New York regulators adopt offshore wind standard

The New York State Public Service Commission, in a July 12 order, adopted an Offshore Wind (OSW) Standard to maximize the value potential of new offshore wind resources by jumpstarting the industry to serve the state.

The commission added that the primary components of the standard include:

  • Initial procurement solicitations, to be held by the New York State Energy Research and Development Authority (NYSERDA), New York Power Authority (NYPA) and/or Long Island Power Authority (LIPA) in 2018 and 2019, for offshore wind renewable energy credits (ORECs) associated with about 800 MW of offshore wind (i.e., Phase 1)
  • An obligation on New York Load Serving Entities (LSEs) to obtain, on behalf of their retail customers, the ORECs procured in Phase 1 in an amount proportional to their load

"This action represents another major step toward establishing a clean energy future that is secure, reliable and cost-effective," New York Gov. Andrew Cuomo said in a statement about the order.Robust offshore wind development is not only critical to meeting our clean energy and carbon reduction goals, this investment has the potential to create thousands of jobs and fuel a $6 billion industry for New York as it combats climate change."

The statement noted that to achieve Cuomo’s 2,400 MW goal of new offshore wind generation by 2030, NYSERDA will procure about 800 MW of offshore wind through a solicitation issued in 4Q18, in consultation and coordination with NYPA and LIPA. Awards are expected to be announced in 2Q19, and if needed, a second solicitation will be issued in 2019, the statement added.

The commission, in its order, noted that in August 2016, it adopted a Clean Energy Standard (CES) designed to achieve a statewide goal of 50% renewable generation resources by 2030 – referred to as the 50 by 30 goal. The 50 by 30 goal was adopted as part of a strategy to reduce statewide greenhouse gas emissions by 40% by 2030, the commission said, noting that the CES is divided into a renewable energy standard (RES) and a zero-emissions credit (ZEC) requirement.

“[T]he commission determines that a series of actions related to offshore wind are necessary to help achieve the CES goal, as part of a strategy to reduce statewide greenhouse gas emissions by 40% by 2030 in a fair and cost-effective manner,” the commission said. “The commission therefore adopts a supplementary goal, to contribute toward the overall objective of the CES, whereby the quantity of electricity supplied by renewable resources and consumed in New York State should include the output of 2.4 GW of new offshore wind generation facilities by 2030. The supplementary goal is based on contributions towards achievement by each” LSE serving retail customers, including the non-jurisdictional LIPA and NYPA.

In furtherance of that supplementary goal, the commission said, it adopts the OSW Standard.

In the CES framework order, the commission considered the potential role of offshore wind as a component in the mix of renewable resources needed to achieve the state’s goal, the commission said. Recognizing that New York has a substantial potential for offshore wind production, the commission requested that NYSERDA perform a study to identify the appropriate mechanisms to achieve that potential and make recommendations for the commission’s consideration.

NYSERDA in January released the New York State Offshore Wind Master Plan, which presents a roadmap to encourage the development of 2,400 MW of offshore wind by 2030, and, among other things:

  • Identifies the most favorable areas for potential offshore wind energy development
  • Describes the economic and environmental benefits of offshore wind energy development
  • Addresses mechanisms to procure offshore wind at the lowest ratepayer cost

The commission added that the master plan reflects a study area of about 16,740 square miles covering a roughly square-shaped area paralleling the coast of Long Island on the north and the Continental Shelf on the southeast. That area is regulated by the federal Bureau of Ocean Energy Management (BOEM), which has entered into six lease agreements for wind development in areas along the Atlantic Coast between New Jersey and New England. The commission also said that BOEM is expected to issue additional leases near the end of 2019.

The master plan is supported by NYSERDA’s Offshore Wind Policy Options Paper, which was filed with the commission for consideration and recommends two phases for offshore wind development:

  • The first phase would initiate the procurement of ORECs associated with about 800 MW of offshore wind over an initial two-year period
  • The remainder of the offshore wind would be procured in future years as the domestic offshore wind industry matures and the resulting expected price declines materialize

As the master plan and options paper indicate, offshore wind is projected to provide numerous benefits in addition to playing a significant role in contributing toward achieving the CES targets and reducing greenhouse gas emissions, including providing substantial reliability and diversity benefits to the electric system, the commission added.

NYSERDA projects that a mature offshore wind industry could deliver electricity to New York’s downstate load areas at prices ranging from about $80-$130/MWh (in 2017 dollars) by 2030, although the ultimate prices may be lower given recent market indicators, the commission said.

Discussing transmission options, the commission noted, for instance, that for purposes of Phase 1, holding the generator responsible for transmission is the most easily implementable and feasible option for jumpstarting offshore wind development in New York.

The commission said that while the utility owned approach would have the potential to achieve cost benefits through lower cost of finance and system coordination, those potential benefits must be weighed against significant implementation challenges, including the scoping of offshore wind transmission projects, potentially cumbersome and untested procurement processes and, most important, related risk to developers involving construction timing, energy delivery, and stranded assets.

“With this order, the commission is adopting a goal of 2.4 GW of offshore wind procurement,” the commission said. “Consideration of Phase 2 will need to begin in 2019, and should be informed by Phase 1 experience, as well as market developments.”

NYSERDA will issue a report, within 30 days of executing contracts for Phase 1 procurements, and that report will describe all aspects of the Phase 1 procurement, as well as recommendations for Phase 2.

With respect to transmission, the commission added, immediate steps are needed to study a potential backbone system for Phase 2 and beyond. By Sept. 28, state Department of Public Service staff and NYSERDA will convene a technical conference that will include the optimal configurations for cost-effective transmission of large-scale offshore wind development, as well as the various options for ownership and planning processes, the commission said.

About Corina Rivera-Linares 3065 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.