Power & Pipes

FERC, CFTC, and State Energy Law Developments
On January 1, 2023, newly constructed standalone energy storage facilities became eligible for an investment tax credit (ITC) under Section 48 of the Internal Code of 1986, as amended (Code), pursuant to provisions of the recently enacted Inflation Reduction Act (IRA). Storage facilities placed in service before 2023 generally were only eligible for an ITC when constructed as part of a combined renewable generation (typically solar) plus storage facility and the storage system was charged by the paired renewable generation system at least for the 5-year initial operating period. Storage developers and owners will now be able to take advantage of new and significant tax credit opportunities, whether or not the storage system is paired with a renewable generation energy facility.
Later this month, the US Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy (EERE) intends to issue, on behalf of the Hydrogen and Fuel Cell Technologies Office, a funding opportunity announcement (FOA) to support the research, development, and demonstration (RD&D) of affordable hydrogen and fuel cell technologies. EERE’s notice stated that the FOA will focus on key hydrogen delivery and storage technologies and durable fuel cell technologies, particularly for heavy-duty trucks to reduce carbon dioxide emissions and eliminate pollution from the tailpipe.
Many people spent the last week of 2022 celebrating holidays or seeking travel adventures both far and near. However, a select group of personnel at the US Internal Revenue Service (IRS) and Department of the Treasury opted for a different path. On December 29, the IRS and Treasury issued a number of documents providing information and clarification on issues concerning tax credit eligibility for purchases of clean vehicles beginning in January 2023.
On December 13, 2022, the Department of Energy’s Office of Fossil Energy and Carbon Management released a Funding Opportunity Announcement (FOA) to make available up to $1.236 billion of funding to promote the development of four Regional Direct Air Capture (DAC) Hubs. This FOA is intended to accelerate the commercialization of, and demonstrate the processing, transport, geologic storage, and conversion of carbon dioxide (CO2) captured from the atmosphere.
In an article published in Project Finance International, partners Levi McAllister and Pam Wu discuss some of the most relevant and pressing issues concerning carbon offsets and raise considerations as environmental, social, and governance (ESG), net-zero goals, and carbon sequestration issues continue into 2023.
FERC issued three orders focused on increasing regulations for inverter-based resources (IBRs) in fulfillment of one of its primary goals to protect the reliability of the bulk-power system. FERC ensures this reliability through the North American Electric Reliability Corporation (NERC), an independent Electric Reliability Organization that develops and enforces mandatory reliability standards. The reliability standards are only mandatory for certain entities registered with NERC, but most IBRs are not required to register and therefore are not obligated to follow the reliability standards.
On December 1, 2022, the Environmental Protection Agency (EPA) published its proposed “set” rule for the Renewable Fuel Standard (RFS) Program. In addition to setting the volume and percentage standards for renewable fuels for 2023 through 2025, EPA proposed several regulatory changes to the RFS Program, the most notable of which was its proposal to create a new program to govern the Renewable Identification Numbers (RINs) for renewable electricity, which are known as “eRINs.”
The US Department of Commerce (DOC) issued its preliminary determination on December 2, 2022, related to circumvention of antidumping and countervailing duty (AD/CVD) orders A-570-979 and C-570-980 (the Orders) with respect to Cambodia, Malaysia, Thailand, and Vietnam. DOC determined that imports of certain crystalline silicon photovoltaic (CSPV) cells exported from Cambodia, Malaysia, Thailand, or Vietnam using parts and components produced in China are circumventing the AD/CVD orders on solar cells and modules from China.
Colleagues in our tax practice have prepared a LawFlash discussing the recently released Internal Revenue Service (IRS) guidance for meeting the prevailing wage and apprenticeship (W&A) standards applicable to the investment tax credit (ITC), production tax credit (PTC), and carbon capture credit (Section 45Q), as enacted or amended by the Inflation Reduction Act (IRA).
On November 17, 2022, the Office of Enforcement (OE) of the Federal Energy Regulatory Commission (FERC or the Commission) released its annual report on enforcement activities (Report). The Report details the FY 2022 efforts of OE’s three divisions: Division of Investigations (DOI), Division of Audits and Accounting (DAA), and Division of Analytics and Surveillance (DAS).