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Project execution the focus for meeting NY renewable goals

ALBANY, N.Y. – Now that New York has done most of the hard policymaking, it’s time to focus on building individual renewable energy projects, speakers said Thursday at the Alliance for Clean Energy New York’s 11th Fall Conference.

“It is a great time to be a New Yorker advocating for clean energy policies in New York, but all these great, strong leading policies have not put us on an easy glide path to 50%” renewable energy, ACE NY Director Anne Reynolds said.

With a tradition of home rule and spirited opposition to large-scale projects, New York is a tough place for building, she said. Thus, ACE NY needs to focus on getting projects built, Reynolds said.

“Without this new focus, and without individual projects succeeding, our collective progress will be on paper only,” she said.

She also spoke of the Trump administration’s efforts to reverse its predecessor’s responses to climate change.

“It’s been a year in which I’ve been glad to focus on advocacy in Albany rather than in Washington, D.C.,” Reynolds said. “It’s also been a year when I’ve been happy to be living in Upstate New York, as we watched with hopes and prayers as Americans in Houston and Florida and Puerto Rico and in the Virgin Islands had a front row seat to a changed and changing climate – a dangerous and deadly front row seat.”

Ambitious Goals

“New York really has set forth an extraordinarily ambitious agenda for climate policy and clean energy in the state,” said Alicia Barton, CEO of the New York State Energy and Research Development Authority, who spoke of the state’s “extraordinarily ambitious” clean energy goals: 50% renewable energy by 2030, while reducing buildings’ energy and electricity consumption by 23% from 2012 levels. It also has committed to build 2,400 MW of offshore wind in the same time frame. (See New York Seeks to Lead US in Offshore Wind.)

Meeting its goals will require scaling energy efficiency to deliver outcomes at a lower cost, she said. That’s why NYSERDA is making new investments in energy efficiency that are premised on different models than used before under the $10 billion, five-year Clean Energy Fund.

“For example, we’re working to launch later this fall a program that we’re very excited about called Retrofit New York, which is a $40 million initiative to enable new models to deliver deep energy retrofits in the multifamily housing space, which is an incredibly important segment of the building stock for New York,” Barton said. “Retrofit New York is based on a model that’s been deployed successfully in a number of European markets, and it’s totally new to the U.S. So again, we are asking for partnership from industry, from players in the design of energy-efficiency delivery and project finance.”

NYSERDA is also looking at a pilot around pay-for-performance in energy efficiency, but that’s in the “fairly early stages of conception,” Barton said.

Largest Procurement in the U.S.?

Government procurement is creating the demand that will allow renewable projects to get financed and built, said Joe Martens, director of the New York Offshore Wind Alliance and former commissioner of the state Department of Environmental Conservation.

“In New York, a developer’s current opportunities for long-term contracts arise from NYSERDA and the New York Power Authority and, to a lesser extent, the Long Island Power Authority,” Martens said. “As you know, there are many open solicitations from both NYPA and NYSERDA for an unprecedented 2.5 million MWh. This procurement, the very first under the Clean Energy Standard policy, is the largest single procurement that New York has ever conducted and, as far as I know, the largest in the United States.” (See NY Clean Energy Commitment Spurs Procurement.)

Rich Allen, NYPA’s vice president for project and business development, said he was excited to tell the conference about the agency’s procurement until he realized that – with a request for proposals open and client confidentially applying – he was not free to discuss many of the details. The authority was pleased to receive more than 100 proposals offering all the technologies sought, Allen said.

“Our procurement goal when we pulled together this RFP was to hit three bullet areas: The Clean Energy Standard; we also wanted to meet our customers’ renewable goals; and we’re also seeking lower-cost renewable energy,” Allen said. “The CES will require about 29 TWh of renewable energy statewide by 2030. NYPA’s share is about 4 TWh, 1 TWh of which it is seeking in the current RFP.”

All NYPA projects – either wind, solar, hydro or biomass – will be required to be in service by 2022, with a minimum size of 10 to 20 MW, depending on the technology.

The most innovative aspect of the RFP is NYPA’s use of a prepaid power purchase agreement, in which the agency would serve as matchmakers between generators and loads. NYPA can only procure as much renewable energy as its customers express an interest in.

Retirement Issues

Doreen Harris, NYSERDA director for large-scale renewables, said that one new aspect of the CES procurement is the setting of minimum quantity requirements. “So for this year, our minimum procurement target is about 1.3 TWh, and should in November we not obtain that quantity, we would issue a second solicitation in 2017,” Harris said. “And this will continue … and will set the stage for what will be a really significant pipeline of projects both under development and in construction in the state.”

On Oct. 2, NYSERDA requested that the federal Bureau of Ocean Energy Management consider areas the state felt were best suited for offshore wind development. The selection process “really is the balance of all the uses of the ocean, including fishing, environmental questions and concerns, as well as cables and pipelines,” she said.

Asa Hopkins of Synapse Energy Economics addressed the fact that some older renewable generators won’t qualify for long-term contracts under Tier II rules. To be eligible, run-of-river hydroelectric facilities of 5 MW or less, wind turbines and direct combustion biomass facilities must have entered commercial operation and had their output included in the state’s baseline of renewable resources by Jan. 1, 2003. Under CES guidelines, they also must demonstrate that the renewable energy attributes of these resources are at financial risk.

“The existing independent New York resources are about 20% of the baseline or about 13% of the resources needed to get to the 2030 goal,” Hopkins said.

If these resources were lost, either by shutting down or by selling their environmental attributes and their energy to other jurisdictions, that could be a significant challenge for New York, he said.

“Opportunities for these resources to export their attributes are increasing,” Hopkins said. “Low market prices increase the risk of retirement. Just to reiterate, New York can only claim those resources for its goals if those attributes actually stay in New York. … Our estimate is that replacing these resources, if they are lost, with Tier I resources would cost New York ratepayers $1.1 billion, and our analysis indicates that there are other policy options that would retain some or all of these resources in New York for less than that.”

On an energy basis, these resources “are 47% hydro, 39% wind and the rest landfill gas, biomass and a little bit of solar,” Hopkins said. He added that in 2014, New York resources used for renewable portfolio standard compliance in Massachusetts were about 1 TWh, with about one-tenth of that amount used in Connecticut.

“These are fungible resources and they could be attracted back to New York depending on New York’s policy,” Hopkins said.

Efficiency Puzzle

New York’s position as a leader in energy efficiency is falling, said Karl Rábago, director of the Pace Energy and Climate Center. Lime Energy CEO Adam Procell said the reason is that “30% of those electrons, or kilowatt-hours, are wasted in our buildings.”

Procell recommended New York regulators avoid being like Florida. “In Florida they love to trumpet their 10-cent energy rate,” he said. “They’ve kept the rates very low; that’s what regulators do in Florida. But when you’re paying 10 cents/kWh to run electricity through 20-year-old equipment and fluorescent lighting fixtures that we took out in Mass. 15 years ago, that’s a very expensive energy bill. Customers care about their bills, not their rates.”

It’s not a good idea to force yourself into playing catch-up on ambitious clean energy goals, said Steve Wemple, director of Consolidated Edison’s Utility of the Future Team.

Con Ed has four different incentives or earnings adjustment mechanisms under the state’s Reforming the Energy Vision. Some are tied specifically to megawatt-hour reductions, as well as peak megawatts, the traditional programmatic incentives for utilities. The company has two new outcome-based incentives that measure the energy intensity of customers and the adoption of distributed energy resources. Con Ed is also developing a carbon intensity metric that it hopes to use as an incentive mechanism in 2019.

To elicit behavioral change, the company is changing its approach to the market. “We used to have rebate forms, but now it’s point-of-sale,” Wemple said. “We’re trying to work upstream to make sure vendors are stocking the more efficient appliances and making it easier for customers to realize those incentives.”

Con Ed is also trying to work through the school system. “Getting school kids to guilt their parents is a very effective tool, and it will pay off down the road,” Wemple said. “Hopefully those students will stay in New York state, and we won’t have the leakage into Massachusetts.”

Procell had the last word: “If New York backslides from 2018 to 2020, we won’t make it to our 2030 goals.”