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USDA Releases $15.5 Million In Support Of Biofuel

September 12, 2013 By Editors of Electric Light & Power/ POWERGRID International Agriculture Secretary Tom Vilsack said the U.S. Department of Agriculture is making payments to support the production of advanced biofuel. The USDA is making nearly $15.5 million in payments to 188 producers through the Advanced Biofuel Payment Program, which was established in the 2008 Farm Bill. Under this program, payments are made to eligible producers based on the amount of advanced biofuels produced from renewable biomass , other than corn kernel starch. Examples of eligible feedstocks include but are not limited to: crop residue, food waste, yard waste, vegetable oil and animal fat. Through the Advanced Biofuel Payment Program and other USDA programs, the department is working to support the research, investment and infrastructure necessary to build a biofuels industry that creates jobs and broadens the range of feedstocks used to produce renewable energy. More than 290 producers in 47 states and territories have received $211 million in payments since the program’s inception. It has supported the production of more than 3 billion gallons of advanced biofuel and the equivalent of more than 36 billion kWh of electric energy. For example, Riverview LLP, a Minnesota-based company, will be receiving an $8,040 payment to help offset the cost of producing electricity from two anaerobic digesters. The two digesters use manure from two of the company’s dairy operations to produce electricity, which is sold to Great River Energy. During the last quarter of 2012, the anaerobic digesters produced almost 4.9 million kWh of electricity, enough to power more than 400 homes a year. http://www.elp.com/a…of-biofuel.html Continue reading

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How to Attract Private Investment in Clean Energy

By the Editors Jun 10, 2013 Like a fresh wind setting in motion the blades of a giant turbine, a new idea for encouraging the development of clean energy has blown into the U.S. Congress. It is to allow renewable-energy companies to form master limited partnerships, a business structure that has long worked to attract investment capital to the oil and gas industry. Legislation in the Senate has support from Republicans and Democrats alike, not to mention the White House. We think it’s a neat idea, too. A master limited partnership offers the tax advantages of a partnership (the partners pay the taxes, not the corporation) even as its shares are publicly traded like ordinary corporate stock. The limited partners receive quarterly dividends, and these are typically higher than those paid to corporate shareholders because the business itself pays no taxes. This means the company can raise money from small investors at relatively low cost. Master limited partnerships would open a huge new pool of affordable capital for renewable energy, an industry that needs a lot of upfront investment and takes years to bring a big return. As things stand, clean-energy businesses have trouble attracting affordable financing. A large wind-energy company can turn to the “tax-equity” market to leverage its federal production tax credits. However, this market consists of just a handful of enormous companies (think of Google Inc., Chevron Corp., Honda Motor Co.) whose giant tax bills make it possible for them to take advantage of the wind company’s tax credits. Such investors get returns averaging 8 percent to 9 percent, according to data compiled by Bloomberg New Energy Finance. By tapping into cheaper money from individual investors, renewable-energy companies could raise $3 billion to $6 billion in financing by 2021, according to an analysis by Southern Methodist University. And the companies would pay less for the financing; average dividends paid by master limited partnerships amount to about 6 percent. MLPs have, since 1981, helped the oil and gas industry raise capital for refineries, pipelines and drilling operations. This market now includes about 120 master limited partnerships, and has a total capitalization of more than $440 billion, according to the National Association of Publicly Traded Partnerships. Renewable energy has been left out so far because federal tax law specifies that master limited partnerships must derive their revenue from depletable natural resources. (The law was written in the days before renewable-energy enterprises sought such large amounts of capital.) Expanding the MLP Parity Act to bring renewables into the game is only fair, and could bring new financing to nuclear power, energy storage, carbon capture and other initiatives that less obviously are considered renewable energy. The U.S. government has in the past subsidized clean energy directly. In 2011, some $48 billion went to various projects. This was stimulus spending, though, and stimulus money is drying up — even as the global market for clean energy keeps expanding. Although the government spending was useful, we much prefer a mechanism that makes private investment possible and appealing. According to a Bloomberg New Energy Finance report, by 2030 renewables will generate 50 percent of power globally. And between now and then, clean energy will attract $8.2 trillion in financing. To remain competitive in this growing market, the U.S. clean-energy industry needs the investment that MLPs would allow. To contact the Bloomberg View editorial board: view@bloomberg.net. Continue reading

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