The Alliance for Clean Energy New York, American Wind Energy Association, Advanced Energy Economy Institute, Northeast Clean Energy Council, and Distributed Wind Energy Association filed comments April 22 at the New York State Public Service Commission on how to meet a new state goal of 50% renewable energy by 2030.
These groups, calling themselves collectively the “Renewable Energy Industry,” said they strongly and enthusiastically supports New York State’s pursuit of a new Clean Energy Standard (CES) to achieve 50% renewable energy by 2030, and to replace the now expired Renewable Portfolio Standard (RPS). They commented on a staff white paper on the Clean Energy Standard issued on Jan. 25.
They wrote; “Our support for the CES is founded on the well-known benefits of renewable energy development, including reducing the carbon emissions that cause global climate change; promoting local economic development; diversifying New York’s electricity supply in a market increasingly dominated by natural gas; providing long-term price stability in electricity supply; providing customers the opportunity to generate electricity on-site; avoiding the air pollution that contributes to smog and acid rain; and keeping energy dollars in-state. We support Governor Andrew Cuomo staking out a leadership position for New York State in addressing the critical issue of global climate change and building the clean energy industry. His directive to the Public Service Commission (“Commission”) to establish a Clean Energy Standard (CES) that will translate a 50% renewable energy goal into a mandate is supported by section 6-104(5)b of the Energy Law, given the inclusion of the 50% goal in the 2015 State Energy Plan.
“Further, while the Renewable Energy Industry wholeheartedly supports the 50% mandate, we highlight in these Comments the critical importance of specific design elements to create a program that will get clean energy projects proposed, sited, permitted, financed, and constructed in New York State, as this is the only pathway to successful achievement of our State’s 50% renewable energy mandate.”
Their support of the 50% mandate is further bolstered by the findings of the Clean Energy Standard White Paper–Cost Study released by the state Department of Public Service on April 8. This study projected modest bill impacts and significant net benefits from the CES program outlined by the White Paper. “Overall, the findings of this Cost Study clearly support the premise that New York can achieve this ambitious program with modest or no impact on electric bills and net benefits for New Yorkers,” the groups said.
“We note that the White Paper leaves several critical policy design questions undecided. We support, for example, the establishment of annual procurement obligations in megawatt-hours (MWh), but the White Paper only establishes these until 2020, which is not long enough to stimulate a strong pipeline of projects. We support a CES program that places an enforceable obligation on load serving entities (“LSEs”) and uses an alternative compliance payment mechanism (“ACM” or “ACP”) to ensure compliance. This type of approach is competitive and market-driven, and stimulates private-sector investment to achieve a clean energy future, all characteristics reflected in the principles of New York’s State Energy Plan. But the White Paper does not establish the level of the ACP nor the specific methodology for setting the ACP, so its efficacy in achieving the 50% goal cannot yet be assessed.
“We support the obligation for electric distribution companies (EDCs) to enter into 20-year power purchase agreements (PPAs), as well as the ability of the EDCs to recover the costs of the PPAs from ratepayers and resell renewable energy credits to LSEs, but the White Paper does not articulate what portion of the overall obligation would be procured via these EDC-backed PPAs.
“This is perhaps the central question posed by the White Paper in terms of CES program design: what portion of the total CES obligation should be covered by utility-backed PPAs? It is a key decision that affects subsequent design decisions. The White Paper (at page 39-40) posits that the correct allocation to utility-backed PPAs should be the level that reconciles the objectives of renewable energy development and cost minimization (both of which compel long-term PPAs) with the objective of development of the self-initiated voluntary market.
“While the Renewable Energy Industry is supportive of innovative approaches to stimulating the self-initiated market in New York State, we also recognize that it is currently small and finite in New York, and inadequate at this time to meet the revenue requirements necessary to attract merchant projects or get new projects built. Further, as articulated in the Renewable Energy Industry’s earlier Initial Comments and Reply Comments in this same LSR proceeding, and shown in the analysis in the Large-Scale Renewable Energy Development in New York: Options and Assessment, Final Report (“LSR Options Paper”) issued in this case, a utility obligation to utilize long-term, bundled power purchase agreements offers the most chance for success in attracting investment and construction in New York, and can advance renewable energy goals at least cost and risk to New York ratepayers. It is the only approach that brings the price stability benefit of renewable energy to ratepayers.
“The utility-backed PPAs would be competitively procured, with independent power producers offering competitive bids. Bids could be evaluated using the “implied REC” approach, which would maintain the market signals created by the NYISO energy and capacity markets to target development to desired locations or to incent projects that have peak co-incident generation.
“The Renewable Energy Industry proposes that the EDC-backed PPA portion of the total CES Tier 1 obligation should be 85%. The remaining portion of the obligation should be achieved via NYSERDA long-term REC contracts, distributed generation supported by co-incentives, and the short-term REC market. In selecting the 85% level, we recognize that long-term contracts – either utility-backed PPAs or NYSERDA contracts – will need to cover roughly 100% of the LSR portion of Tier 1, because without a long-term contract vehicle, we do not believe that new LSR will get built in New York. Any demand in the short-term REC-only market will most likely be exclusively met by behind-the-meter generation or imported renewable generation. Yet the Tier 1 obligation will rightly be met by a combination of LSR and behind-the-meter renewable generation. Based on the years of experience with the RPS in New York, roughly 86% of the incremental renewable energy was provided by LSR (via the Main Tier) versus behind-the-meter generation (via the Customer Sited Tier).”