American Council on Renewable Energy (ACORE), April 22nd and 23rd 2015

ACORE convened its Membership Day and National Defense & Security Executive Meeting on April 22nd at the Westin Washington, D.C. City Center and the American-Danish Business Council participated to get the newest updates. The National Defense program consisted of three panels covering: the keynote by Dan Reicher, Interim President of ACORE and John Conger, Performing the Duties of Assistant Secretary of Defense for Energy, Installations and the Environment; an “Overview of Military Services’ Project Pipelines and Other Issues” with panelists Richard Kidd, Deputy Assistant Secretary of the Army (Energy & Sustainability), Steven Iselin, Principal Deputy Assistant Secretary of the Navy for Energy, Installations and the Environment and Roberto Guerrero, Deputy Assistant Secretary of the Air Force for Energy; and Program Operations Contracting and Finance with panelists Amanda Simpson, Executive Director, Army Office of Energy Initiatives, Pamela Griffith, Director Installation Energy, Defense Logistics Agency Energy, Dr. Pasquale Gambatese, Director, Air Force Energy Policy, and the Honorable William C. Anderson, Director Strategy and Business Development, Government, Eaton Corporation.

Some of the most important take aways are:

  • the Navy is moving faster than the other services
  • goal of 3 GW renewable sources, 25% by 2025 with the new Presidential order raising goal to 30% by 2025
  • 20% by 2020 according to President’s climate action plan
  • Major challenges are bases have no one with required skills to manage projects, issues of jurisdiction – mostly between Department of Interior who is the landowner and the Department of Defense (DOD) who uses the land – large projects have been difficult to drive forward while 10-20 MW projects are making good progress

The services are driven by the mission and energy projects are seen through the lens of the mission. It is important to keep this in mind when proposing projects to DOD or any of the Services. Government money is harder to find. Thus, DOD is relying more and more on Private/Public/Partnerships or PPPs. There is also a preference for known and tested technologies.

Interestingly, the Army has communicated to the Hill it is in favor of extension of both the Production Tax Credit (PTC) and the Investment Tax Credit (ITC).

The National Energy Policy Forum on April 23rd began with an early morning panel on “Why Policy Matters”. Mike Eckhart from Citibank emphasized that 2013, with the opening of the Green Bond market, was a turning point opening up capital markets. He noted however that the consequences of the financial crisis are for banks to avoid risk and that banks cannot do long term loans for renewables. Thus without the ITC and PTC the risk is too great and capital would not be available. Todd Foley of ACORE made the point that policy signals and drives capital markets and investors. Dan Reicher pointed out that fossil fuels have enjoyed incentives for decades including the oil depletion allowance and fossil fuel producers received $548 Billion in 2013 while Renewable energy producers received $96.5 Billion.

Dan Reicher then introduced Senator Charles Grassley, Senator Dean Heller and Ahmad Chatila President and CEO of SunEdison for the Opening Keynotes. Senator Grassley (author of the PTC) set the tone for the day by saying the country must extend the PTC and ITC. The US needs both diversity of sources and, for national security reasons, the US should not be relying on “tin horn dictators” for energy.

The other panels of the day returned again and again to Senator Grassley’s theme of the importance of the PTC and ITC. Some speakers brought up the possibility of extending the Master Limited Partnership (MLP) used by fossil fuels. At the moment, the MLP must make most of its cash flow from natural resources, commodities and real estate. Extending to renewable energy this form of partnership (where the limited partner supplies capital and the general partner operates the business) could be most beneficial. However, most of the speakers and attendees were skeptical that anything would be done this year because Members of Congress are pushing for comprehensive tax reform – which is unlikely to happen. The PTC and ITC are being held hostage until the comprehensive tax reform push is either driven forward or postponed.

The day ended with a discussion of the role of the states. While the state role has been critical, most of the speakers wanted to see a policy role for the Federal Government.

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