S T A T E O F N E W Y O R K
________________________________________________________________________
7027
2021-2022 Regular Sessions
I N S E N A T E
May 25, 2021
___________
Introduced by Sen. PARKER -- read twice and ordered printed, and when
printed to be committed to the Committee on Energy and Telecommuni-
cations
AN ACT in relation to maintaining the continued viability of the state's
existing large-scale, renewable energy resources
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Legislative findings and intent. The legislature hereby
finds and determines:
1. New York is a national leader in developing and implementing policy
to promote the development of renewable energy resources, the growth of
which has significantly benefited the state in numerous ways, including
through reductions in pollutants that contribute to climate change,
associated reductions in adverse impacts on public health, and substan-
tial job growth in the clean energy sector.
2. To further promote and incentivize the development of renewable
energy, New York state recently adopted the Climate Leadership and
Community Protection Act (CLCPA), which, among other things, mandates
that by 2030, 70% of electricity consumed in the state will come from
renewable resources, and 100% of such electricity be renewable by 2040
(CLCPA targets). In 2019, approximately 27 percent of the state's elec-
tric load (representing 41,340 gigawatt hours) was supplied by renewable
resources - solar, wind, hydroelectric, biomass, fuel cells and similar
resources.
3. However, a recently published triennial review of the clean energy
standard (CES) found that falling commodity market revenues in the
wholesale energy markets create a risk that legacy renewable generators
may not be able to cover their costs. These facilities have options to
export to neighboring renewable portfolio standard (RPS) compliance
markets and will do so if the renewable energy certificate (REC) revenue
opportunity is greater than New York's voluntary market.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11681-01-1
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4. Exports of legacy supply have increased since 2014 by about 0.5
TWh, and unless reversed would need to be made up from incremental
sources of supply in order to achieve CLCPA targets. There is a real and
present danger that a significant portion of New York's resources will
either cease operations or sell increasing volumes of their RECs to
neighboring markets. In either case, New York will not be able to count
them towards the CLCPA targets.
5. A recent study shows that, in the wake of COVID-19, after reaching
nearly 164,000 clean energy jobs statewide in 2019, the pandemic tempo-
rarily reversed multi-year growth trends. The clean energy industry can
serve as a cornerstone for economic recovery, but that must begin with
the retention of New York's existing valuable renewable assets.
6. The CES was established in a 2016 public service commission order,
predating the CLCPA. In its original form, the CES was composed of a
tier 1 for the development of new large-scale renewables, a maintenance
tier 2 to provide short-term relief to economically distressed renewable
resources, and a tier 3 to support the state's nuclear resources through
ZECs. In 2018, the public service commission added a program related to
offshore wind development. Despite numerous appeals from the renewable
energy and environmental advocates, none of the public service commis-
sion's actions modified the program such that the state's existing
renewable energy resources would be preserved as a baseline onto which
to add in pursuit of the state's laudable and aggressive environmental
goals.
7. In 2019, the CLCPA was passed and signed into law. In the meantime,
during the period between the implementation of the CES to the CLCPA
becoming law (2016-2019), exports of baseline renewable generation
increased by approximately 50 percent - a direct contrast to the objec-
tives of both initiatives. Given that numerous RPS contracts will be
expiring in the near term, the public service commission has stated that
it expects this trend to continue, potentially putting New York at risk
of not reaching the 70 by 30 target.
8. Also, in 2019, a separate energy-related bill passed both houses of
the legislature. That bill would have created a truly supportive tier 2
requiring the New York state energy research and development authority
(NYSERDA) to procure RECs from all eligible existing renewable resources
at a discounted rate (75%) of the current tier 1 REC price. That
proposed legislation rightfully recognized that to promote achievement
of the CLCPA targets, and to ensure the continued job growth and other
benefits attendant to a clean energy economy, New York needs to assure
that its existing renewable resources are provided with adequate price
signals and financial incentives to remain in operation and to sell
their renewable energy attributes in New York. Absent these assurances,
it would be difficult if not impossible for the state to meet the
recently established targets.
9. The governor vetoed the tier 2 legislation, citing in large part
that payments would be made to renewable resources on a non-competitive
basis. However, he ordered NYSERDA and the department of public service
to develop a program "to provide qualified legacy renewable energy
resources in New York State with appropriate support to continue to
competitively operate and contribute to the State's clean energy goals."
10. In response to the veto message, NYSERDA filed a petition with a
proposed framework for a competitive tier 2, which the public service
commission adopted in an October 2020 order modifying the clean energy
standard. The program would issue annual solicitations over three years,
with the winning bidders receiving three-year contracts to sell their
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RECs to NYSERDA at the accepted price. NYSERDA's stated goal was to
procure approximately one-third of the renewable baseline RECs in each
auction.
11. However, the first ever competitive tier 2 solicitation, completed
in May 2021, netted awards to just three renewable facilities that total
less than 14 MW, while the eligible baseline capacity well exceeds 1,000
MW. The low volume of awards is directly attributable to offers being
rejected due to a confidential price cap utilized by NYSERDA, which does
not accurately reflect the price needed to keep New York's renewable
resources in New York.
12. Even had NYSERDA accurately valued existing renewables, the
competitive tier 2 program is set to have the contracts from its third
and final solicitation expire at the conclusion of 2025, a full four
years before the first CLCPA renewable target date of 2030. This chasm
provides no assurances to renewable resources that they should invest in
their assets or keep their RECs in the state in the critical years lead-
ing up to the 70 by 30 target.
13. New York's ability to meet the CLCPA targets will be hampered if
such existing resources provide their wholesale energy products for
delivery to adjacent states, some of which have enacted laws that
provide for a robust market that provides a stronger opportunity to sell
renewable energy attributes than is currently available in New York.
14. It also is of paramount importance to ensure the fuel diversity of
the state's energy sector for the purposes of providing energy security,
system reliability and protection of consumers from potential price
spikes or shortages. For this same reason, it is important for the state
to take measures to ensure the continued viability and competitive posi-
tion of a wide variety of large-scale, renewable energy resources in the
state.
15. Accordingly, the overlying intent of this act is to modify the
competitive tier 2 program such that it appropriately values maintaining
the state's renewable baseline and provides existing large-scale, renew-
able energy resources in New York state with appropriate financial
incentives to continue operations for the foreseeable future.
§ 2. Definitions. As used in this act:
1. "Competitive tier 2 program" refers to the renewable baseline
retention program created within the order modifying the clean energy
standard and being administered by NYSERDA.
2. "Eligible competitive tier 2 resource" shall have the same meaning
as contained in the order adopting modifications to the clean energy
standard: (a) existing non-state-owned run-of-river hydropower and
existing wind generators located within the State; (b) that have entered
commercial operation prior to January 1, 2015, and (c) are not already
under contract with NYSERDA.
3. "Renewable energy credit" means a tradable, non-tangible energy
commodity that represents proof that 1 megawatt-hour (MWh) of electric-
ity was generated from a renewable energy resource.
4. "Tier 1" means the program designated as tier 1 pursuant to the
order adopting a clean energy standard and subsequently refined within
the order modifying the clean energy standard.
5. "Tier 2 renewable energy credit" refers to a renewable energy cred-
it generated by an eligible competitive tier 2 resource.
6. "Maximum bid price" shall mean the price employed by NYSERDA above
which offers submitted in the competitive tier 2 program would be
rejected.
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7. "Order adopting a clean energy standard" means the public service
commission order dated August 1, 2016 and entered in case number
15-E-2203 et seq.
8. "Order modifying the clean energy standard" means the public
service commission order dated October 15, 2020, and entered in case
number 15-E-2203 et seq.
§ 3. Modifications to the competitive tier 2 program. 1. The public
service commission, in consultation with the New York state energy
research and development authority, shall modify the following
provisions of the competitive tier 2 program within 30 days of the
effective date of this act, to provide support to and for eligible
competitive tier 2 resources.
2. Maximum bid price. The maximum bid price utilized by NYSERDA for
each solicitation conducted within the competitive tier 2 program shall
be set equal to 75% of NYSERDA's tier 1 REC sale price established for
the most recently completed Renewable Energy Standard (RES) compliance
year for tier 1 RECs.
3. Program cost cap. The $200 million cost cap on total program
expenditures imposed by the order modifying the clean energy standard is
eliminated. Program costs will be determined by the volume of accepted
offers, as determined by NYSERDA's annual targets, multiplied by the
price of accepted offers no greater than the maximum bid price.
4. Program duration. The competitive tier 2 program shall remain in
place and NYSERDA shall conduct annual solicitations for tier 2 RECs
such that the final solicitation will result in NYSERDA procuring tier 2
RECs under awarded contracts through the year 2030.
5. Annual targets for tier 2 renewable energy credits. The target
volume of tier 2 RECs in each of NYSERDA's annual tier 2 solicitation
shall be one-half the quantity of renewable energy generation that is
serving total electric load in New York state, excluding generation from
facilities owned by the power authority of the state of New York or
otherwise under contract with NYSERDA.
§ 4. This act shall take effect immediately.