Community Renewable

Energy Projects: Financing

and Public Procurement

Jonathan Klavens
Klavens Law Group, P.C.
April 29, 2010

KLAVENS LAW GROUP, P.C. © 2010 Klavens Law Group, P.C.

Klavens Law Group, P.C.
Small law firm focused on clean energy ventures and
projects
Help companies, investors, public entities and nonprofits
Provide start-up, outside general counsel, transactional,
project development and regulatory services
Bring the interdisciplinary approach this field needs by
drawing on experience in corporate, energy, land use,
environmental, municipal and nonprofit law
 Financing

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Overview of Development Phase Incentives
Federal & Massachusetts Incentives:

Site Feasibility Design Basics

Assessment Study

MassCEC – 100kW+
Community-Scale Block 3 - $2M – applications due 5/4/10
Wind √ √ √

MassCEC – Over 2 MW and not net metered

Commercial Wind √ √ Round 3 – Expected soon

MA DOER Green Apply for GC status by 5/14/10 and for GC

Communities Grants grant by 5/28/10 to be eligible for FY2010
√ √ √ grant program
DOER to award up to $1M in FY2010

USDOE grants Watch funding opportunities

USDA grants/loans Watch funding opportunities

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Overview of Construction & Operation
Phase Incentives (1)
Massachusetts Incentives:

Construction Operation Basics

MRET – Community-Scale √ See above

Wind (Past round – up to $570K for public projects 600 kW+
with no required cost share)

MRET – Commercial Wind √ See above

Loan at Prime + 2% up to $250K with 25% cost share

MA Green Communities √ See above

Grants

MA Net Metering Details below

Comparable to selling excess power back to utility at
√
near retail rate (for any facility with public host
customer)
Long-term Utility PPA Sale of power and/or RECs to utility at wholesale rate
√

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Overview of Construction & Operation
Phase Incentives (2)
Federal Incentives:

Construction Operation Basics

Tax-exempt Bonds √ Lower-interest loans

CREBs & QECBs No interest “tax credit bonds”

√ CREBs by U.S. Treasury application/allocation
QECBs pre-allocated to states – contact MassDev!
USDOE grants √ Watch funding opportunities

USDA grants/loans √ Watch funding opportunities

ITC Tax credit for up to 30% of allowable capital costs -

√
taxable entities only
Treasury Cash Grant Cash Grant for up to 30% of allowable capital costs in
√
lieu of ITC - taxable entities only
Accelerated Depreciation Depreciation of allowable capital costs over 5 years -
√
taxable entities only
PTC √ Tax credit of 2.1¢/kWh - taxable entities only

REPI 2.1¢/kWh paid to public entities

√
Subject to appropriation!

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 Financing: Resources
MA Clean Energy Center
MA DOER Green Communities Program
MassDevelopment
Database of Federal and State Incentives
for Renewables and Efficiency
Windustry Website

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 MA RE Policy Update

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 Net Metering: Basic Benefits
Earn $-denominated “net metering credits” for each
month’s net electricity generated
Credit approaches retail rate for 60 kW to 1 MW facilities
and for 1 MW – 2 MW facilities where facility is behind a
public entity’s meter
Facility limit is “per unit” for facilities that are owned or
operated by a public entity and effectively per utility
meter in other cases
Credit never expires and may be transferred to other
accounts (“virtual net metering”)

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Net Metering: Advanced Benefits
For 1 MW – 2 MW facilities, utility may (and likely will)
exercise right to pay cash instead of allocating –
eliminates hassle of having to sell credits you can’t use
Compatible with private third party ownership structures
Likely compatible with federal tax incentives (esp. ITC &
cash grant)
If better off-take arrangement comes along, can opt out
of net metering

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Net Metering: Key Drawbacks
May need to sell credits you can’t use
 Not a problem for towns with multiple utility accounts
and high load
1% system cap on net metering facility capacity
 No queue!

Net metering credit value can fluctuate with rates and

rate classification

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Net Metering: Resources

Massachusetts DG and Interconnection

website
MA DPU net metering FAQs

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Other Notable Developments
S-REC program (Solar RPS Carve-out & Solar Credit
Clearinghouse) – emergency regs in place
 More info on DOER website - link
MA wind energy siting reform legislation – passed by
Senate; pending in House
 More info on EOEEA website - link
MA PACE enabling legislation – pending as part of
municipal relief bill

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Public Procurement

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 Public Procurement: Basics
Why comply?

Minimize risk of bid protests

Minimize risk of contract nullification & re-do
Minimize risk of penalties & other sanctions
Get good value

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Public Procurement: Advanced
Statute
Energy procurement
exemption – MGL c. 30B,
1(B)(33)
General goods and services –
MGL c. 30B, 5 (ITB) or 6
(RFP)
Lease of land – MGL c. 30B,
16
Public Buildings Statute – MGL
c. 149, 44A – 44M
Public Works Statute – MGL c.
39M, 30
Energy management services
RFP – MGL c. 25A, 11C
Energy management services
RFQ – MGL c. 25A, 11I
KLAVENS LAW GROUP, P.C.
Basics
Exemption from competitive procurement for procurement of energy and
ancillary services; not for services alone
Open issue: Available for purchase of net metering credits?
For procurement of any goods or services $25K and over (no requirements under
$5K; 3 quotes needed for $5K to below $25K; cannot split bids to meet limits)
For lease (not mere license) of municipal land where value of lease is > $25K
Determination of value requires appraisal or other method
Governs contracts for construction, reconstruction, installation, demolition,
maintenance, or repair of any building by a public agency
Governs $10K+ contracts for construction, reconstruction, alteration, remodeling,
or repair of public improvements not involving work on a building
For energy efficiency services/projects and on-site renewable energy
services/projects; allows design/build integration; exemption from 30B and
Public Buildings Statute (but – inadvertently? – not the Public Works
Statute)
Similar to 11C but allows for initial selection of most qualified respondent
based on non-price qualifications followed by bilateral negotiations with
that party
© 2009 Klavens Law Group, P.C.
 Public Procurement: Resources

OIG public procurement information - link

 Helpful quick resource: OIG charts on local
public procurement procedures
DOER energy management services
technical assistance - link

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Contact

Jonathan Klavens
Klavens Law Group, P.C.
420 Boylston Street, 5th Floor
Boston, MA 02116
(617) 266-2879
jklavens@klavenslawgroup.com
http://www.klavenslawgroup.com

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.

 Disclaimer

This document, which may be considered

advertising under the ethical rules of certain
jurisdictions, is provided with the understanding
that it does not constitute the rendering of legal
advice or other professional advice by Klavens
Law Group, P.C. or its attorneys. Please seek
the services of a competent professional if you
need legal or other professional assistance.

KLAVENS LAW GROUP, P.C. © 2009 Klavens Law Group, P.C.