Power & Pipes

FERC, CFTC, and State Energy Law Developments
Yesterday marked the start of CERAWeek 2024 by S&P Global, and for the rest of this week Morgan Lewis partners Kirstin Gibbs and Felipe Alice will be reporting back on the key themes and ideas they are uncovering as the conference unfolds.
As anticipated, the US Department of Energy’s (DOE’s) Office of Energy Efficiency and Renewable Energy (EERE) issued a funding opportunity announcement (FOA) that focuses on advancing the fueling infrastructure for medium- and heavy-duty (MD/HD) vehicles and other heavy transportation applications.
In 2022, FERC began issuing directives aimed at ensuring that the reliability of the bulk-power system is protected from potential risks posed by the growing number of inverter-based resources (IBRs) connected to the electric grid. As we previously reported, FERC issued three orders in December 2022 focused on increasing regulations for IBRs through the North American Electric Reliability Corporation (NERC), an independent electric reliability organization that develops and enforces mandatory reliability standards. In continuance of this goal, this fall, FERC took the step of directing NERC to develop or modify reliability standards specifically to address reliability concerns attributable to IBRs (Order No. 901).
The US Department of Energy’s (DOE’s) Office of Energy Efficiency and Renewable Energy (EERE) announced on November 16, 2023 its intention to issue, on behalf of the Hydrogen and Fuel Cell Technologies Office, a funding opportunity announcement (FOA) that is expected to focus on advancing fueling infrastructure for heavy-duty (HD) vehicles and other HD transportation applications and addressing key challenges to siting, permitting, and installation.
The US Department of Energy (DOE) has announced the much-anticipated selection of seven hydrogen hub projects across the country that are eligible for $7 billion in federal investment. The selectees will now undergo an award negotiation process to obtain a commitment from DOE. This funding aims to accelerate the commercial-scale deployment of low-cost, clean hydrogen as an alternative source of energy and the creation of networks of clean hydrogen producers, consumers, and infrastructure.
In a per curiam decision on October 3, 2023, the US Court of Appeals for the Sixth Circuit affirmed that the Federal Power Act prevents tort suits against the United States relating to damage caused by dams that are licensed by the Federal Energy Regulatory Commission (FERC). That is, liability for any injuries or damages caused by any dam licensed by FERC is solely the responsibility of the licensee, and liability cannot flow to the United States, even after dam failures.
While no one has a crystal ball for what 2023 will hold for the energy industry, the seemingly widespread support for green technology and clean energy is expected to carry through this year. In our industry outlook, “The Trends—and Traps—That Will Shape 2023,” we highlight some of the major green energy tax credit trends.
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.
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.”