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Renewable Energy Project Refinement Case Study: FCPC Renewable Generation, LLC Digester

Renewable Energy Project Refinement Case Study: FCPC Renewable Generation, LLC Digester . Presented by: Nathan Karman Legal Department Forest County Potawatomi Community May 28, 2014. Overview of FCPC Renewable Generation, LLC Project.

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Renewable Energy Project Refinement Case Study: FCPC Renewable Generation, LLC Digester

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  1. Renewable Energy Project Refinement Case Study: FCPC Renewable Generation, LLC Digester Presented by: Nathan Karman Legal Department Forest County Potawatomi Community May 28, 2014

  2. Overview of FCPC Renewable Generation, LLC Project • 2.0 megawatt biodigester and biogas facility constructed in Menomonee Valley of Milwaukee • Operates on liquid (pumpable) food wastes, utilizing anaerobic digestion to convert the wastes into a fuel similar to natural gas • Pursued for environmental and energy goals

  3. Possible Drivers for Renewable Energy Project Refinement • Financial • To Obtain/Leverage Funding and Financing • Consent • To Obtain Internal Support and Approval • To Avoid/Minimize Public Opposition • To Obtain Regulatory Permits • Project Optimization • Often in Conjunction with Above • To Improve Performance • To Minimize Negative Environmental Impacts • To Maximize Economic Returns

  4. Project Refinement Example #1 • Challenge: To monetize tax incentives • Before FCPC received PLR 20131001 (December 5, 2012) allowing Tribe to transfer tax credits directly to taxable entity through a lease • Investors uncertainty regarding technology • Solution: Create taxable entity, FCPC Renewable Generation, LLC, to directly take advantage of tax benefits through Section 1603 grant • Grant in lieu of ITC or PTC for taxable entity • Taxable entity did not need tax burden to offset, so no third party tax investors required • Typically equal to 30% of the project’s eligible cost basis • Sequester impacts • Required LLC to incur expenses of at least 5% of project’s eligible costs basis prior to December 31, 2011 in order to “Safe Harbor” • Expired program unavailable for future projects

  5. Project Refinement Example #2 • Challenge: To overcome siting challenges • Concern about large project on Reservation • Concern about impact to neighboring facilities • Solution: Relocate project to brownfield site in Milwaukee and install robust odor control system • Certified Survey Map to subdivide property into three parcels, one of which was developable • No odors detectible at boundary of property • Other positives for property: • Eligibility for favorable tariff from incumbent utility (We Energies) • Eligible for New Market Tax Credits (still seeking) • Many nearby sources for high strength feedstock • Compromise: No On-Site Solids Slurrying; Effluent Management.

  6. Project Refinement Example #3 • Challenge: Design-Build-Operate-Source framework would have rendered the project economically infeasible. • Issued RFP pursuing this simple, risk free framework, but shedding all risk would have cost too much. • Solution: Separate Design-Build, Operations and Maintenance, and feedstock sourcing and responsibilities. • Issued separate RFPs for Design-Build and O&M. • Compromise: Increased Transactional Complexity; Additional Responsibilities for LLC; More Opportunities for Finger Pointing.

  7. Questions • Answers to all questions submitted electronically during today’s webinar will be posted on WAPA’s website within a few weeks. • To view and download presentations and corresponding Q&As from the 2014 Tribal Energy Webinar Series, please visit www.wapa.gov and click on Renewables in the top navigation. • To submit follow-up questions regarding the material covered in today’s webinar, please contact: Nathan Karman nathan.karman@fcpotawatomi-nsn.gov (414) 847-7750

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