Cherrytree Group LLC Blog

In order to become more green and to implement greener business practices, more and more businesses are buying Renewable Energy Credits (RECs).

Businesses can buy renewable energy credits, or RECs from power companies who supply power, natural gas and energy products for homes and businesses.

The RECs are Green-e® Energy Certified and sourced from wind energy. The RECs give developers of renewable energy a market-based, financial incentive to build wind, solar and other forms of renewable energy. One Renewable Energy Credit is created for each megawatt-hour of renewable power that is delivered to the electric grid. Once an REC is sold, it is retired, ensuring that each REC is only used once.

More and more companies are searching for options to support sustainability goals and initiatives. The Cherrytree Group represents green developers and businesses that using green products such as renewable energy certificates as well as solar and load response options.

Expiration of the payroll tax deduction, changes to the capital gains tax rates, expiration of the Bush-era tax cuts, health insurance mandates, and diverging opinions between Democrats and Republicans on how to reform the Tax Code are creating much anxiety for both business and individual taxpayers alike. Tax issues are of paramount importance to businesses when faced with investment, expansion, or hiring decisions, and in the case of smaller businesses these decisions often flow through to the principals’ tax planning strategies.

Regardless of your political affiliation, the availability and usage of mechanisms that aid tax planning are important economic drivers. This article focuses on highlighting the role of tax credits as an economic engine, rather than their incorrect labeling as “subsidies”, particularly when they originate from the creation of renewable energy. The demise of companies such as Evergreen Solar and Solyndra, which received expensive loan guarantees or other subsidies only to fail spectacularly, costing taxpayers vast sums has only added to the political distaste for subsidies.

Tax credits, are an incentive that allows the outsourcing of governmental functions to the private sector. Tax credits, which allow a taxpayer an offset against taxes due, usually dollar for dollar, or are sale-able in the marketplace create a financing source for projects that otherwise would not exist. There are tax credits for remediation of environmentally contaminated properties, rehabilitation of historic buildings, producing renewable energy, and the creation of affordable rental housing, to name a few. The market for tax credits is fluid and vibrant, and it is important that the market for these tax credits remains strong. Take the conversion of biomass into renewable energy. Technologies that can perform such a conversion create energy and avoid the need to landfill industrial waste, yet these deals are difficult to finance through traditional lending channels. Generating tax credit equity for such ventures, while providing tax planning benefits to buyers of tax credits, such as large corporations, institutions, and individuals frees up businesses to invest in equipment, personnel, upgrades and other business needs that would inevitably be scrapped if these dollars were being paid as taxes.

Warren Kirshenbaum is the president of Cherrytree Group, LLC, Newton, Mass., a tax credit consultant, broker, and syndicator.

Wind power is facing a make-or-break moment in Congress, with renewable-energy firms' projects on hold as lawmakers debate whether to extend subsidies for new wind farms this month.

Currently U.S. tax credits are available only for facilities that come online before the end of 2012. Iberdrola Renewables, the second-largest U.S. wind operator, has suspended work on new U.S. projects for "anything we can't build in 2012," said Rich Glick, vice president of government affairs for the unit of Spain's Iberdrola SA.

Industry players see two main chances for Congress to act this year. One comes in February, when the wind subsidies could be tacked on to an extension of payroll-tax cuts. The other would come in the lame-duck session after November elections, when lawmakers must address the expiration of tax cuts from 2001.

The tax credit has helped bring down the cost of wind power, making it more competitive with rival producers, but wind's backers say they need a few more years to build out a U.S. supply chain. The sharp fall in U.S. natural-gas prices has made this a particularly sensitive moment for wind energy by giving gas-fired power plants an extra cost advantage.

Previous delays in extending the wind-farm tax credit have led to drop-off in wind installations. The credit, designed to help level the playing field with coal and other fossil fuels, is worth 2.2 cents per kilowatt-hour of electricity produced during the first 10 years a wind farm is in operation.

A delay could also stunt efforts to bring down the cost of wind-power technology. "We face the loss of domestic expertise and the momentum to build a strong domestic supply base," said Luis Miguel Fernandez, chief corporate officer for the North American arm of Spain's Gamesa Corp., which has a factory in Pennsylvania.

Last month, Vestas Wind Systems said it will cut 1,600 U.S. workers if the tax credit isn't renewed, on top of 2,300 jobs it is already shedding world-wide. An industry-backed study by Navigant Consulting said in December that thousands of additional job cuts could occur if the credit expires.

About 6.8 gigawatts of wind power were installed in the U.S. in 2011, bringing the total nationwide capacity to nearly 47 gigawatts, enough to power about 12 million homes at any given time, according to the American Wind Energy Association. That is about 3% of total U.S. generating capacity.
 
Without the wind tax credit in place, Navigant said, about two additional gigawatts of wind capacity would be installed in 2013, as opposed to more than eight gigawatts expected to be added in 2012, when the tax credit will still be in place.
 
Other predictions are more dire. Iberdrola's Mr. Glick said there would be "close to zero" gigawatts of wind capacity installed next year without an extension soon.

Some in Congress say it is time to end subsidies for renewable energy. The wind industry "simply cannot continue to rely on the American taxpayer," said Rep. Mike Pompeo (R., Kan.), who has a bill that would cut many energy-related credits from the tax code. "Each time it comes up to a year of expiration, they say, 'If we just get a few more years our technology will mature and we will become more competitive.' It's time for them to figure out how to do that."

The industry's supporters argue that Chinese manufacturers also get government support, and they say companies need more time to build a U.S. supply chain and drive down costs.

Denise Bode, president of the American Wind Energy Association, said that in several years' time "we will not need" the tax credit but losing it now could stunt efforts to attract new investment.

Some U.S. facilities may keep going without the credit, thanks to foreign demand and mandates in many states for utilities to buy increasing amounts of renewable power.

Twenty-three governors have backed a bill that would extend the tax credit by four years. Senate Majority Leader Harry Reid (D., Nev.) said late last month the credit is "extremely important" and suggested it should be included with the extension of the payroll-tax break.

Some House Republicans have supported the four-year extension. But Rep. Dave Camp, a Michigan Republican and lead House negotiator on the payroll-tax bill, has said energy tax credits shouldn't be part of the payroll-tax discussions.

Original Article – Wall Street Journal

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

An interesting transactional focus for year-end which could create some much needed impetus in the renewable energy arena is the expiration of the 1603 Treasury Grant, and the solar depreciation acceleration for 2011, which expire on December 31, 2011. The possible expiration of these valuable incentives should spur, in particular, increased activity in solar installations in order to meet the spending parameters of the grant by the end of December 2011.

An experienced consultant can assist in the 1603 grant process and in tax incentive deals generally. Consultants are also able to piece together financing sources and partners in the solar development marketplace that can be strategically helpful to clients needing to take advantage of tax credit for solar installations.
 
Cherrytree is an innovative real estate and business consulting company that advises business and real estate owners, developers, property managers, and landlords.  

Our services include the representation of clients in the renewable energy area, particularly solar installations and tax credits as well as providing sophisticated value added services to green development projects, i.e. developments that utilize energy efficient development incentives.

For information, assistance or questions regarding the 1603 Tax Credit, Solar Energy Credits, Brownfields Tax Credits or other Commercial Real Estate transactions, contact the Cherrytree Group.

“Sophistication, Value and Follow-Through”

American Capital Energy, Inc. (ACE) was awarded a landfill contract to construct $85 million, 18.2 MW of solar generating facilities by Cape and Vineyard Electric Cooperative.

The project will convert town owned property and landfills in six Cape Cod and Martha's Vineyard communities into solar farms which will produce approximately 25% of the energy needs of the participating communities.

Mark Sylvia, commissioner of the Mass. Department of Energy Resources, said, "This is a significant game-changing model."

The project is projected to save participating towns $1.42 million in energy costs in the first year.

Across the USA, every city and town has vacant capped landfills and brownfields which could be converted to solar facilities to produce solar electricity to power the grid, reduce carbon omissions and cut corporate and municipal energy costs. American Capital Energy, a Massachusetts based company and leading solar expert has completed over 35 large scale utility and brownfield projects since its founding in 2005.

Selected from more than 150 submissions ACE was the Engineering Procurement Construction firm that recently completed the Silver Lake Solar Facility for Western Mass. Electric Co.

Silver Lake is the redevelopment of 8 acres of brownfield floodplain land into a renewable energy facility.

The 1.8 MW Silver Lake facility is located in Pittsfield, Mass. accommodates a variety of complex permitting restrictions and is a shining example of what a public-private partnership can accomplish.

Silver Lake is the largest utility scale solar project completed to date in Mass. and consists of 6,500 ground mounted photovoltaic panels covering 8 acres.

As cities and towns across the country struggle with energy consumption and costs the conversion of these polluted open sites, brownfields, will produce not only much needed power but also help communities balance their budgets.

NERJ

...by Warren Kirshenbaum

The pilot program of Solarize Massachusetts will come to Scituate this month, as part of the statewide initiative to bring solar energy into the lives, homes, and businesses of South Shore residents.

Chosen as one of four communities throughout Massachusetts to participate, Scituate will host numerous presentations on the solar initiatives available to residents with the hopes that the coastal community will become greener than ever.

“We first started The Commonwealth Solar Rebate Program a number of years ago, and we’ve seen impressive numbers in terms of the number of solar systems installed in Massachusetts homes and businesses since then,” said Kate Plourd, the press representative for Mass CEC.

Scituate opted into the program early this year and was chosen at random to be the pilot town for this region.
Plourd hopes that the program’s success will dictate how else to deploy solar initiatives in other communities throughout Massachusetts, bringing more and more residents and businesses on board with the cleaner, greener, energy.

There has been significant growth of solar power in Massachusetts. This program is intended to educate homeowners and business owners about the ease of installing a solar system and the  financial benefits, both in utility bills and tax credits.

As part of the program, Scituate hosted a “Solar 101” meeting to discuss solar rebates, installation, and renewable energy tax credits.

There are three basic kinds of rebates available to locals – the Commonwealth Solar Rebate Program, the state tax credit, and the federal tax credit.

“Solarize Scituate” isn’t the only clean-energy initiative the town has its hands on right now.

With the soon-to-be-implemented Stretch Code mandates, which require more stringent, energy-efficient guidelines for new construction; a wind turbine to be installed in the fall; and with a large solar array being placed on the town’s capped landfill, Scituate will be relying on clean energy in no time.

“Between [all] those things … things are looking very green around Scituate,” she said.

Original article By Jessica Bartlett-Boston.com

...by Warren Kirshenbaum

The top state energy official in Massachusetts marked Earth Day this week by announcing a new solar power initiative. The pilot program is aimed at bringing the power of the sun to the masses.

A grassroots marketing effort will attempt to sell solar power house by house and business by business and through volume discount pricing attempting to overcome a chief drawback, the high cost of installing solar power systems. Richard Sullivan, Secretary of the Massachusetts Executive Office of Energy and Environmental Affairs says the program called “Solarize Massachusetts” introduces a new business model for small scale solar projects for homes and businesses.

It is a way to aggregate and drive down the cost of installation.

Proponents of the program hope it will take solar energy in Massachusetts beyond the early adopters and reduce the need for substantial government rebates for solar. Sullivan says Massachusetts has one of the most ambitious clean energy programs in the country, but 80 percent of the roughly 22 billion dollars spent on energy annually in Massachusetts goes out of the state, most of it out of the country.

Since 2006, incentive programs have helped increase solar power by 20 fold in Massachusetts. The state has 45 megawatts of solar power installed and another 40 megawatts under contract for installation. By statute, 250 megawatts of solar power is to be installed by 2017.

The effort to increase adoption of solar power will begin this year in four pilot communities Hatfield, Harvard, Scituate and Winchester. These were selected at random from geographic regions and each meets certain criteria under the state's Green Communities Program.

The Massachusetts Clean Energy Center, partnering with the state to run the pilot program, is seeking bids from companies willing to provide homeowners and businesses with a turnkey solar power system on a tiered price schedule that lowers the costs for multiple installations. Existing state and federal renewable energy credits would also be available for purchasing the solar power systems.

The director for the Massachusetts Clean Energy Center says funding is available for up to 400 projects.

Funding for the solarization pilot project comes from a clean energy surcharge on Massachusetts utility bills and from the sale of renewable energy credits.

Original news story can be seen and heard WAMC Northeast Public Radio - Paul Tuthill

...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.