Last week’s article discussed New York’s Zero-Emissions Credit (ZEC) for nuclear power. The ZEC is one component of New York’s Clean Energy Standard (CES). The other major component of the CES is the new Renewable Energy Standard (RES). In the RES, the New York Public Service Commission (PSC) formally adopted the goal set by Governor Cuomo in December 2015: 50 percent of all electricity used in New York by 2030 should be generated from renewable resources. This goal builds on the State’s previous goal of achieving total renewable generation of 30 percent by 2015.
The RES consists of a Tier 1 obligation on load-serving entities (LSE) to support new renewable generation resources through the purchase of renewable energy credits (REC), a Tier 2 program to support existing at-risk generation resources through maintenance contracts, and a program to maximize the potential of new offshore wind resources.
The goal of the RES is to reduce carbon emissions and ensure a diverse generation mix in New York. The state’s existing nuclear facilities, supported by the ZEC program, will close in 2030 (absent a renewal of their licenses) and the RES aims to ensure that the electricity provided by those units is replaced with new renewable resources.
New Renewable Resources
Tier 1 of the RES will support the development of new renewable resources that begin commercial operation after January 1, 2015. Eligible resources include biogas, biomass, liquid biofuels, fuel cells, hydroelectric, solar, tidal/ocean and wind resources located in New York or in a control area adjacent to the New York Control Area delivering energy for consumption in New York.
New York’s RES will continue to use a unique central procurement process. The New York State Energy Research and Development Authority (NYSERDA) will procure qualifying RECs from new renewable resources via fixed-price long-term contracts, providing certainty to renewable energy developers. The PSC set procurement targets for 2017 through 2021 and required NYSERDA to publish a schedule of dates for annual and supplemental solicitations to allow developers to prepare and participate with greater certainty.
All LSEs in the state are required to purchase qualifying RECs equal to a percentage of their total load. The PSC set fixed targets for 2017 through 2021 and will adopt incrementally larger percentages for the years 2022 through 2030 through a triennial review process. LSEs may purchase RECs from NYSERDA or may self-supply by direct purchase of tradable RECs. For 2017 NYSERDA will sell RECs to LSEs at a price equal to the weighted average cost per MWh NYSERDA paid to acquire the RECs plus an adder approved by the PSC to cover administrative costs. PSC Staff will propose a methodology for pricing RECs for future years. Alternatively, LSEs may make alternative compliance payments equal to the published REC price plus 10 percent.
Existing Renewable Resources and Offshore Wind
Tier 2 of the RES provides support for existing run-of-the-river hydroelectric facilities of 5 MW or less, wind facilities, and biomass direct combustion facilities through maintenance contracts approved by the PSC and administered by NYSERDA. Resources in this tier must demonstrate that but for the maintenance contracts, the facility would cease operation and no longer produce positive emissions attributes.
The third and final component of the RES is offshore wind. The PSC did not set forth any specific plans for the development of offshore wind resources. Instead, the PSC requested that NYSERDA identify appropriate mechanisms the PSC and State should consider to develop offshore wind resources. NYSERDA recently issued its Blueprint for the New York State Offshore Wind Master Plan, outlining the process, steps and timeline for developing the Master Plan, which is ultimately expected to be released in 2017.
Multiple entities have requested rehearing of the CES and requests focused on the RES component argue that certain types of renewable resources were excluded, such as existing wind facilities and hydroelectric dams, and that those facilities may sell their power outside of the state as a result.