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Renewable Energy Industry Legislation Activity in 2014 Virginia General Assembly

We watched a lot of bills arrive and die in the Virginia General Assembly session this past year (a session that still has yet to pass a budget for the state). Here is a brief look at a few initiatives impacting renewable energy development in Virginia that have been enacted or remain active for future sessions.

Senate Bill 653: Renewable Energy Property Grant Fund.

S.B 653 was intended to offset costs to install new renewable energy facilities by offering grants to cover a portion of these costs. This bill defines “renewable energy” as energy derived from sunlight, wind, falling water, biomass, waste, landfill gas, municipal solid waste, wave motion, tides or geothermal power, but does not include energy derived from coal, oil, natural gas, or nuclear power.  The idea was to establish a grant system through which the $10 million fund would allow individuals who placed new renewable energy property into service during a fiscal year 2016 to apply for a grant equal to 40 percent of the costs paid or incurred by the individual, not to exceed $2.5 million for any particular project.

The bill was passed by both the House and the Senate, but amended so that only 35 percent, rather than 40 percent, of the costs may be recovered through a grant. In addition, costs related to existing facilities that generated electricity within the 12 months preceding the date of a grant application would not be eligible and any renewable energy property paid for by ratepayers would also be ineligible. The provisions of act will not become effective unless it is reenacted by the General Assembly in 2015.

Senate Bill 418/House Bill 1239: Real and Personal Property Tax Exemptions for Solar Energy Equipment, Facilities and Devices.

These bills provide an exemption from local taxation for all certified solar energy equipment, facilities and devices. The exemption for solar photovoltaic systems would only apply to projects equaling 20 megawatts or less. It adds “solar energy equipment, facilities, or devices” to the definition of certified pollution control equipment and facilities, whether or not the property has been certified to the Virginia Department of Taxation by a state certifying authority if the property is owned or operated by a business and fits within the 20 megawatt cap. These bills also establish a separate tax classification for other solar energy equipment, facilities, or devices if they are certified by the Virginia Department of Environmental Quality.  Unlike the business-owned solar property, which is exempted by these bills, whether or not the separately classified individual-owned solar property is partially or fully tax exempt is up to the governing body of the individual’s county, city or town.

These bills were signed into law by Governor McAuliffe, taking effect January 1, 2015.

Senate Bill 514/House Bill 796: Postponed the Due Date for Quadrennial Updates to the Virginia Energy Plan.

Amending § 67-202 of the Code of Virginia, these bills postponed scheduled Virginia Energy Plan updates from July 1, 2014 to October 1, 2014. The plan then has to be updated every four years after the update this October. Updates to the plan must reassess goals for energy conservation based on progress toward the goals in the previous plan and lessons learned from attempts to meet those goals. These bills passed both houses and were signed into law by the Governor.

The 2010 Virginia Energy Plan aims to (1) expand both traditional and alternative energy generation, (2) increase the use of conservation and efficiency, and (3) educate the public about Virginia’s energy consumption and production, emphasizing how they affect our economy and teaching Virginians ways to energy more efficiently. Additionally, the plan strives to maximize the Commonwealth’s investments in clean energy research and development through the Universities Clean Energy Development and the Economic Stimulus Foundation. This law takes effect July 1, 2014.

Senate Bill 498/House Bill 822: Changed Virginia’s Renewable Energy Portfolio Standard Program.

These bills limit the ability of an electric utility participating in the renewable energy portfolio standard (“RPS”) program to bank excess renewable energy sales or renewable energy certificates (“RECs”) to achieve its annual RPS goals. A utility may use its excess renewable energy sales and RECs only in the five years following the renewable energy generation or the REC creation. This bill was approved by both houses and signed into law by the Governor.

The goal of these bills is to encourage utilities to continue to expand use of renewable generation to achieve current goals of the plan, but not to bank excess RECs in the short term when RPS goals are lower to use in later years when RPS goals increase, or may even become required. Companies are able to bank excess RECs for five years after their creation before they no longer count toward the utility’s RPS goal.

Virginia’s RPS goals are laid out in four stages, starting in 2010 and running through 2024. In each subsequent stage, the RPS goal increases by a specified percentage. This law takes effect July 1, 2014.

If you have questions about any of these laws and how they might impact your business, please contact the energy lawyers at GreeneHurlocker for more information.

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