FERC, CFTC, and State Energy Law Developments
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.
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.
Midcontinent Independent System Operator (MISO) has issued a report analyzing the effects of renewable energy growth in the MISO region and concluding that the system can reliably accommodate a significant percentage of variable renewable resources.
Our colleagues in the tax practice have published a LawFlash detailing the Consolidated Appropriations Act, 2021, which includes the Taxpayer Certainty and Disaster Tax Relief Act of 2020. The act contains tax provisions to provide direct relief to individuals, but also includes tax benefits for various industries, including the “green” energy and technology industries.
The US Congress adopted extensive federal energy policies in the Energy Act of 2020 (Energy Act), which President Donald Trump signed into law on December 27 as part of the Consolidated Appropriations Act, 2021.
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FERC issued a notice of proposed rulemaking (NOPR) on September 19 announcing its intent to revise key rules governing the status and rights of Qualifying Facilities (QFs). These revisions include proposed changes to the rules for measuring QF size that could make it more difficult for certain projects to maintain QF status.
For the second time, PJM Interconnection, LLC (PJM) has suspended its 2019 Base Residual Auction (BRA) as directed by the Federal Energy Regulatory Commission (FERC). FERC found that delaying the auction until the Commission establishes a replacement rate would provide greater certainty to the market than conducting the auction under the existing rules.