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Tuesday, March 09, 2010
Biomass Plant May Lose Tax Credits
By Ashley Bergen
Mountain View Telegraph
Technically, as of Feb. 21, the Estancia Basin Biomass Power Project should have been operating to benefit from the state of New Mexico's renewable energy tax credits.
It's been almost two years since the state Energy, Minerals and Natural Resources Department approved Western Water and Power Production Ltd. LLC's application for renewable energy tax credits. The credits are worth up to $27.4 million over a 10-year period.
To keep the credits, the plant had to be up and running within 24 months of the application approval.
According to Western Water's president and attorney David Cohen, the economy has kept that from happening.
Cohen has submitted a request for the state to grant a waiver to allow until the end of 2012 to generate electrical power.
According to the request, "because of the worldwide meltdown of the credit system during the 2008-2010 period, despite the best efforts of WWPP, WWPP was unable to obtain financing for the project."
The company does have a "financing letter of intent" with an Asian partner to pay for the project, the request states.
"WWPP has also executed a power purchase agreement with a California investor-owned utility to purchase the energy from the project for 20 years," the request states. A confidentiality agreement kept Cohen from releasing more details to the state, according to the request.
Fernando Martinez, director of the Energy Conservation and Management Division, said a ruling has not been made nor a hearing been set.
"The division will be taking action on the WWPP request within the next couple of weeks," Martinez said.
The project did clear one important hurdle in late January.
To receive the renewable energy production tax credit, construction had to have begun by Feb. 21, 2009.
On Sept. 8, a hearing was called by Martinez and on Jan. 29 the division ruled the project had met the milestone.
The public had brought some concern to the state that not enough construction had been done to constitute a multimillion dollar renewable energy project.
Despite the concerns, it looks like the project will keep its credits for now.
"Although the construction effort by the project is minimal," the ruling says, "the evidence supports compliance with the actual language of the rule within 12 months of the application's approval."
The proposed project has been estimated to cost about $100 million to build.
Cohen said if the financing falls into place, full-on construction should begin no later than the end of summer. Western Water has been negotiating financing with its Asian partner for the past six months, Cohen said.
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