Climate Change Report : Climate Change Lawyer & Attorney : K&L Gates Law Firm : Global Climate Law, Carbon Emissions

By Fred Greguras (Palo Alto)

The SolarPraxis PV Power Plants - USA 2011 conference in Phoenix brought together solar project developers, bankers and other investors, utilities, regulators and other stakeholders to discuss the problems and solutions for getting more utility solar projects built, particularly in the Western states.

The conference sessions included presentations on the development and status of renewable energy generation in the Western states comprising the Western Electricity Coordinating Counsel and how these states could work together more effectively. There was a consensus of stakeholders that the current approach of both independent power producer and utility-owned solar projects are needed to meet RPS requirements in western states. Concern was expressed over California's amended renewables portfolio standard (RPS) law enacted this spring. The law has a strong in-state energy sourcing requirement to meet the new goals and limits the eligibility of out-of-state energy and RECs for RPS purposes.

With the fast approaching December 31st expiration of the Section 1603 cash grant in lieu of investment tax credit, there was speculation about whether the cash grant would be extended and, if not, how to quickly and effectively qualify projects for the year-end safe harbors. There were also discussions about how the expiration would impact the financing of solar projects in 2012 and thereafter.

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By Fred Greguras (Palo Alto) and Stan Lewandowski (Palo Alto)

The power purchase agreement (“PPA”) is the primary source of revenue in a solar project financing for debt service to a lender as well as for returns to other investors and the project developer. If the solar facility must be removed from the rooftop or ground site because of foreclosure or other superior rights, then the project cannot generate any more electricity which means there will not be any more revenue from the PPA, from electricity production subsidies such as production-based incentives or from the sale of renewable energy credits or certificates. The predictability of the revenue (or lack thereof) is the key factor in the financeability of the project. There cannot be any revenues if the solar facility is no longer operating. The value of the installed solar equipment by itself is not adequate to protect lenders or investors. While the security interests in a loan financing will include a UCC-1 filed on the solar equipment, the equipment has little resale or salvage value once it is installed and will have little value for a lender or other investor.

Site control means control over the rooftop or ground site where a solar facility will be located for the term of the PPAso that the PPA revenues can be generated without any interruption. A key business objective in financing due diligence is to identify and implement site control protections which increase the probability that the solar facility will generate such revenues for the life of the PPA. A lender will want site control for the term of its loan. The borrower/project owner will want the revenues to continue for the life of the PPA to provide a return for itself and other investors. The investors and project owner have a common interest which should drive cooperation on these issues.   

The title report for the property where the project will be located will identify the deeds of trust, easements for utilities, rights-of-way, mineral and other rights and encumbrances which may restrict or prevent the use of the land for the development of the solar project. For example, a project owner may be leasing the rooftop of a building which is subject to a financing party’s deed of trust. The most common encumbrances on a title report that must be addressed are deeds of trust or mortgages held by parties that financed the property. The risk to the solar project owner is removal of the solar facility if the land owner defaults and foreclosure occurs. The title report should be ordered and reviewed at the outset of the project to identify what site protections may be needed to mitigate the financing risks and to quickly determine if they can be obtained.

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By: John M. Sylvester (Pittsburgh) and Jonathan D. Christman (Pittsburgh)

In the nation’s first appellate decision of its kind, the Virginia Supreme Court has held that an insurer does not have a duty to defend an energy company policyholder for third-party liability claims alleging global warming-related damage.  Specifically, in AES Corp. v. Steadfast Insurance Co., the Virginia Supreme Court upheld a lower court decision and determined that an insurer had no duty to defend AES Corporation with respect to a global warming claim lawsuit brought by a native Alaskan village against several energy and utility companies on grounds that the complaint did not contain allegations of an “occurrence” necessary to trigger the insurer’s relevant policies.  This decision, however, is certainly not a conclusive statement on the issue of insurance coverage for global warming claims because the legal principles on which the decision is based are a minority view. 

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Program Details
Markets outside of the U.S. present an excellent opportunity to generate revenue – whether from investment, alliances or other cross-border transactions. K&L Gates and Deloitte bring together experts from four important regions – Asia, Europe, Latin America and the Middle East – to share success stories and strategies making the most of the unique business and regulatory environments in markets beyond our borders. With 4 panels of speakers focused on their regions, you will walk away with practical insights into the hottest revenue-generating opportunities of 2012.

Agenda
10:00 a.m. – Registration
10:30 a.m. – Opportunities in Europe
12:00 p.m. – Lunch with casual Q&A
1:00 p.m. – Generating Revenue in Latin America
2:30 p.m. – Tapping into Asia
4:00 p.m. – Opportunities in the Middle East
5:30 p.m. – Casual Q&A and wine reception

To attend, either register below, email Christina Hendry or call 415.882.8038 by Friday, October 28th. Please indicate which location you would like to attend. This program is complimentary.

REGISTER NOW

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Thursday, October 20, 2011 8:30 - 10:30 a.m. PDT
Computer History Museum
1401 N. Shoreline Blvd.
Mountain View, CA
Register Now

On September 16, 2011, President Obama signed into law the Leahy-Smith America Invents Act (the “Act”), which will substantially affect the way that patents are procured and enforced in the United States. The Act makes very significant changes to U.S. patent law.

The Act includes many changes, large and small, affecting subjects as far-reaching as the available appeals from reexaminations to the subject matter eligibility of tax planning methods and human organisms. Please join us for a presentation and question and answer session at the Computer History Museum in Mountain View, CA.

Topics Include:

• First-Inventor-to-File
• Changes to What Constitutes Prior Art
• New Post-Grant Administrative Proceedings
• Supplemental Examination
• Defense to Infringement Based on Prior Commercial Use
• Fee Issues
• Subject Matter Carve-Outs for Tax Strategy Patents and Human Organisms
• Marking and False Marking
• Impact on Your Litigation Profile and Risk Management

In addition to providing our audience with a summary of the changes in the above areas, the focus of our presentation will be on how these changes will impact your business.

Program registration is complimentary. CLE credit is available in the following jurisdictions: California, Illinois, Pennsylvania, New York, New Jersey and Texas. An application has also been made to the North Carolina Bar. Other applications will be submitted upon request. To register, please click on the link below.

For more information, please email Ellen Keiley or call 617.951.9075.
This event will be taking place in multiple K&L Gates offices.
 

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By Vanessa Edwards (London/Brussels), Philip Torbøl (Brussels), Christopher Tung (Hong Kong), and Jonathan Blank (Washington, D.C.)

In an important case pending before the European Court of Justice (ECJ), the Advocate General Juliane Kokott (AG) delivered her Opinion on Thursday 6 October. The AG considers that the inclusion of international aviation in the European Union (EU) Emissions Trading Scheme (ETS) is compatible with international law.

The AG's Opinion is not binding on the judges of the ECJ but in the majority of cases the judgment of the ECJ comes to the same conclusion. The judgments in this case should be delivered in the course of next year.

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September 21, 2011 7:30 - 9:30 a.m.
Computer History Museum
1401 Shoreline Blvd.
Mountain View, CA  94043
Register Now

SPONSORS:
Centaur Partners, K&L Gates, and Next Step

PROGRAM:
M&A is the best opportunity for most businesses to capture their enterprise value; but most companies don’t get it right!  Are you ready for what is coming?  Or will you end up having the value of your deal driven down because you were not prepared?

Being ready enables a business owner to respond effectively, maximize valuation, and avoid a missed opportunity in the hyper-competitive deal environment.  Now is the time to prepare your Finance, Legal, Marketing, and Operational infrastructure so when an acquisition is imminent, you can survive the due diligence process and maximize your deal value.

The seminar begins with a brief update on current M&A trends. Then, our experts step you through the actions to:

• Master the due diligence process
• Accelerate the closing process
• Avoid legal and accounting traps that can kill a deal, increase transaction costs or cause discounts in value
• Build value through your sales channels, customer base and marketing approaches
• Negotiate customer and partner licenses and agreements that will be acceptable to an acquirer

COST:
$25.00, payable to Next Step, includes continental breakfast and all workshop materials.

For more information and to register for the seminar in San Mateo on Sept 14, click here and for Mountain View on Sept 21, click here.

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August 17, 2011 6:00 - 9:00 p.m.

K&L Gates - San Francisco Office
Four Embarcadero Center, Suite 1200
San Francisco, CA 94111
Center, Suite 1200
San Francisco, CA 94111

SPONSORS: German American Business Association, Rheingold International, and K&L Gates

PROGRAM:
As an international research firm, Rheingold is often asked to help clients provide insights to psychologically translate their marketing campaigns to other countries. One of the biggest obstacles is to effectively reach consumers with a different cultural background, particularly when trying to transfer successful concepts to various countries. Rheingold’s research exemplifies the differences between the American and German culture that impact, in this case, sustainability considerations. The insights presented will help understand the marketing strategic pitfalls and success factors.

Rheingold explored current sustainability considerations in 40 2h in-depth interviews with American and German consumers. The research revealed significant cultural differences in sustainability perceptions and impacts on personal everyday lives. Rheingold’s research shows how marketing measures can account for these differences and successfully speak to the psychological needs of the American vs. German consumer.

Topics to be discussed:
• How do consumers define sustainability?
• What do they truly care about and what is “lip service”?
• What are differences between the American and German consumer and what are they rooted in?

Cost:
$15 Members, $25 Non-Members, $35 At the door.

For additional details and to attend, please click here.

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By Greg Brucia (San Diego)

California may have a dominant position within the US solar market, but the US has only a modest position in the global solar market.  That was a key message from two leading solar industry analysts, Paula Mints of Navigant Consulting and Stefan Pietzsch of EuPD Research, at a June 27, 2011 webcast presented by Intersolar North America titled US Solar Market Overview and Future Trends. 

Both presenters emphasized the importance of government support for the development of solar markets. Mints noted early US dominance in the supply market gave way first to Japan and Europe in 1999 and later to China and Taiwan, with increased government support being the common driver for the successive leaders. Not surprisingly, Mints suggested that increased government support would be necessary for the US to return to a more competitive position in the supply market.

Domestically, the speakers agreed government support has been a key to California’s leading position within the US, driven in large part by the plethora of incentives in California –  a leading renewable portfolio standard, feed-in tariffs, utility rebates and net energy metering. Pietzsch noted other supporting factors such as a culture in California that embraces protection of the environment and a willingness among consumers to change behavior to further that goal. This has been particularly important for the development of the residential and small business sector, the historical backbone of California’s solar market. But Pietszsch also sees these factors supporting growth in the utility-scale segment, which is predicted to be the highest growth segment of the California solar market.

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By Dirk Michels (Palo Alto)

Today, the promise of solar PV is not about technology, but rather about creating the financial, legal and regulatory frameworks that allow for significant cost reduction, especially for the residential and commercial distributed solar sectors. Together with the utility-scale solar sector, significant growth in the distributed solar sector may be the game changer that makes solar power a viable alternative to traditional fuels.

According to GTM Research, the U.S. solar PV market was at an installation pace of 878 MWp (DC) with 636 MWp (DC) in residential and commercial distributed installations in 2010. The research also indicated that the U.S. solar PV market will grow to annual installations of more than 5,000 MWp (DC) by 2015. If the majority of new installations are utility-scale solar facilities, the residential and distributed commercial/municipal sectors could fall behind in overall growth.

To prevent that loss of market share, the sectors will need to address the most significant factor affecting their success: cost competitiveness. The installed costs for residential and distributed commercial/municipal installations are rather high, at approximately US$5.71~US$6.98. That compares to utility installations, which are already at a much lower price point of between US$4.05 and US$4.80 for the year 2010. Further, it is expected that a large number of the currently available state and federal incentives will terminate, which further complicates ‘small-scale’ solar’s attempt to achieve cost competitiveness. In the coming years, the residential and distributed commercial/municipal sectors still have some catching-up to do before they can claim their fair share of future growth in the market.

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By John Krill (Harrisburg)

The United States Supreme Court has held that the Clean Air Act[1] “displaces” any federal common-law cause of action that might exist for the alleged public nuisance of contributing to global warming by emitting carbon dioxide, but left open the possibility of state law claims.

The Court decided 8-0 in American Electric Power Co. et al. v. Connecticut et al. that the Second Circuit erred when it allowed such a federal common-law nuisance suit by eight states and three land trusts to go forward against five major electric power companies.[2]

The Opinion of the Court, reviewing the history of the federal common law of public nuisance, focuses on the litigation several decades ago over sewage pollution of Lake Michigan.  In Illinois v. City of Milwaukee, the Court found that there was a common-law cause of action maintainable by the State of Illinois to abate pollution of the lake from Milwaukee’s discharges.[3]  Nine years later the Court held that the Clean Water Act amendments to the Federal Water Pollution Control Act[4] had “displaced” the federal common law claims brought by Illinois.[5]

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June 16, 2011 8:30 - 10:00 a.m. - Computer History Museum
June 17, 2011 8:30 - 10:00 a.m. - K&L Gates - San Francisco Office

We are pleased to invite you to this exciting breakfast program on renewable energy and emerging technology policy and funding issues.

As the former Chairman of the House of Representatives Science and Technology Committee, whose jurisdiction covered everything from NASA and NIST to the Department of Energy, K&L Gates partner Bart Gordon will be speaking on a  myriad of interesting topics including ARPA-E  (as he was the original author of the program), SBIR funding, DOE's Office of Science, the America Competes Act and the future of science and technology policy /funding opportunities.

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by Lawrence Patent (Washington, DC) 

The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) recently published proposed regulations that would further define the term “swap” under the Commodity Exchange Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). 76 Fed. Reg. 29818 (May 23, 2011). 

Three items therein may be of particular interest to energy companies. With respect to the forward contract exclusion from the definition of “swap,” the CFTC stated that it would interpret this provision consistent with its historical interpretation of the forward contract exclusion from the definition of the term “future delivery.” Further, book-out transactions in nonfinancial commodities that meet the requirements of the CFTC’s 1990 “Brent Interpretation,” and that are effectuated by a subsequent, separately negotiated agreement, also will qualify for the forward contract exclusion from the swap definition.

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May 23, 2011 6:00-9:00 p.m.

K&L Gates - San Francisco Office
Four Embarcadero Center, Suite 1200
San Francisco, CA 94111

By popular demand, we are repeating this program. In partnership with the German American Business Association, please join K&L Gates, East West Bank and Solar Power, Inc. at our San Francisco office on Monday, May 23 for this evening event. Registration/wine reception is at 6:00 p.m., with the program beginning at 6:30 p.m.

PRESENTERS:

• Steve Kircher, CEO, Solar Power, Inc., project developer
• Don Danh, Senior Vice President, East West Bank, a lender for the project
• Dirk Michels, Cleantech Practice Partner, K&L Gates, lender’s law firm
• Moderator - Fred Greguras, Cleantech Practice Partner, K&L Gates 

SPONSORS: K&L Gates, German American Business Association, East West Bank, and Solar Power, Inc.

This year will be a major growth year for solar implementation in the U.S.  Why? As European feed-in tariffs are reduced, the U.S market will be a primary focus for global solar players.  The extension of the successful Section 1603 cash grant program and the creation of 100% bonus depreciation for 2011 at the federal level will stimulate investments in renewable energy projects. The availability of state level incentives for solar financing is also increasing making financing more readily available for solar energy projects in 2011.

The panelists will discuss the financing of solar projects with these incentives at a practical, hands-on level using lessons learned in a real solar project by Solar Power, Inc. – the Aerojet project in Northern California.  This large-scale PV solar system was built at an EPA brown field site and combines the implementation of solar for electricity generation with the reuse of a contaminated site.

What are the lessons learned in a real project? What are the pitfalls you want to avoid? How can these lessons help in securing financing and ensuring successful implementation of other solar projects?

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