Photosynthesis vs. Photovoltaics

When Urban Foresters Meet Wisconsin’s Solar Access Law

Questions about solar access and urban forestry conflicts are becoming increasingly frequent in my renewable energy practice. After going through 20 years with no calls regarding such conflicts, I have encountered five such conflicts since the start of 2011. Conflicts arise because trees and solar energy systems are competing for the same resource – access to the sun. But the needs of trees and solar energy systems can be harmonized if appropriate planning and legal systems are in place.

On January 31, at the 2012 Wisconsin Arborist Association/Wisconsin Department of Natural Resources Annual Conference in Green Bay, I dove further into this subject. My presentation was entitled “Solar Access and Urban Forestry in Wisconsin: Laws, Conflicts and Potential Solutions.” The audience primarily comprised of urban forestry professionals and state and local governmental officials. It included the City Forester for the City of Madison, the City of Milwaukee, the City of Oak Creek, and others. They asked very good questions, and some audience members had encountered these conflicts in their professional experiences.

Competing interests of urban forestry and solar energy development can, on occasion, lead to conflict. Shading of solar energy systems has a different impact on solar photovoltaic (PV) systems than it does on solar thermal (aka, solar hot water) systems. The adverse impact on PV systems is much more severe, but both can be significantly impacted by shading.

Wisconsin’s solar and wind access laws are quite comprehensive and probably the most protective of solar access of any such state laws in the entire country. Some members of the audience were surprised to learn that “vegetative growth that occurs” and impairs solar access to a solar energy system, can be considered a “private nuisance,” even if the growth occurs after the solar energy system is installed. There is no automatic grandfathering for trees that are planted first.

Solar-Tree conflicts can create specific problems that affect the day-to-day job functions of Urban Foresters, including:

- Reconciling their municipality’s mixed policy messages – promoting energy efficiency gained from tree shading while simultaneously promoting renewable energy generation from solar energy systems.

- The difficulty of performing their jobs without making somebody upset – in complying with the solar access law, they may be creating unhappy neighbors who don’t want their favorite local tree to be pruned.

- The difficulty of picking appropriate trees for medians and rights-of-way, knowing that those trees may or may not be someday be adjacent to solar energy systems.

- Knowing what to do if a mature tree that shades an area desirable for solar has to be removed due to disease and replaced by another healthy tree. Does the replacement forfeit any pre-existing “growth rights” that its predecessor may have had?

Don’t despair – Potential solutions exist that can enable sensible urban forestry policy and sensible solar energy promotion to live side-by-side. Potential solutions for mitigating current conflicts include:

- Better-coordinated urban planning

- Using planning software that minimizes solar-tree conflict by providing relevant data reflecting growth and shading

- Community education and local solar advisory committees

- Borrowing from innovative local ordinances in other states

- Possibly making modest changes to the Wisconsin solar access law to better accommodate urban forestry concerns

The best solution will protect investments in both solar energy systems and trees and offer predictability and certainty in the planning process. A copy of the slides from the presentation is available here: WAA Annual Conference Presentation (1-30-12 Final.pdf)

Written on February 6, 2012 at 3:34 pm, by Michael Allen

Finish 2011 on Target (Part 2)

Last Minute Solar Projects Need to Be Aware of Critical Treasury Department Guidance

In Part 1 of this topic, I discussed the Treasury Department’s guidance on whether the applicant for a Section 1603 Payment has “begun construction” in 2011.  In Part 2, I will focus on Treasury guidance recently issued on how the Treasury Department evaluates Section 1603
applications for solar photovoltaic (aka PV or solar electric) projects.

Treasury Guidance Regarding Solar Electric costs

The Treasury Department recently published guidance titled “Evaluating Cost Basis for Solar Photovoltaic Properties” (referred to in this post as “The PV Cost Guidance”) indicating how it will evaluate the claimed cost basis for solar PV projects applications for Section 1603 payments to reimburse eligible costs of solar electric projects. The PV Cost Guidance establishes benchmarks for average costs per
watt for solar PV projects. The guidance includes the following table:

The PV Cost Guidance indicates that solar electric projects whose claimed cost basis exceeds the benchmarks above will receive closer scrutiny. This doesn’t necessarily mean that costs above the benchmarks will be disqualified. However, there must be a good reason for applicants to exceed the benchmarks.

Finally, Treasury guidance discloses that Treasury views certain other types of situations, including related party transactions (i.e. where two parties in the project are related to one another) as deserving close scrutiny. Treasury’s concern is that if a transaction is not between two
parties negotiating it at arm’s length, the cost for which reimbursement is applied may be inflated. The Treasury guidance concludes by detailing the approaches that Treasury uses to determine fair market value of projects.

If you have specific questions about The PV Cost Guidance, you can go on to the Department of Treasury’s 1603 website to review it yourself. You are also welcome to email me with any questions or comments.

Required Formal Disclaimer:  Since this entry involves some discussion of legal principles, there is at least a theoretical possibility that one of you out there may read this blog entry and conclude that: (a) you and I have entered into an attorney client relationship; or (b) I am offering you specific legal advice for your specific legal situation.  In the unlikely event you reach either conclusion, I must inform you that sadly, it is not true.  Persons accessing this site are encouraged to seek independent counsel for advice regarding their individual legal issues.

Written on November 3, 2011 at 11:21 am, by Michael Allen

Finish 2011 on Target (Part 1)

Last Minute Solar Projects Need to Be Aware of Critical Treasury Department Guidance

As the Section 1603 payment program draws to a close, solar project developers and owners need to pay attention to two critical sources of guidance issued by the United States Department of Treasury.

The first is the “begun construction” guidance, advice regarding the steps applicants must take to ensure that their project will qualify for federal reimbursement funding, if it is not placed in service by the end of the Section 1603 program on December 31, 2011.

The second type of guidance addresses situations in which Treasury will scrutinize reimbursement requests from solar PV projects.

I addressed both types of guidance at the Solar Wisconsin Fall Conference held at the Monona Terrace Convention Center on October 25. A copy of my presentation outline is here: (Section 1603 Guidance Presentation). I will address the first of these types of guidance in this entry and the second type in another entry that I will post in a few days.

Begun Construction Guidance

Under a document titled “Frequently Asked Questions and Answers Begun Construction” (the “Begun Construction Guidance”), the Treasury Department has indicated that if a Section 1603 applicant wants its renewable energy project to be eligible to receive a Section 1603 reimbursement payment equal to up to 30 percent of the eligible cost basis, and cannot place it in service (i.e., have it commissioned
and, if applicable, connected to the grid) by the end of 2011, then the applicant must meet one of the two Treasury “begun construction” tests:

Commence actual physical work on the project. This means actual work at the site or actual work by a project contractor on renewable energy project components that are being made specifically for the project.  Items taken out of existing inventory will
not qualify.  Nor will preliminary activities such as site clearing, demolishing existing structures or money spent to obtain financing or secure permits.

5% Safe Harbor Rule. To qualify for the safe harbor, the applicant must have paid (if a cash-basis taxpayer) or incurred (if an accrual basis taxpayer) an amount equal to 5% of the eligible cost-basis of the renewable energy system. Whether or not an expense has been incurred is determined by reference by a multi-part test established under earlier Treasury regulations.  It is important that the monies be spent under a contract that is enforceable under state law and and one that does not limit damages, in the event of breach by the applicant to less than 5% of the total contract price.

There are advantages and disadvantages to either approach. If an applicant opts for the physical onsite work approach, there is no established minimum amount of work that must be done. However, once work is begun, it must be continuous. On the other hand, the 5% test does not include the continuous work requirement, only that the threshold amount of money be spent. The 5% Safe Harbor test is not without its own risks: If the applicant spends 5% of the eligible cost basis, as it appears to be in 2011, but if in 2012, the project costs increases so that with 20/20 hindsight the money spent turns out to be less than 5% of the final eligible cost basis, the applicant will fail the 5% Safe Harbor Test.

The requirements in the Begun Construction Guidance are detailed, and require applicants to look carefully at the scheduling of their projects and even the contracts they enter into to create their project, to be sure that they can pass the applicable tests. If you have specific questions about the Begun Construction Guidance, you can go on to the Department of Treasury’s 1603 Program website to  review the guidance. You are also welcome to email me with any questions or comments.

Required Formal Disclaimer:  Since this entry involves some discussion of legal principles, there is at least a theoretical possibility that one of you out there may read this blog entry and conclude that: (a) you and I have entered into an attorney client relationship; or (b) I am offering you specific legal advice for your specific legal situation.  In the unlikely event you reach either conclusion, I must inform you that sadly, it is not true.  Persons accessing this site are encouraged to seek independent counsel for advice regarding their individual legal issues.

Written on October 31, 2011 at 2:00 pm, by Michael Allen

ELW Provides Support for UW-Madison Urban & Regional Planning Course

On October 21, I spoke as part of a panel and worked with the graduate students in the 2011 Planning Workshop in the UW-Madison Department of Urban and Regional Planning. In this course, which is part of the master’s program and financed by a U.S. Department of Housing and Urban Development (HUD) Sustainable Communities Grant, the students are hard at work developing a regional energy plan examining renewable energy opportunities in nine counties in Southwest Wisconsin.

I spoke as part of a panel that included presentations from Sara Walling, Bioenergy Advisor for the Office of the Secretary of the Wisconsin Department of Agriculture, Trade and Consumer Protection, Gregory Nemet, Professor at the La Follette School of Public Affairs and Bill Johnson, a bioenergy consultant and former Manager of Biofuel Development for Alliant Energy.

I addressed legal issues involved in the planning process, from the perspective of counsel to developers and utilities involved in establishing renewable energy facilities.  I also drew on my past experience as a city attorney and as counsel for municipalities and local landowners in communities where large-sized renewable energy projects were being developed.

I addressed the differing interests of stakeholders (developers, utilities, municipalities, host land owners and neighbors) that must be taken into account when developing rural energy facilities. The challenge for municipalities is to balance the interests of these stakeholders fairly in making their planning and zoning decisions.  An approach that goes too far to protecting the rights of non-hosting land owners, risks discouraging economic development and depriving potential facility hosts from fully developing the potential of their property. On the other hand, a regulatory approach that is too lax risks subjecting the community to environmental harm or placing unwarranted costs on the community and land owners, when such costs should fairly be borne by the developer or others who will be directly benefiting from the project.

A copy of the slides from the presentation is available here:

Presentation Outline

Written on October 27, 2011 at 11:48 am, by Michael Allen

Janesville Gazette Profiles ELW Client Jim Erickson

At Energy Law Wisconsin, we enjoy what we do, but there are some clients in particular who make it fun. Jim Erickson of Antech Properties LLC is one of them. Erickson, 83 years young, decided last year to install a solar energy system on his commercial office building in the Janesville, Wisconsin area. Why? Because it was smart, a good fit and last but not least, fun.

Energy Law Wisconsin appreciates the opportunity to have been of service to Mr. Erickson in this endeavor. In a recent article for the Janesville Gazette, Erickson was profiled about his property and the successful savings he is having with it. The building is included in the 2011 Wisconsin Solar Tour event, occurring on Saturday, October 1.

Written on September 26, 2011 at 2:42 pm, by Michael Allen

“Don’t Block My Sun”/ “Don’t Block my Solar Installation”

Tips for Putting Your Best Foot Forward with Confused Local Governments and Upset Neighbors

Required Formal Disclaimer:  Since what follows involves some discussion of legal principles, there is at least a theoretical possibility that one of you out there may read this blog entry and conclude that: (a) you and I have entered into an attorney client relationship; or (b) I am offering you specific legal advice for your specific legal situation.  In the unlikely event you reach either conclusion, I must inform you that sadly, it is not true.  Persons accessing this site are encouraged to seek independent counsel for advice regarding their individual legal issues.

I have lately been receiving an increasing number of unsolicited calls from homeowners, solar installers and would-be owners of solar energy systems who are running into conflict with their neighbors and local municipalities regarding the installation and operation of solar energy systems.  As the number of solar energy systems (photovoltaic and solar hot water) increase, some of the controversy that has long dogged wind farm developments is starting to spill over to solar installations.  This blog entry is an effort to provide some general tips to the parties who are involved in these disputes and help them minimize cost, controversy and confusion.

Here are a few tips that draw on my experience as an energy transactions attorney and former city attorney to help persons who own or are interested in installing solar energy systems to work and negotiate constructively with neighbors and local governments:

Tip #1: Know and understand the Wisconsin Laws that provide protection to persons with renewable energy systems.  These laws cover wind and solar and detailed discussion of each of these laws and the reported cases interpreting them is beyond the scope of this blog entry.  However, a listing and summary of them can be found on the DSIRE website.

Generally speaking, when applied to solar energy systems these laws attempt to:

• Protect the rights of persons who own or wish to install a solar energy system, while balancing these rights against the reasonable expectations of neighboring property owners who might want to put on an addition to their home or office. If your solar energy system is already in place, you have greater rights than a person planning a solar energy system.

• Limit the basis on which local governments and private land use controls can prohibit or regulate solar energy systems.

• Protect and preserve access to the sun.  This includes providing recourse for when a neighboring property owner creates a “private nuisance” by improperly blocking access to the sun.

Tip #2: If you are seeking local approval for a solar energy system, bring these statutes into the discussion early in the process.  While some of the Wisconsin laws that protect solar energy systems have been in place since the 1980s, the calls I have received suggest that many local officials are unfamiliar with them.   Therefore it is critical to inject them into the discussion as early as possible.  It may be necessary to educate the local municipal planner, building inspector and perhaps even the local municipality’s attorney on the applicable laws protecting solar energy systems.  Doing this increases the likelihood that the discussion over your system will focus on the relevant legal and factual issues, and not get sidetracked by emotionally charged local concerns that are irrelevant or pre-empted by State law.

Tip #3: Try to resolve disputes at the lowest level.  It costs less and takes less time to resolve an issue at the Plan Commission level than have to overturn an unfavorable plan commission decision at a follow up appeal before the Zoning Board of Appeals.  It can be much cheaper (perhaps by as much as a factor of 10 or even more) to resolve a dispute over a solar energy system before a local government board than to go in unprepared, lose before the municipality and then have to fight it out all over in Circuit Court.  I sympathize with homeowners who lack the funds to hire an attorney or are understandably reluctant to spend money on legal fees before they know they have a fight on their hands.  If this describes you, then I recommend you meet with the local planner early and flush out any issues or concerns they, the local body or your neighbors may have.  If there will be objections, you may find that, “An ounce of prevention, is worth a pound of cure”.

Tip #4: Make a record and stick to the law/facts. If you find yourself embroiled in a controversy over your solar energy system, keep in mind how such disputes are resolved.  If legal issues emerge at the local level the local government may involve the local municipal attorney to provide some legal analysis of the issues.  When I was a municipal attorney I had a number of duties, including seeing that my clients followed the applicable law.  Help the municipal attorney to do his or her job by addressing the legal issues directly and succinctly.

If you are unlucky enough to find yourself on the way to Circuit Court, remember that the woman or man who will ultimately resolve your dispute will be not a scientist or a renewable energy supporter, but rather a judge (i.e., a person with a law school education and a lawyer’s perspective on legal issues).  For this reason as well, it is critical to stick to the relevant facts and applicable law.

Based on the calls I have been hearing lately, here are some suggested dos and don’ts:

• Don’t surprise the government body and do invest time in educating decision-makers and even potential opponents.  Surprising witnesses helped TV lawyer Perry Mason obtain murder confessions in the 1960s show, but surprise is rarely an effective technique at the local level.  Local officials may become frustrated or may even angry when they are surprised by new issues raised in an approval proceeding.  In addition, injecting new issues at the last minute invites the local decision-maker to push the matter back to a later meeting.  This costs you money and delay.  It pays to get your ducks in a row and invest the time necessary to educate staff and even potentially upset neighbors before you go before the local body.

• Do make a record.  This includes creating a paper trail that inserts the applicable statutes and relevant facts that support you with a narrative that puts your project in the best possible light into the local decision making process.   Pay attention to how the proceeding will be recorded.  If the only record of a meeting will be the local clerk’s notes, you are well-advised to submit a written summary of your position that puts your best foot forward.  Otherwise you are hanging your hat on the clerk’s selective memory as to what was said.  Even recorded proceedings can have subsequent problems with microphone pick up or technical difficulties.  Without a record, an appeal can deteriorate into dueling memories.  This puts the appellate body is at a disadvantage and hurts you if you are appealing.

• Do remember that local decision-makers are people just like you.  Members of local commissions and boards don’t get paid a lot of money.  It is common for them to take a fair amount of grief in the course of performing their duties.  Treat them with kindness or at least respect.  It can’t hurt and may help.

• Don’t fall prey to the temptation to make political or activist statements. Heaping praise or scorn on current and past politicians for their commitment or lack of commitment to renewable energy is not germane to the decision on your local permit.  Nor is it relevant or helpful that you were down with solar, before solar was cool, and therefore you believe that you are more highly evolved than the rest of your neighbors.  Politically charged or activist statements are risky, especially in a state like Wisconsin, where opinions appear to be evenly divided on most policy issues.  Stick to the objective facts and relevant laws.

These tips of course don’t, by themselves, guarantee success, but if you follow them, you will increase the likelihood that your project will be evaluated and hopefully approved based on the proper criteria.

Good Luck!

Written on September 19, 2011 at 12:23 pm, by Michael Allen

Colleen Wenos Joins Energy Law Wisconsin

In the spring, Energy Law Wisconsin hired its first paralegal, Colleen Wenos. Colleen has a BA in English from the University of
Wisconsin Stevens Point, previous work experience in magazine publishing and marketing, and an affinity for dark chocolate. (The last item put her over the top in the job interview.)  Colleen is currently pursuing a legal certificate from Madison College and plans to take two courses this fall.

At Energy Law Wisconsin, Colleen will support the firm in its efforts to provide clients affordable legal services, by performing legal and business research, assisting in contract drafting, and helping with day-to-day business needs.

Welcome, Colleen!

Written on July 25, 2011 at 11:11 am, by Energy Law Wisconsin

Taking on Risk at the Small Wind Conference

On June 14, I presented “How to Limit Your Risk in a Small Wind Business” at the Small Wind Installers Conference in Stevens Point. There were about 250 attendees, including installers, manufacturers, utility representatives, environmental groups and government agency representatives.

I was part of a panel titled “Reality Check: Legal and Insurance Issues,” where I joined two small wind installers who had faced liability concerns in New York and New Jersey.  The situations they described were especially difficult for wind installers as they appear to have been the subject of claims for liability, even though by all accounts there were not defects in their installation efforts.  Insurance agent Alan Virgil also spoke on how to insure a small wind business.

During my presentation about how to manage risk in the small wind industry, I gave the audience suggestions on how minimize risk generally, providing two fundamental risk management principles and five risk management “commandments” to help keep them out of trouble.  If you would like a copy of the overheads from this talk, just e-mail me at mallen@energylawwisconsin.com.

The heart of my message was that up-front planning is critically important when forming a business and entering into a wind project contract to ensure risks are allocated fairly and that wind energy entrepreneurs don’t expose themselves to unwarranted amounts of liability.

The Small Wind Installers Conference was a great opportunity to talk to leading national players in the small wind industry and discuss the latest developments in state and federal renewable energy policy.

Written on July 7, 2011 at 11:04 am, by Michael Allen

Japanese Attorney Visits Energy Law Wisconsin

On May 25, Mitsuko Kawamoto, a practicing attorney from Tokyo, Japan, visited Energy Law Wisconsin with her husband Yoshimizu (Mitch) Kawamoto, and their energetic two year old son Yoshiharu (Hatch) Kawamoto.   Mitsuko is a visiting scholar with the recommendation of the Japan Federation of Bar Association at the University of Illinois Law School in Champaign, Illinois. She is particularly interested in legal issues associated with the production and regulation of bio-ethanol.

I met Mitsuko in April 2011, when I spoke at the 3^rd Annual Law Advanced Biofuels Law and Regulation Conference at the University of Illinois, sponsored by the Energy Bioscience Institute (EBI).  EBI is a research and development organization that harnesses advanced knowledge in biology, the physical sciences, engineering, and environmental and social sciences to devise viable solutions to global energy challenges and reduce the impact of fossil fuels to global warming.

Mitsuko and I discussed the practice of law in Japan and the United States’ system of federal, state and local laws that regulate energy and the environment.   Specifically, Mitsuko was interested to know:

• When does a federal law “trump” a state or local law?
• What are the differences between energy policy in Wisconsin and Illinois?
• How to build a career as an energy attorney after graduation from law school.

My meeting with Mitsuko was a good reminder of the significant differences between the practice of law in the United States and overseas.  Among other things, Mitsuko shared that virtually no attorneys in Japan specialize in energy law.  This may seem surprising, given Japan’s highly industrialized economy and heavy reliance on energy sources including coal, nuclear and renewables.   We each appreciated the international perspective.  In addition, Hatch showed great promise for a future career in the energy industry, happily playing with a toy electric and gas utility truck in the office.  I enjoyed lunch with Mitsuko and her family before they left to visit the Wisconsin Capitol and the University of Wisconsin campus.

Mitsuko is the second international attorney I have had the privilege to visit with in the past 12 months, following my earlier meeting with Ugandan attorney Alex Buri.  Even for a solo practitioner in Wisconsin, the energy world is getting flatter.

Written on July 7, 2011 at 10:43 am, by Michael Allen

What is “Energy Law Wisconsin” : A Collection of Actual Project Photos

Many people have asked me, “Just what is Energy Law?”  I have quickly learned that to answer this question with precise details of the laws in place and tasks involved is a good way to make peoples’ eyes glaze over.

It is easier to explain what I do is by showing the results, so here are a few pictures.  These are the types of projects I help people with:

Other types of projects I work on that are not pictured above include replacing coal with biomass as a fuel for power generation, helping energy startup companies  get off the ground (kind of like holding your hands around a newly struck match while starting a campfire on a windy day), and helping municipalities convert garbage and sewage into energy.

There are a host of legal issues wrapped up in the journey from start to finish on all of these types of projects.  They include legal issues relating to raising money, protecting new ideas, getting government approvals, contracting for labor and materials, connecting to the electrical grid, putting together a financial package of grants, tax credits and other incentives and positioning the project for optimal use of renewable energy certificates and carbon credits it may produce.

My plan is to share a few of my stories from my practice. I’ll try to weigh in on some of the issues that people face when trying to change the energy status quo.  If you have any comments I’d love  to hear from you.  I’ll do my best to answer questions, time permitting.

Written on August 4, 2010 at 12:35 am, by Michael Allen