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Key Takeaways | Update on the Solar Circumvention Proceeding and Discussion of Possible Comments in Response to Commerce’s Recent Memo

On May 17, 2022, Carl Fleming, Lynn Kamarck and Tyler Kimberly from McDermott’s Energy and Project Finance and International Trade teams hosted Solar Energy Industry Association (SEIA) General Counsel and Vice President of Market Strategy John Smirnow for a roundtable discussion that provided substantive arguments, best practices and other advocacy strategies for US solar developers who are preparing to submit collective and individual responses to the US Department of Commerce (Commerce) this week following Auxin Solar Inc.’s petition and Commerce’s subsequent memorandum.

Below are key takeaways from the discussion:

1. To reach an affirmative circumvention determination, Commerce must confirm that the processing occurring in the target countries (i.e., Cambodia, Malaysia, Thailand and Vietnam) is “minor or insignificant.” While Commerce’s precedent establishes that the processing required to make a wafer into a module (including cell production) is not “minor or insignificant,” it has suggested the opposite during this circumvention inquiry.

2. Commerce could terminate the circumvention proceeding on the basis that including cells or modules completed in the target countries within the scope of the existing Chinese orders would not be “appropriate.” However, there is no clear indication as to what “appropriate” means.

3. What developers need the most right now is certainty. Because of the uncertainty surrounding the amounts of cash deposits and the final assessment of import duties, some developers are unable to make key business decisions. While Commerce tried to provide some of this certainty in its May 2 proposal, it did not accomplish that goal.

4. Developers can share their views regarding the investigation by submitting comments to Commerce by 5:00 pm EDT on May 19, 2022. Comments can include discussion of any difficulties complying with Commerce’s proposed certifications and whether such certificates would be useful to the company, the treatment of cells or modules manufactured in non-targeted countries and inconsistencies between prior Commerce decisions and the investigation at hand.

5. SEIA is calling for a Public Interest Requirement in anti-circumvention investigations to prevent similar petitions from being filed and moving forward in the future.

McDermott is currently preparing comments for a number of US solar developers and also providing additional feedback on comments prepared by other US solar developers to ensure that they are putting their best foot forward during this critical period.

For more insight on this topic, please watch our recent webinar recording where our executive leadership panel discussed the commercial, legal and policy responses to Commerce’s anti-circumvention investigation.




McDermott Will & Emery Named 2021 Project Finance Group of the Year

We are pleased to share that our Energy & Project Finance Group was recently recognized as a 2021 Law360 Practice Group of the Year for Project Finance.

We have made impressive strides in 2021 with exponential team and matter growth globally. The group’s multifaceted experience in both renewable and conventional energy, as well as in the infrastructure sector, combined with the group’s excellent thought leadership, has led to this recognition.

From closing fast-moving energy deals to help drive a carbon-neutral economy to hosting industry experts for a bi-weekly discussion on how the Energy Transition is shaping our industry, the Energy & Project Finance Group is committed to providing comprehensive advice in any area of energy law.

Read the full article.




Biden Administration Advances California Offshore Wind Development

On May 25, 2021, the Biden Administration announced an agreement to lease almost 400 miles off California’s northern and central coasts for offshore wind development. The announcement expands on the recent approval of the first major offshore wind project in US waters. In an effort to decarbonize US power generation, the administration noted, “These initial areas for offshore wind development in the Pacific Ocean could bring up to 4.6 gigawatts of clean energy to the grid, enough to power 1.6 million American homes.”

Furthering the Biden Administration’s “whole-of-government approach” to clean energy, the US Department of Interior in connection with the US Department of Defense identified an area northwest of Morro Bay that will support three gigawatts of offshore wind. The Humboldt Call Area is also being considered as a potential offshore wind location, which would bring 4.6 gigawatts of energy to California. The Department of Defense played a significant role in identifying areas for offshore wind development, as they take part in significant training and operations off the coast of California that are essential to national security. Both the Department of Defense and Department of Interior plan to work closely together to ensure protection of military operations while pursuing new domestic clean energy resources.

To support this development in the deep Pacific Coast waters, new floating offshore wind technology will be deployed. The US Department of Energy (DOE) has invested more than $100 million in researching, developing and demonstrating floating offshore wind technology. Floating turbine technology will likely be a prime candidate for DOE Loan Programs Office support because it is (1) large enough in scale, (2) has a long lead time to develop and (3) is not commercially scalable in the same way as offshore technology that utilizes bottom anchoring. Lenders will have questions about the technology and having that guaranty could significantly aid project financing.

Ahead of yesterday’s announcement, California invested millions into its budget for environmental needs, including funding port upgrades and power lines that will carry electricity to California homes. We expect further developments in California from a legislative perspective to further offshore development.




New Resource Center: Navigating Change in the US Administration

Pandemic relief, taxes, income inequality, climate change, infrastructure, healthcare and civil rights: the new US administration is moving forward rapidly on President Joe Biden’s stated priorities. So how are these new policies affecting your business? We’re here to keep you informed!

McDermott Will & Emery’s multidisciplinary team of industry-leading lawyers are monitoring key legal areas to help you navigate and gain perspective on the most critical impacts of changing US policies. Access the latest updates in our new resource center.




Initial Republican Tax Reform Proposal Includes Tax Cuts and Changes to Energy Credits

Changes to the energy credits proposed in the Tax Cuts and Jobs Act could impact the eligibility of renewable energy projects that had been relying on the guidance previously issued by the Internal Revenue Service.

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