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Alerts and Updates

Energy, Environment and Resources Update—Issue 2

Issue 2 | November 2015

Energy, Environment and Resources Update—Issue 2

Issue 2 | November 2015

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Virginia Energy Projects Face Extensive Regulation Review

Proposed renewable energy projects in Virginia can anticipate a rigorous review by state regulators. On October 20, 2015, the Virginia State Corporation Commission denied an application by Dominion Virginia Power to construct and operate a 20 MW utility-scale solar electric generating facility in Fauquier County, near the town of Remington. The proposed project was to be constructed on land already owned by Dominion and co-located with an existing natural gas generation facility.

The Commission denied the application because it found that the applicant has not satisfied Virginia’s requirement that the applicant consider and evaluate alternatives to the proposed project, including third-party alternatives. Although Virginia law considers certain small renewable energy projects to be in the public interest, reliability, economic and environmental implications must also be addressed. While the alternatives analysis submitted by the applicant was found to be insufficient, the Commission is allowing the applicant to resubmit its application with a revised analysis.

Cuba’s Renewable Energy Plans Offer Opportunities for U.S. Investors

Cuba recently announced plans to install more than two gigawatts of renewable energy capacity by 2030. According to Rosell Guerra, director for renewable energy of the Ministry of Energy and Mines, the additional capacity will result in renewables comprising approximately one-quarter of Cuba’s total installed capacity. The new generation mix will include:

  • 13 wind farms, with a total output of 633 MW;
  • the installation of 700 MW of solar photovoltaics;
  • 19 biomass power stations, fueled by sugar-cane residue, with a generating capacity of 755 MW; and
  • 74 small hydroelectric plants, with an output of 56 MW.

In order to achieve its renewable energy goals, Cuba will need capital investments of approximately US$3.5 billion, as well as access to technology and equipment. The Cuban government passed a foreign investment law in early 2014 and entities in several countries have already been active in the market, including the Abu Dhabi Fund for Development, which recently offered US$15 million in loans for the construction of four 10 MW solar power plants. Participation by U.S. firms is still subject to the embargo and would require a special license from the Office of Foreign Assets Control. However, with the gradual, though unpredictable, lifting of restrictions, the Cuban market presents opportunities for both U.S. equipment manufacturers and investors.

California State Water Resources Control Board Issues Notice to Water Rights Holders

By Thomas M. Berliner

On October 27, 2015, the California State Water Resources Control Board (the “Water Board”) issued a notice to all pre-1914 water rights holders for the Sacramento-San Joaquin watersheds and Delta, indicating that water is available for diversion. The Water Board based its determination upon projections of precipitation and runoff estimates as forecasted by the National Weather Service, the volume of unimpaired water supply based upon calculations by the California Department of Water Resources and the overall reduced demand for water, which is typical at this time of year.

The Water Board said it would continue to monitor weather forecasts and streamflow to determine if additional diversions will be allowed or expanded to include post-1914 water rights holders. 2014 and 2015 continue to be record drought years in California. On November 2, 2015, the Water Board modified its curtailment notice to allow water rights holders to divert until November 6. The Water Board will continue to monitor the situation and extend diversion rights consistent with hydrology.

This announcement partially eliminates curtailment orders issued by the Water Board in the late spring of 2015. Pursuant to those announcements, the Water Board began curtailing post-1914 water rights and eventually curtailed certain senior pre-1914 water rights holders from diverting water within the Bay Delta Watershed. Some of the curtailment orders issued by the Water Board are the subject of litigation in the state courts of California and before the Water Board itself. The state litigation is in its earliest stage and is likely to drag on for many months, at a minimum. In California, 1914 is the year that the predecessor to the Water Board was formed, thereby creating a state agency with responsibility for the supervision of water rights claimed after the date of its formation. Water rights obtained prior to the formation of the Water Board were acquired through a state statutory process.

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