Cherrytree Group LLC Blog

...by Warren Kirshenbaum

In a Hertford County field where rows of corn once grew, rows of solar panels now stand - 20,000 panels that will soon convert sunshine into enough electricity to power a small town.

When finished next month, Duke Energy Renewables' project on 37 acres will be one of the state's largest.

About 40 miles to the southeast, on a 100-acre field in Perquimans County, a Charlotte company plans to build another solar farm, this one consisting of 83,000 panels. It would stand out as the largest in North Carolina.

With the two solar farms and at least three major wind farms in development, northeastern North Carolina has become a hot bed for renewable energy.

The region has plenty of open land, and a sunny, breezy coastal climate. It also has a major power transmission line running through it with ties to the PJM Interconnection, the largest competitive wholesale electricity market in the world.

"Alternative energy is one of our main economic niches now," said Vann Rogerson, president of North Carolina's Northeast Commission, which recruits industry to the region. "The big players know where northeastern North Carolina is now."

Rogerson is working on additional renewable energy development projects with at least two other green-energy companies.

Much of the surge in green energy ventures stems from North Carolina's 2007 mandate requiring utility companies to produce 12.5% of their power from renewable resources by 2021, said Julie Robinson, spokeswoman for the North Carolina Sustainable Energy Association. Utilities are actually ahead of schedule, especially in the solar field, she said.

"Solar energy in North Carolina has grown dramatically over the last few years," she said.

The more capacity in megawatts that a green project has, the closer that utilities get to reaching the state mandate, and the bigger the reputation gets within the industry.

Duke Energy Renewable's Murfreesboro Solar Project is expected to carry a 6.4 megawatt capacity and be able to power 700 homes. The North Carolina Electric Membership Corp. will buy the electricity.

The Perquimans project, built by Solar Green Development of Charlotte, plans to have a capacity of 20 megawatts, enough to provide electricity to nearly 3,000 homes - more than half of all the households in the county. It is expected to connect to Dominion Power.

The solar projects would complement the wind farms that have found their way to the region.

Iberdrola Renewables plans to build a wind farm with 150 turbines on 20,000 acres. In Camden County, Invenergy is seeking permits to erect 100 turbines on thousands of acres of open farmland. Together, the projects could power about 100,000 homes. Each wind farm is projected to involve a $600 million investment and would be among the largest in the nation.

Down in Beaufort County, Invenergy has announced plans to build a wind farm valued at $160 million that would power about 15,000 homes.

The northeastern corner of the state has plenty of inexpensive, open land, a sparse population, and officials who are receptive. The proximity of the major transmission line is also a big draw.

"When that wind is really blowing, then there is a lot of power coming out of those turbines, and you need a place to send it," Ellis said.

The Perquimans County solar farm will have a capital investment of $85 million.

Given that kind of investment, tax breaks are a major motivator. Among other state and federal tax breaks, North Carolina allows local governments to collect 20% of the property tax value from land on which renewable-energy projects are built.

"Twenty percent of $85 million is a good-sized tax boost," said Bobby Darden, Perquimans County manager.

Original article – Hamptonroads.com

...by Warren Kirshenbaum

California Governor signs 33% renewable energy standard into law; Iowa approves solar, wind tax credits; CO passes hydro bill; NY announces fuel cell incentives; Oregon mandates 5% biodiesel.

California Governor Jerry Brown today signed into law a bill that raises the bar on the state's renewable energy standard (RES).

The bill requires the state's pubicly-owned utilities to produce or purchase 33% renewable energy by 2020. Previously, the mandate was 20% by 2010.

This new RES is the most ambitious in the US by far. It was signed into law today at the opening of a new SunPower/Flextronics solar manufacturing facility in California. The facility is expected to create more than 100 renewable energy jobs.  

Iowa Senate Approves Solar, Wind Tax Credits

Solar and wind energy tax credits passed through the Iowa Senate this month. The credits equal 30% of the cost of construction or installation, subject to a maximum credit of $15,000 for commercial or agricultural construction.
If signed into law, the tax credits would be refundable or alternatively applied against tax liabilities for the following tax year. They will also be retroactive to Jan. 1.

According to a recent American Wind Energy Association report, Iowa now leads the US in wind power production. The state produces roughly 15% of its electricity with windpower, up from 7% in 2008. 

Colorado Passes Bipartisan Hydro Bill
 
The Colorado House by a 65-0 vote passed an amended version of a hydroelectric power bill (HB1083), which now moves to Gov. John Hickenlooper's desk awaiting his signature to become law.

It passed unanimously through two committee hearings, two votes in the House and a vote in the Senate - more than 180 votes cast, and not one in opposition. The bill adds hydroelectric and pumped-hydro operations to the list of new energy technologies that the Public Utilities Commission can consider.

The bill is seen as a first step in bringing an $800 million pumped hydro project to Colorado. TransCanada is considering building the project, known as South Slope. 

New York Announces Fuel Cell Incentives

The New York State Energy Research and Development Authority (NYSERDA) announced an incentive program for businesses, hospitals or other large power consumers interested in installing fuel cells.

The technology allows users to generate some of their own power from clean energy, using less energy from the electric grid.

NYSERDA's Customer-Sited Tier Fuel Cell Program will provide up to $21.6 million through 2015. The program provides an incentive toward the cost of fuel cell installation, plus payments over the first three years of operation based on power produced.

Companies can collect a total payment of up to $1 million for fuel cells, based on the size of the project. Funding is awarded to applications received on a first-come, first-serve basis.
 
Oregon Mandates 5% Biodiesel Blend

On April 1, Oregon became the second US state to require that most diesel fuel contain at least 5% biodiesel (B5).
 
The state already had a 2% biodiesel (B2) requirement. Oregon's B5 requirement was scheduled to be triggered when the in-state production capacity reached 15 million gallons annually, which the biodiesel plants recently accomplished. The requirement will generate about 25 million gallons of biodiesel demand annually.

Minnesota was the first state to pass a B2 biodiesel requirement, which has since increased to B5. The state's required volume of biodiesel is scheduled to rise to B10 by 2012, and B20 by 2015.

Washington and Pennsylvania both have a B2 requirement in effect. Connecticut, Louisiana, Massachusetts and New Mexico have all passed similar legislation that hasn't yet taken effect.


Original article can be seen on SustainableBusiness.com News

...by Warren Kirshenbaum

The Emergency Economic Stabilization Act of 2008 is legislation which contains a number of tax incentives designed to encourage businesses to make investments in solar energy, including extensions of the business solar investment tax credit (ITC). The following is a brief summary of the provisions directly and indirectly benefiting the solar industry.

Provisions Directly Benefitting the Solar Industry:

The Business Solar Investment Tax Credit bill extends the 30% Income Tax Credit for solar energy properties for eight years through December 31, 2016. The bill allows the Tax Credit to be used to offset both regular and alternative minimum taxes and permits public utilities to directly invest in solar facilities and claim the Income Tax Credit. The five-year accelerated depreciation allowance for solar property is permanent and unaffected by the passage of the eight-year extension of the solar ITC.

Provisions Indirectly Benefiting the Solar Industry:

Extension of Energy-Efficient Buildings Deduction. Current law allows taxpayers to deduct the cost of energy-efficient property installed in commercial buildings. The amount deductible is up to $1.80 per square foot of building floor area for property installed in commercial buildings as part of:

•   Interior lighting systems,
•   Heating, cooling, ventilation, and hot water systems,
•   The building envelope.

Expenditures must be certified as being installed as part of a plan designed to reduce the total annual energy and power costs with respect to the interior lighting systems, heating, cooling, ventilation, and hot water systems of the building by 50 percent or more in comparison to certain established standards. The bill extends the energy efficient commercial buildings deduction through December 31, 2013. (This is section 179D in the Internal Revenue Code).

Qualified Energy Conservation Bonds. The bill creates a new category of tax credit bonds, "Qualified Energy Conservation Bonds" to finance State and local government initiatives designed to reduce greenhouse emissions. QECBs can be issued to finance capital expenditures incurred for:

•   Reducing energy consumption by at least 20%;
•   Implementing green community programs;
•   Rural development involving the production of electricity from renewable resources.

The bonds can also be used to finance research facilities and provide research grants for, among other things, technologies to reduce peak use of electricity. There is a national limitation of $800 million, allocated to States, local and tribal governments.

...by Warren Kirshenbaum


There are numerous cities across the United States which can be considered "cleantech capitals." With a large array of renewable resources, a dedication by businesses and homeowners to become more energy efficient, and a large hub for research and development, a lot can be accomplished when it comes to creating new, efficient and sustainable clean technologies. There are many factors that make up a "capital for cleantech," and although there are more than ten cities around the nation that are involved in clean technologies, here are six of the top cities.

1) Boston, Massachusetts. Boston is said to enjoy some of the most supportive policies in the United States for energy efficiency and renewable energy. After California, Boston is second in clean technology venture capital investments. With an environment that is ripe for cleantech startups, numerous companies are moving their business to Boston. The MIT Clean Energy Prize is a venture and innovation creation competition that encourages clean energy innovation. Its objective is to provide educational opportunities and supply incentives to ventures demonstrating the clean energy affordability. As well, the development of MIT's cleantech incubator will provide Boston with more access to cleantech flow, increasing the demands for all future building to be constructed in accordance to LEED standards set up by the U.S. Green Building Council.

2) San Jose, California. San Jose, part of California's Silicon Valley, has been very productive in clean technologies. The city has expanded a number of clean technology investments and because of the research and development institutions in the area, many cleantech companies are coming to make their home in San Jose. San Jose's, "Long-time leadership in engineering know-how, combined with semi-conductor, nanotechnology and optics R&D gives it a leg up in renewable energy development, particularly in solar energy applications." San Jose is also home to the Environmental Business Cluster, a non-profit technology commercialization center assisting startup cleantech companies developing goods and services to positively impact the environment.

3) Austin, Texas. Austin has long been Texas' hub for solar, wind, geothermal, and biomass power, as well as fuel cell technologies. Its commitment to the environment and sustainability has made it not only a national cleantech player, but a global one as well. Austin is home to some of the largest cleantech companies on a global level. A large research and development hub, the University of Texas at Austin has created several research expenditures to elevate research into energy efficiency and renewable energy. This includes a project by the College of Natural Sciences to create biofuel from blue-green algae and hybrid-electric automobile programs developed by The Center for Electromechanics.

4) San Francisco, California. California is one of the top cleantech states in the United States and it is cities like San Francisco that makes it happen. Currently, San Francisco is well on its way to becoming the first city to be completely run by renewable energy by the year 2020. With projects like Sunset Reservoir Solar Project, which is the largest municipal solar facility in the state, and a new $250,000 grant to increase renewable energy capabilities.
 
5) Seattle, Washington. Seattle has been leaving its mark in cleantech society by increasing the need for green standards. The Green Building Sustainable Communities Program, for example, creates city projects that meet sustainable outcomes. Tax breaks and loans are provided to businesses and residences that utilize green practices. Seattle has been a leader in using their garbage to get electricity. They have invested into electricity from garbage landfills.
 
6) Chicago, Illinois. Over 20 percent of total power in Chicago is coming from renewable sources. Due to the increase in the need for renewable energy and energy efficiency, Chicago has been able to create numerous job opportunities while, at the same time, increasing solar power and saving on CO2 emissions. Chicago is also becoming one of the major investment locations for international businesses. Chicago also has a number of green initiatives, including the Chicago Green Office Challenge.

Kirshenbaum Law and Cherrytree Group LLC can help you structure your tax credit transaction. Let us guide you through the process of applying for and securing renewable energy tax credits. These transactions typically require a lawyer, a consultant, and a syndicator, and Cherrytree Group and Kirshenbaum law can act in all three capacities, saving you time and money on your transaction.

The original article was written by Shawn Lesser, and can be seen at http://www.reuters.com/article/2011/03 /28/idUS317857292020110328

State Auditor Suzanne Bump intends to review public subsidies for Evergreen Solar, the energy company that recently announced plans to shutter its Devens plant and move more 800 jobs elsewhere despite receiving millions of dollars in public funds, as part of a broader review of the state’s entire system of tax incentives.

With the Patrick administration saying it could recoup $13 million of the $31 million the state invested in Evergreen Solar, the News Service asked Bump if she was considering an examination of the public subsidies in the company.

Bump’s press secretary Christopher Thompson responded with a statement noting that before she took office, Bump had described reviewing the state’s broad system of tax incentives as a priority.

“She has developed an internal team and a strategy to evaluate these investments with a focus on accountability and tax payer [sic] benefit,” Thompson said. “The Auditor’s review will take a broad look at many different tax incentives, and the tax incentives granted to Evergreen Solar will be reviewed in this broader context.”

On the campaign trail last year, Bump talked up plans to examine tax incentives, saying they should be measured by the benefits provided to Massachusetts citizens and taxpayers and that accountability for public investments “must be built into state government.”

As a candidate, Bump said that all state tax incentives and credits should be reviewed for effectiveness and that she would begin with economic development tax incentives. She estimated state government would forego $1.7 billion in fiscal 2011 due to tax incentives and credits.

Bump also pledged to conduct audits of agencies charged with providing or documenting tax incentives to determine whether agency managers used appropriate procedures, provided objective analysis, measured outcomes as intended, and held recipients accountable for performance.

State Housing and Economic Development Secretary Greg Bialecki said last week that Evergreen had received $21 million in cash grants - $20 million to help build its facility and $1 million for workforce training - $7.5 million in investment tax credits and a long-term lease on state land valued at $2.7 million.

Evergreen has received other forms of public aid, but Bialecki said he did not count in his estimate $13 million in state grants used to build road and utilities infrastructure at Devens and some state taxes the company avoided when paying for equipment.

Bialecki estimated the state can recoup $13 million, including the $7.5 million investment tax credit, which he said won’t be claimed, $3 million in state grants that were tied to a job creation formula, and land costs.

"We’re looking very carefully at what happened here and what lessons can be learned," Bialecki said last week. "This wasn’t so much an investment in Evergreen Solar as it was in the clean energy sector. The purpose wasn’t to benefit a company but to grow an industry and the investment really put us on the map."

In announcing its Devens plant closing plans, Evergreen Solar President Michael El-Hillow said the firm’s production costs in Devens were “much higher than those of our low cost competitors in China.”

“Solar manufacturers in China have received considerable government and financial support and, together with their low manufacturing costs, have become price leaders within the industry,” El-Hillow said in a statement. “While the United States and other western industrial economies are beneficiaries of rapidly declining installation costs of solar energy, we expect the United States will continue to be at a disadvantage from a manufacturing standpoint.”

MassGOP Chairman Jennifer Nassour has called the state’s investments in Evergreen “reckless policy” and urged the Patrick administration to offer a more broad-based approach to economic incentives for companies.

House Minority Leader Brad Jones has said that the Evergreen case should serve as a “lesson to Governor Patrick that throwing money at companies in industries he approves of won’t necessarily translate into success.” Jones said Patrick and Lt. Gov. Tim Murray “should turn their attention to creating an economic climate where all businesses can succeed and thrive.”

Gov. Deval Patrick has defended his administration in light of the Evergreen controversy, saying the process of doling out incentives to individual companies or industries "works well."

"I am disappointed that we are losing these manufacturing jobs to China, but Evergreen produced over 900 jobs for each of the years in question (two or three times what they promised) and that was good for the workers who got those jobs," Patrick said during a recent online chat.

"Evergreen did not use about half of the benefits that were offered to them and we have recovered or will recover most of the rest. Beyond that, we need to ask ourselves whether we are serious about competing for jobs on the same playing field as other states. Far more often than not, we win in a competition. But we have to compete to win."

Senate President Therese Murray told WCVB-TV Sunday that Evergreen “paid us back” $11 million based on an initial state investment of $2.5 million. “I think that’s pretty good,” Murray said.

But Murray added, “Probably their five or ten-year plan was a little aggressive . . . It’s still a loss. There should have been a bit more due diligence. I would have had a bigger clawback - that if the jobs left that the money came back.”

Murray said she’s been told that “solar doesn’t make a profit,” adding, “I’m still grappling with that.”

House Speaker Robert DeLeo, who has also called into question the Evergreen investments, on Wednesday reiterated his support for tax incentives aimed at stimulating film industry business. DeLeo noted that “The Social Network,” “The Town” and “The Fighter,” which all have a Massachusetts connection, tallied 16 Oscar nominations this week.

“These movies, filmed right here in Massachusetts, are a good reminder of how important the film tax credit has been to our state’s economy in these challenging times,” DeLeo said in a statement, referencing House votes from nearly a year ago to block efforts to reduce incentives available to the film industry.

A Department of Revenue report released this month found that the film tax credit cost the state $82.4 million for productions filmed in 2009 and generated $319 million in spending, of which $104 million was spent in Massachusetts. Of the $215 million spent outside of Massachusetts, $82 million paid salaries of $1 million or more to actors, according to the report.

Over the four years in which the tax credit program has been on the books, the total credit-eligible spending for 449 productions claiming the tax credit was $1.047 billion, with 32 percent or $335.5 million paid to Massachusetts residents and 68 percent or $712.3 million paid to non-residents or out-of-state businesses, according to the Department of Revenue.

On Wednesday, Patrick said his newly unveiled budget proposal included a continuation of the film tax credit program.

...By Warren Kirshenbaum

Renewable energy is not yet able to be produced in quantities that will satisfy global energy demand, and renewable energy is more expensive than energy produced from fossil fuels, but great strides have been made in recent years in these areas. Furthermore, the costs that the production of fossil fuels are imposing, both on our environment, and financially on the companies producing oil and gas are not factored into the cost per gallon or kilowatt hour of energy production, and perhaps this is a line item that we should start to factor into the cost of the production of energy from fossil fuels if we are going to make a push toward serving the world’s energy needs with renewable resources.

This year, the Deepwater Horizon oil spill (which was both the biggest oil spill in U.S. history and the largest accidental marine oil spill in the history of the petroleum industry) released 185 million gallons of crude oil into the Gulf of Mexico for about three months and has inflicted devastating environmental and psychological damage on the coastal communities in the Gulf, affecting tourism, fishing and drilling, as well as subjecting residents to ongoing restrictions on fishing and shrimping that have affected the livelihoods of thousands of people. BP’s Gulf Oil Spill resulted in the deaths of 11 workers on the rig and injuries to 17 others. BP’s financial expenditures from the oil spill have so far reached $3.12 billion, excluding the $20 billion compensation fund they have set up to reimburse residents and businesses for their losses. Also this year we endured the Copiapo mining accident in Chile, which occurred when the copper/gold mine owned by San Esteban Mining Company collapsed and 33 men were trapped 2,300 ft below ground for 69 days. Fortunately, all of the 33 men were rescued with only one man suffering from pneumonia, and a few others experiencing dental problems. The cost to rescue the men was $20 million. The San Esteban Mining Company has allegedly violated mining regulations previously, and 8 of its employees have died at the mine in 12 years. Adding to the year’s disasters at fossil fuel production sites is the Pike River Mine accident in New Zealand where an explosion at the coal mine has left 29 miners trapped 4,900 feet from the mine’s entrance. The miners are still trapped in the mine and may not be alive. Gas sampling is being tested to ensure that any accidental spark will not ignite the mine when search and rescue operations are undertaken. The Gulf Oil Spill, Copiapo mining accident, and Pike River Mine accident were stark reminders that our pursuit of energy derived from fossil fuels is causing an irreversible deterioration of our planet, its natural resources, our environmental balance, and is subjecting us to unacceptable losses in human life.

There are a multitude of renewable resources, but this post will focus on solar and hydro energy production, as these methods of renewable energy production are, in my opinion, poised to experience significant growth in the next few years.

Solar energy production is significantly more expensive than hydro, due to the cost of the solar panels themselves. Hydro has languished for decades as a method of creating renewable energy, mainly due to the environmental objections that a hydro project creates, and the expensive federal regulatory requirements of such projects. However, both forms of renewable energy are attractive. Solar projects, unlike wind projects do not create a danger to birds, cattle, and other animals, solar fields are not large and aesthetically displeasing, and do not generate loud whirring sounds that intrude on people’s quality of life. Consequently, as solar installations have very little negative environmental effect, they are generally easy to permit. Solar energy is, however, expensive to produce, as the technology that underpins the solar panels have traditionally made the installation of solar fields expensive enough to impede their development as a commercial enterprise. As with all technology, as solar technology develops, its cost has begun to decline, which should make solar projects more viable. Hydro, is very clean and unobtrusive to the environment, and is relatively safe to produce, but it can affect the migratory pathways of fish, and a dam breach could be detrimental to downstream human habitats. Consequently, new dams have not been constructed in many years. In fact, the stock of dams has decreased over the decades. Moreover, the prospect of new dams being built is relatively slim (due to the environmental challenges and the time period involved in getting Federal Energy Regulatory Commission (FERC) approval). Inorder for hydro production to increase, the capacity of existing facilities would need to be expanded. Legislative changes that limit environmental objections to the process of FERC approval, renewal, and re-licensing would need to be implemented to help to stimulate hydro production, this will require intensive lobbying, but it can be done.

Nevertheless, the point being made here is that, despite the higher cost of producing renewable energy, the cost of energy production from fossil fuels is enormous,not only the monetary cost, but the environmental cost as well as the cost of human life. This is more of an IOU being tagged to the planet than a current cost, which leads to the conclusion that we have no choice but to pay the higher monetary price for renewable energy now and retire the bigger IOU that future generations will inherit.

What is an energy tax credit and how do I know if I am eligible for one?

Current law allows taxpayers the ability to deduct the cost of energy-efficient property installed in commercial buildings.  This deduction will allow commercial real estate owners to qualify for tax deductions under the Energy Policy Act of 2005 (EPACT).  Many EPACT benefits were extended by the American Recovery and Reinvestment Act of 2009, creating greater options for taxpayers.   Remember, this is a tax deduction, and not a tax credit.   As I explained in one of my previous blog posts, a tax credit is a dollar-for-dollar credit against your tax obligation, whereas a deduction, reduces your gross income, and, therefore, will save you taxes as a percentage of the tax obligation.

As a commercial real estate owner, you could be eligible for a tax deduction of up to $1.80 per square foot of building floor area for improving the energy efficiency of your commercial property, or for adding energy efficient systems into your buildings.

To qualify for the full deduction, a commercial real estate owner must make investments which will reduce energy costs by 50% or more.  A partial deduction of $0.60 per square foot is available for investments which will reduce energy costs by 16 2/3% in one of three systems—lighting; heating and cooling; or building envelope.  Remember, tax deductions reduce your overall taxable income reducing the taxes you owe by a percentage.

The person or organization that benefits from the deduction are those who pay for construction and/or installation of the energy-efficient property, i.e. usually the building owner, unless it is a government owned building.  If the building is government owned, then the beneficiary could be the person responsible for designing the building or project.