The New York State Public Service Commission recently authorized the New York State Energy Research and Development Authority to create a new, innovative pricing structure to decrease capital costs and further spur the development of clean energy resources in New York.
The action builds on Gov. Andrew M. Cuomo’s 2020 State of the State announcement that NYSERDA will make competitive awards to 21 large-scale solar, win, and energy storage projects across upstate New York, totaling over 1,000 megawatts of renewable capacity and 40 megawatts of energy storage capacity. These awards are part of a NYSERDA 2019 procurement for large-scale clean energy projects.
“As a result of Gov. Cuomo’s determined drive to create a vibrant clean-energy industry, New York has been able to attract billions of dollars in private investment for renewable power supplies, while developing new jobs and clean energy choices for consumers,” PSC Chairman John B. Rhodes said. “Our decision … will benefit renewable energy developers by reducing their risks while also lowering customer costs. In 2020, the commission will work tirelessly to implement the governor’s ambitious clean energy goals.”
Specifically, the commission directed NYSERDA to offer the option of providing additional financial options and support to developers when NYSERDA seeks bids to build renewable energy projects. Instead of the traditional fixed-price that NYSERDA had been offering developers, the clean energy authority will now be able to compensate developers for the environmental attributes of the solar or wind farm associated with its generation output, based on a reference market index that will change monthly over the life of the contract. Providing an indexed renewable energy credit, or REC, in addition to continuing to allow for a fixed-price bid, will provide clean energy developers with more flexibility to adapt their bidding behavior to their respective financing and operational needs and more in line with markets.
In contrast, fixed-price RECs provide a fixed as-bid REC price throughout the contract lifetime. The indexed pricing structure will reduce market risk overall for renewable energy generators and lead to reduced bid prices and corresponding decreased contractual costs to the benefit of all customers. Under an indexed bid structure, ratepayers benefit both from projects’ reduced finance costs and fewer changes to their energy bills.
Cuomo has already created a swiftly expanding renewable energy industry in New York with over 2,700 megawatts of solar, wind and storage capacity installed since 2011 and another 7,000 megawatts in development. In his State of the State address, the governor also announced the New York Power Authority will work with state agencies and authorities and its customers to competitively contract for large-scale clean energy resources. In total, the State of the State initiatives, including the PSC action, will spur over $2.5 billion in private sector investments toward the development, construction and operation of clean energy projects, create over 2,000 short-term and long-term jobs, and generate enough renewable electricity annually to power over 350,000 homes.
The PSC’s 2016 clean energy standard order established, in part, a renewable energy standard (RES) that requires retail customers to be served with increasing amounts of renewable generation. NYSERDA conducts annual competitive solicitations for the purchase of RECs from eligible generators, which have been highly successful thus far. The first two fixed-price REC RES solicitations resulted in awards for 26 new projects in 2017 totaling 1,383 MW, and awards for 19 new projects in 2018 with 1,364 MW. For 2019, 21 large-scale solar, wind and energy storage projects across upstate New York will receive awards, totaling over 1,000 MW and 40 MW of energy storage.
These decisions may be obtained by going to the PSC documents section of the commission’s website at www.dps.ny.gov and entering case numbers 15-e-0302 (proceeding on motion of the commission to implement a large-scale renewable program and a clean energy standard) in the input box labeled "Search for Case/Matter Number." PSC documents may also be obtained from the commission’s Files Office, 14th floor, Three Empire State Plaza, Albany, NY 12223 (518-474-2500).