Power & Pipes

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.

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).

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 Federal Energy Regulatory Commission recently issued a final rule, Order No. 880, revising its hydropower project inspection and safety regulations. The updates revise part 12 of FERC’s regulations and conclude an approximately year and a half of rulemaking in Docket No. RM20-9.

The Federal Register recently published the US Department of Energy’s (DOE) notice of Request for Information (RFI) seeking public input on energy sector supply chains. The RFI requests that stakeholders provide comment on a wide variety of issues concerning supply chains of energy and related technologies.

President Joe Biden signed an executive order on February 24 to address possible vulnerabilities in the supply chains of critical national economic sectors, including the energy sector. The executive order directs various executive departments and agencies to complete, in coordination with private stakeholders, a series of assessments to evaluate the resiliency of supply chains in those key sectors. In his prepared remarks, President Biden explained that the order was prompted partly by concerns surrounding shortages in semiconductors, which are vital components of electronic devices used in everything from mobile phones to motor vehicles.

During its January open meeting, FERC issued an order directing independent system operators (ISOs) and regional transmission organizations (RTOs) to submit informational reports regarding co-located generation resources. The order focuses on so-called “hybrid resources,” which is a term that refers generally to sets of co-located resources sharing a single point of interconnection that can be separately dispatchable or modeled and dispatched as a single integrated resource. The forthcoming reports could shed light on the manner in which hybrid resources are, or could be, participating in wholesale markets as well as the hurdles to such participation.

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.