Obama administration officials recently released a Memorandum of Understanding (MOU) signed by nine federal departments and agencies to streamline the siting of transmission lines on federal lands.
The Obama administration acknowledged that overlapping agency jurisdiction and a lack of transparency slowed the process of siting and building transmission lines. In turn, these delays hampered the modernization of the grid and the expansion of renewable energy generation, which often requires new transmission lines to carry the power to distant load centers.
The MOU will decrease the necessary permit approval time and encourage the siting of new transmission lines by:
The MOU applies only to “qualifying projects,” which are “high voltage transmission line projects (generally though not necessarily 230 kV or above) … or otherwise regionally or nationally significant transmission lines [,] in which all or part of a proposed transmission line crosses jurisdictions administered by more than one Participating Agency.” The MOU does not apply to transmission siting on non-federal lands, nor does it apply to projects proposed to be sited in a national interest electric transmission corridor under Section 216(b) of the Federal Power Act.
The participating agencies are departments of Agriculture, Commerce, Defense, Energy, and the Interior along with the EPA, the Council on Environmental Quality, the Advisory Council on Historic Preservation (ACHP), and FERC.
While 2009 has yet to conclude, thus far, solar energy again leads a Foley study of in the number of patents granted across the Cleantech patent landscape with an annual total projected to be more than 200, an increase of about 30 percent over last year. Looking back, among the 589 U.S. patents issued in 2008 across nine categories in the Cleantech landscape, the category that produced the most patents was solar energy with 156 patents.
The vast majority of solar energy patent protection granted during 2008 (based on number of claims in the patents) was directed to technologies related to photovoltaic cell construction designs, details, and materials, with more than 40 percent of the total. The second most active area for solar energy patent protection involved solar concentrators for both photovoltaic and solar-thermal applications, which came in a distant second place and accounted for more than 12 percent. Technology related to electrical power conversion for photovoltaic cells followed closely behind in third place, with more than eight percent. Solar panels or modules in building or rooftop applications represented the fourth most common area, accounting for more than seven percent. The remaining patents were directed to 17 other categories of solar energy technology and each accounted for less than four percent of the total.
Notably, among the 56 U.S. patents that were directed to photovoltaic cell construction designs, details, and materials, 10 (corresponding to about 18 percent) were granted by the U.S. Patent and Trademark Office with no initial rejection of any claims in view of “prior art” patents. Generally, this indicates that potential patentable “white space” may still exist in this technology area, despite the high level of patent activity.
Collectively, individual inventors accounted for approximately 19 percent of all the solar energy patents granted in 2008, which is substantially more than any individual corporation. Only three corporations each represented more than three percent of all solar energy patents granted in 2008. Ninety-five other corporations each accounted for less than two percent of all U.S. solar energy patents.
U.S. solar energy patents were granted to entities from 18 countries. The United States accounted for almost 60 percent (93 of 156), with Japan obtaining about 17 percent, Germany obtaining about five percent, and Canada obtaining about three percent. The remaining countries each accounted for less than three percent. Among the 93 solar energy patents granted to U.S. entities, the majority were granted to entities from California (24 total), New York and Massachusetts (nine each), and Michigan and Illinois (six each). Twenty-one other states each received five or fewer patents.
Further analysis of the 2009 Cleantech patent landscape data will be published in early 2010 detailing the overall increasing trend in solar energy patents and the solar technology areas that are showing the most patent activity and potential patentable whitespace. The study also will review 2009 patent activity in smart grid technologies and the potential contributions they may have on the increasing activity in solar energy patents.
Generators seeking to interconnect with certain transmission owners in the Midwest Independent Transmission System Operator, Inc.’s (Midwest ISO) transmission system will now be required to pay up to 100 percent of the costs of network upgrades. Specifically, with recent FERC approved revisions to the Midwest ISO tariff, generators are required to pay (i) 100 percent of the costs for network upgrades rated below 345 kV and (ii) 90 percent of the costs for network upgrades rated at or above 345 kV with the remaining 10 percent of such costs being recoverable on a system-wide basis.
The tariff changes were approved on an interim basis. The Midwest ISO and participating transmission owners must file a long-term “Phase II” solution by July 15, 2010. FERC found that the interim proposal adequately balanced the costs and benefits of network upgrades required to interconnect generation projects. These revised provisions do not apply to network upgrades constructed on the American Transmission Company, LLC, ITC Transmission/Michigan Electric Transmission Company and ITC Midwest systems which will still benefit from the 100-percent crediting provisions for such upgrades previously requested by and approved for by these three entities.
Effective as of July 10, 2009, the revised provisions apply to interconnection projects that (i) are in the Definitive Planning Phase, (ii) have not yet entered into a generator interconnection agreement or (iii) have not yet filed an unexecuted generator interconnection agreement with FERC. The revised provisions do not apply to interconnection projects that already have entered into executed generator interconnection agreements or that have already filed unexecuted generator interconnection agreements with FERC.
While the stakeholder process moves forward, it will be interesting to see if this ruling will discourage renewable projects from entering into new interconnection agreements until the long-term solution has been filed with FERC by July 15, 2010.
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Authors and Editors:
Ronald N. Carroll
Thomas McCann Mullooly
John M. Lazarus
Trevor D. Stiles
Ann L. Warren