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.
