State of Green Business
New York's plan to reach 50 percent renewable energy
New York's plan to reach 50 percent renewable energy
In December, New York Governor Andrew Cuomo directed the state's regulators to come up with a plan to reach 50 percent renewables by 2030.
Early last week, the New York Department of Public Service (NYDPS) released its proposed plan to do just that. The “50 by 30” Clean Energy Standard (CES) builds on New York’s Reforming the Energy Vision (REV) proceeding, providing a necessary target and enforcement mechanism to achieve state policy objectives.
New York is in good company with other states looking to increase their renewables and fight climate change. Several states including Hawaii, California, Vermont and Oregon are leading the way with major increases in the past year in their clean energy targets. And with a series of executive announcements and regulatory activities over the past two months, New York is staying firmly at the head of the pack.
Rapid decarbonization of electricity becoming the new normal
Over the past year, several states have ratcheted up their renewable portfolio standards (RPS) to make them more aggressive.
Hawaii: On June 8, 2015 Hawaii Governor David Ige approved HB623, which included an increase to the state’s RPS to 100 percent by 2045. The increase includes a staged approach—hitting 30 percent by 2020, 70 percent by 2040, and 100 percent by 2045. Hawaii’s RPS is considered a landmark given its unprecedented goal of being the first state to have 100 percent renewable energy.
Vermont: Just three days following the Hawaii action, Governor Peter Shumlin of Vermont signed HB40 into effect. This bill included an increase to the state’s RPS to 75 percent by 2032. Vermont continues to have progressive energy goals and stands out as a frontrunner in the fight against climate change, including a longstanding commitment to energy efficiency.
California: On October 7, California Governor Jerry Brown approved SB350. SB350 includes more than just an increase to the state’s RPS to 50 percent, but also an increase to energy efficiency by 50 percent by 2030. California’s goals are important for their recognition of more than just electricity supply as paramount to abating emissions.
Oregon: Picking up where other states ended 2015, last month Oregon’s two major investor-owned utilities, Portland General Electric and Pacific Power, announced that they are backing a bill to phase out coal-fired generation by 2030 and to increase the RPS to 50 percent by 2040.
All this activity elsewhere in the country puts New York in good company as it strengthens its commitment to clean energy development.
The key challenge now for all these states is to not only build new renewable generation sources, but to also build a new integrated energy system that deploys assets to their best use while harnessing new technologies and employs business models that improve customers’ relationship with their energy supply.
New York is putting its money (and the law) where its mouth is
In order to meet the 50 by 30 goal, NYDPS describes a path forward in its CES white paper. The paper outlines the principal policy objectives of the CES, which include increasing renewable electricity supply to achieve the 50 percent goal and promoting the progress of REV market objectives.
The plan also includes provisions to extend the operating licenses of select nuclear plants in the state to support reliability and to serve as a zero-carbon bridge fuel while greater renewable generation is built out. In addition, NYDPS laid out a series of recommendations to meet these objectives, including:
- The obligation for all investor-owned utilities to participate in the CES, proportionate to their share of annual electricity sales
- The establishment of tiers for the CES that support both existing renewable and zero emission resources, as well as new renewable generation, and corresponding eligibility requirements for each tier (the proposed plan calls for both centralized and distributed renewables, but doesn’t specify absolute or relative amounts of each)
- The use of both renewable energy credits (RECs) and zero emission credits (ZECs) for qualified nuclear generation to show compliance, as well as the creation of a New York Generation Attribute Tracking System (NYGATS) to track the RECs and ZECs
- The commitment for the New York State Energy Research and Development Authority (NYSERDA) and the investor-owned utilities to supply long-term, competitive procurement for certain tiers to provide price stability, project financing, and a reduction of compliance costs
- A triennial program assessment by the Commission of the CES with initial goals of 26.8 percent renewables by 2017, 29.5 percent renewables by 2020, and 50 percent renewables by 2030
- A suggestion to include energy efficiency projections in its baseline calculation for the CES 2030 goal, as well as the possibility for the inclusion of energy efficiency in the CES tiers.
Recently, Governor Cuomo also announced a $5.3 billion clean energy fund that will include funding to support the CES as well as the state’s energy efficiency, clean energy, and energy innovation programs.
The fund sets a 10-year target for energy efficiency savings of 10.6 million MWh of electricity and 13.4 million MMBtu of fuel consumption, 133 million tons of CO2e reductions, $39 billion in customer bill savings, and $29 billion in private investment.
Electricity reform a critical piece of the clean energy puzzle
The impending clean energy standard and funding mechanisms reinforce clean energy reforms in development in New York.
Most notably, the Reforming the Energy Vision (REV) proceeding has recognized the importance of a whole systems approach to electricity reform, including a rethinking of the conventional utility business model and new approaches to distribution system planning and operations.
These programs seek to unleash market innovation and develop a more robust market for distributed energy resources, complementing the large-scale wind and solar projects that historically have accounted for the bulk of states’ RPS programs. With REV, New York is driving towards a future that includes not only clean energy but also greater affordability, a customer focus, more efficient buildings, increased resiliency and reliability, and an animated market for clean energy resources.
Where 2014 saw the establishment of the REV proceeding and the setting of overarching policy objectives, and 2015 was about making some key decisions and refining priorities, 2016 is likely to focus on implementation. The clean energy standard creates the mandate but other activities will define how it is achieved and what the future market will look like.
For example, the six New York utilities are required to file their distributed system implementation plans (DSIPs) in June. The DSIPs will propose necessary grid investments to achieve the REV vision, identify areas of the distribution system for asset deferral through DERs or other means, and should move the ball forward on release of system information to shine light on system planning and operations.
Complementary to the DSIPs, the Commission launched a proceeding in December to determine an “interim successor tariff” to net metering and set a path for eventual establishment of a more accurate “value of DER” pricing approach. If done well and in a coordinated fashion, these multiple regulatory initiatives should create a more robust marketplace to allow distributed renewables to become a significant asset for achieving the CES.
While a lot of important details clearly need to be worked out, all this activity in New York and across other states points to welcome and meaningful growth in renewable energy development. It is increasingly clear that when states enact ambitious clean energy requirements in a binding manner they are much more likely to achieve these levels.
Disclosure: RMI serves as a strategic advisor to the NY Department of Public Service on the REV proceeding.