What changes to New York's renewable energy programs are
coming down the pike? Public comments filed with the New York
Public Service Commission (the "Commission") concerning
the Commission's Draft Biennial Review of the State's Clean
Energy Standard ("CES") (the "Draft Review")
offer clues. On July 1, 2024, the Commission and NYSERDA filed the
Draft Review, which sketches out several possible revisions to the
CES and related State programs aimed at decarbonization and
procurement of renewable generation capacity. Initial comments were
due September 23, and reply comments, due October 11, were posted
today.
As soon as December of this year, the Commission may announce
adjustments to some of the state's renewable energy procurement
programs; in particular, up for consideration are an emphasis on
onshore wind power and a focus on selecting more "mature"
projects in solicitations. However, the Commission may also shape
its reforms in response to comments filed by the City of New York,
large industrial and commercial energy consumers, and nuclear
advocates, who are sharply critical of the CES, wary of rising
ratepayer costs, and who argue that New York State needs to find
new paths forward as it strives to meet its decarbonization
targets.
Likely Changes to the Clean Energy Standard
In the Draft Review, NYSERDA and the Commission proposed several
changes to programs currently administered under the CES, including
the Renewable Energy Standard ("RES") Tier 1 and offshore
wind programs. With broad support from most commenters, it seems
probable that the Commission may implement the following
reforms:
- Extension of NYSERDA's Tier 1 procurement authority by at least three years (i.e., until at least 2029)
- Reduction of the 70% price scoring component in scoring Tier 1 bid submissions
- Re-allocation of non-price points in scoring Tier 1 bid submissions to favor mature projects
- Alteration of Tier 1 bid scoring to favor onshore wind project proposals, perhaps by weighting "peak coincidence" more heavily or by building a "price bonus" into the evaluation process
- Granting NYSERDA discretion to extend or waive contracted projects' Commercial Operation Milestone Dates
- Offering longer contract tenors for both Tier 1 contracts (25 years) and offshore wind contracts (30 years)
- Designation of Renewable Energy Zones, whether to align generation development with transmission expansion or to reward projects proposed for supply-constrained areas
- Significant increases in state support for legacy small- and mid-size hydropower facilities, whether through the creation of a Capital Grants program, providing E-Value to such facilities or revising the Maintenance Tier program (including by extending the duration of contracts thereunder from three to ten years)
While it is possible that the Commission grants NYSERDA
authority to adjust strike prices during the life of a contract,
either to account for unforeseen events or to track inflation,
several commenters opposed these proposals. Similarly, a proposal
to allow regulated utilities to build and operate renewable
generating capacity was met with stiff opposition from developers
and advocacy groups but with strong enthusiasm from the state's
utilities.
Criticisms of the Clean Energy Standard
Several commenters—including the City of New York, advocates
of nuclear power ("NYECA"), and the state's advocacy
coalition of large industrial and commercial energy consumers
("Multiple Intervenors")—submitted sharp critiques
of the CES and of the Draft Review's proposed changes. Those
commenters pointed to rising consumer costs, significant attrition
rates by projects under contract, and the limited progress made so
far toward decarbonizing the state's power sector to call into
question the CES's structure, goals, and implementations. In
particular, the City of New York argued that the Commission should
prioritize limiting impacts on ratepayers in determining how to
reform the CES. Going further, Multiple Intervenors cited the
State's "repeated failures" and warned that the path
forward proposed in the Draft Review would threaten reliability and
make power unaffordable for important businesses in the State.
NYECA, calling the Draft Review's proposals
"unrealistic" and "disturbing," argued that the
State could only achieve its decarbonization targets by emulating
other low-carbon major economies' support for hydropower and
advanced nuclear power.
Takeaways for the Clean Power Industry
Once the Commission publishes its Final Biennial Review—which
could come as soon as December 2024—the State agencies
involved in administering the CES will turn their attention to
implementing reforms, with impacts on solicitations likely to come
in 2025. As we write above, developers may expect a Tier 1 program
that, by one mechanism or another, more reliably selects onshore
wind projects and looks more favorably on mature project proposals
of all resource types. REC and OREC contracts may feature longer
tenors and adjustable strike prices, whether to track inflation
(thereby disincentivizing "front-loading" of bid costs)
or account for unforeseeable events like supply chain shocks.
Legacy hydropower facility owners and operators may expect
meaningful state assistance (likely with some conditions for
facility qualification) to renew FERC licenses, repower facilities,
and perform maintenance.
What is less clear is whether and how the Commission will respond
to the broader and sharper criticisms leveled by influential
constituencies like the City of New York and the large industrial
and commercial sector. Progress toward the State's
decarbonization goals has come in fits and starts since
establishing the CES. Ratepayers face higher energy costs, and new
challenges, like steep forecasted demand growth, loom. The
Commission may decide that serious structural reforms—aimed
at limiting ratepayer exposure to program costs or taking steps
toward procuring nuclear-generating capacity—are needed. This
Biennial Review may only be a course adjustment for New York State
or constitute a pivot point; watch this space.
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