By Anne Reynolds
What’s the best and most cost-effective way to reach our 50% Clean Energy Standard? To chart a path to where we need to go, let’s first understand where we are today. Sounds easy right? Well, maybe it’s not so easy after all…
What is the Clean Energy Standard (CES)? The CES is a NYS framework that requires a certain amount of electricity to be produced from renewable energy resources. Today, the New York Public Service Commission has approved the CES stating that, by 2030, 50% of electricity consumed must be generated from renewable energy resources. The practicality of being able to achieve the approved CES levels, or the more aggressive levels being contemplated and discussed below, will be driven by the continued build out of renewable energy resources to generate incremental clean energy. One of the key elements of the standard is the types of energy sources that qualify. Currently, certain renewable energy resources with identical attributes are treated differently in New York.
Table 1: Wind Resources Qualification Comparison
Why is the CES important? The underlying goal of the CES is to reduce harmful air pollutants through the development of new renewable energy sources, which is often accomplished through contracts being awarded to new renewable resources. New York is unique in that we provide minimal support to existing renewables once their original contract term expires. Only if the resource threatens to cease operations is there financial support awarded to provide cost relief for a short period of time. This policy threatens New York’s ability to achieve its CES levels. With the Governor’s proposed increase in CES levels to 70% renewable electricity by 2030, we must ensure all assets are encouraged to stay operational and their clean, carbon-free electricity remains in New York.
How can we improve New York’s CES framework? Current New York regulations recognize that existing renewable resources need support to maintain efficient operations, but such support is only used to prevent plant closures. This policy drives resource operators to pursue all commercially available opportunities to maximize the revenue from their resources, including pursuing out-of-market sales which dilutes the facility’s benefits to New York. Currently, New York does not allow existing generators to participate in state procurements while neighboring states encourage all renewable resources, regardless of age, to participate in an open market. We seek to address the issue of providing CES eligibility to existing resources, including those that have received contract support in the past, in an effort to continue to position New York as a leader is renewable energy generation.
What if we don’t change New York’s CES framework? The most fundamental reason to include existing renewable resources in the CES is that we need these resources to meet our goals. Within the next five years, 750 MW of Tier II (or “baseline renewable”) wind projects are scheduled to complete the term of their original NYSERDA REC contracts. Adding that to the existing pool of NYSERDA contracted wind resources ineligible for Tier I (or “new renewable”) compliance makes a total of more than 1,300 MW unavailable to meet renewable goals. That unavailable supply represents approximately 70% of the 2018 wind production in New York that is forced to seek markets out of state to ensure operational viability. Put simply, resources that count towards our CES levels now will not count in the coming years. These policies are only favorable to adjoining states, such as Connecticut, New Jersey, and Massachusetts, which are following the national trend in increasing their own renewable targets.
Figure 1: Forecasted New York State Wind Generation by Resource Type
Where do we go from here? Existing resources are cost-effective. Paying a lower rate to existing resources than what new resources receive will keep valuable renewable resources in New York creating a foundation to reach the state’s CES goals. We need to address the concerns of consumers, particularly the business community, regarding the cost of electricity and fears of resource unavailability. More accurately calculating existing renewable energy supply that is available to meet CES levels will reduce uncertainty that complicates long-term planning and leads to opposition from certain sectors.
Finally, we must acknowledge that developing new energy infrastructure is challenging. The comprehensive reforms being pursued for the Article 10 siting process are encouraging, but remain uncertain. Future development of New York’s new renewable resources depends on several factors that are difficult to predict. These factors include trends in the supply and price of natural gas, greenhouse gas and other environmental regulations in competing states, changing consumer preferences, technological advancements, and future public policies and regulations. Changes in any one of these factors could make future renewable energy options more or less attractive, so let’s not needlessly lose what we’ve worked so hard to achieve.
In conclusion, we believe that a critical factor in our success will be maintaining existing resources and allowing these critical assets to participate in New York’s renewable energy market. We will support any path forward to ensure the clean, carbon-free electricity generated by existing renewables stay in New York because the best way to continue to build towards the future is on a strong foundation.