By Michael Kuser
ALBANY, N.Y. — Carbon pricing, siting challenges for new renewables and new funding for energy storage initiatives all topped the discussion at the annual fall conference of the Alliance for Clean Energy New York on Oct. 9-10, which opened in the wake of a renewed warnings about global warming.
State University of New York Chancellor Kristina Johnson pointed to the newly released report by the U.N.’s Intergovernmental Panel on Climate Change that said catastrophic effects will likely occur sooner than previously thought and that preventing them will require unprecedented global cooperation. (See IPCC: Urgent Action Needed to Avoid Climate Trigger.)
Johnson, a former U.S. undersecretary of energy, said some people believe that any construct that would reduce greenhouse gas emissions enough to stop the planet from getting warmer would cost too much, but SUNY analysis conducted with the Boston Consulting Group determined it would “cost $1 trillion invested over 25 years.”
That works out to $40 billion a year to decarbonize the electric sector, electrify personal vehicles, modernize the grid and ramp energy efficiency, she said, “so that’s basically a grande latte per household per week. Who in their right mind wouldn’t do that?”
New York State Energy Research and Development Authority CEO Alicia Barton said her organization is “very close” to being able to issue the first request for offshore wind proposals, and it announced $40 million in energy storage funding incentives through the NY-Sun initiative.
“We’re not only serious about setting the targets but serious about getting the projects built,” Barton said.
Sunrun Chief Policy Officer Anne Hoskins, a former member of the Maryland Public Service Commission, shared her experience going to Puerto Rico to help with recovery from last year’s hurricane.
“We are partnering with three local installers … and the amazing thing is how everybody I talked to — the cab driver, the governor — all want distributed solar,” Hoskins said. “It’s because they realize they need to do something different.”
Participants also discussed New York’s effort to price carbon into its electricity market. The state’s Integrating Public Policy Task Force (IPPTF) has been meeting almost weekly this year to model the impact of carbon pricing on emissions and prices in New York and neighboring regions. (See ‘Negative Leakage’ from NY Carbon Charge, Study Shows.)
“A lot depends on the assumptions being used … low gas price projections may not be realized, and if natural gas prices spike, then the dollar value of the environmental benefits rises, too,” said former NYSERDA head Frank Murray, now with the Natural Resources Defense Council.
Couch White attorney Michael Mager, who represents a coalition of large industrial, commercial and institutional energy customers, said, “The past six months have seen many new state initiatives and mandates on things like storage … and we haven’t had time to digest the analyses released over the past month or so by Brattle [Group], [Resources for the Future] and Daymark [Energy Advisors].”
Mager characterized a carbon charge as potentially the biggest market design change since NYISO was formed in 1999 and said his clients have two main concerns: What are the likely consumer impacts, and what are the environmental benefits?
“We’re also concerned about how the Public Service Commission sets the social cost of carbon and how they update it, and how often,” Mager said. “And we’re concerned about the potential for double cost recovery.”
In addition, he said that two out of three recent analyses indicate emissions would increase in New York state and drop in the region as a result of implementing a carbon charge.
“We’re undecided, not yet opposing, and may never oppose,” Mager said.
Christopher LaRoe of Brookfield Renewable Energy Group said a carbon adder may be the best way to achieve the state’s aggressive policy goals. He said his company provides the environmental benefits sought by the state but does not get compensated for it.
The state “recognizes the value of maintaining existing baseline resources, and yet you go incremental to that to achieve your 50[% renewables] by 30 goals,” LaRoe said, referring to the state’s Clean Energy Standard target. The PSC didn’t see fit to provide a revenue stream for Tier II resources, outside of a maintenance tier, which is “basically a nightmare,” he said.
Brookfield has lobbied to value Tier II resources at 75% of the Tier I price: “Not quite a made-up number, but it was meant to provide a discount off of the Tier I price,” LaRoe said.
That effort failed at the last minute in the legislative session this year, but FERC would like to see progress by the states and grid operators putting their policies and markets together, so hopefully New York “can get there voluntarily and not through coercion,” LaRoe said.
Clean Energy Progress
Anne Reynolds, executive director of ACE NY, highlighted progress over the past year, including new offshore wind targets, energy storage programs and energy efficiency targets.
“NYSERDA completed their first Tier I procurement, awarding contracts for 3.2 million more megawatts than they set out to do, and they issued the second Tier I procurement on schedule, delivering the much-needed certainty and regularity in the Clean Energy Standard procurement process,” Reynolds said.
In addition, Gov. Andrew Cuomo announced an ambitious energy efficiency goal of 185 billion Btu of savings by 2025, she said.
“Energy efficiency was a missing piece of the puzzle last year, not just because it can save ratepayers money and it’s good for the environment, but because under the CES, when they determined the Tier I, they assumed a lot more energy efficiency than New York was then achieving,” Reynolds said.
However, “developers still need efficient and predictable processes for permitting large-scale wind and solar under Article 10,” she said, referring to the state law governing the siting of generating facilities.
“Since last October, there’s been real progress with the queue itself, with one project certified, four projects deemed complete [and] one additional application. But in that same year, 21 new projects embarked on the process,” Reynolds said. “The process in itself in the last year hasn’t gotten faster or more predictable.”
Peter Olmsted, assistant secretary for energy to Cuomo, said, “We need to double down on collaborating with each other,” and that Article 10 process improvements should be coming faster now with the appointment of Sarah Osgood, director of policy implementation at the Department of Public Service, to speed implementation.
Osgood said there are currently 34 active projects in the Article 10 pipeline, 31 of them renewable energy projects.
“Overall we have over 6,300 MW of generation capacity proposed, three-quarters of it renewable energy,” Osgood said. “The projects are split pretty evenly between wind and solar, but we are noticing that the projects that came into Article 10 earlier tend to be more large-scale wind. We’re starting to see a little bit of a shift to have more solar entering the pipeline.”
David Gahl, director of Northeast state affairs at the Solar Energy Industries Association, said that some shortcuts have been taken on value of distributed energy resources (VDER) compensation.
“Right now, the VDER provides compensation for the avoided pollution, and that’s great, but I think some decisions were made in determining what that value should be that essentially shortchange what a number of solar projects or DER projects should receive,” Gahl said.
“There are little changes on the margins that have reduced that compensation, and ultimately that’s probably not the direction the state wants to go if it wants to put more DER on the system,” Gahl said. “We shouldn’t take shortcuts, shouldn’t shave off value.”
Jeff Bishop, CEO of storage developer Key Capture Energy, said there are several frameworks to consider and that “as we move to the energy future, there’s a role for all the new technologies.”
VDER doesn’t include hydro, biomass, small wind or PV, he said, “but there is a role for storage … we have to be sure that technologies get paid for all their attributes.”
Dan Hendrick, head of external relations for Clearway Energy, said New York is heading in the right direction, but with considerable gaps.
“There’s a talk of devaluing in a five-year timeline, but some of these facilities generate for 30 years,” Hendrick said. “Con Edison has only 8 MW of community-distributed generation in the pipeline around New York City.”
Michael Gerrard of Columbia Law School reviewed some of the legal history around siting requirement waivers and the tug of war between state and municipal officials.
“The main difference between the old version of Article 10 and the new is that the former had the phrase ‘unreasonably restrictive,’ which has been supplanted by the phrase ‘unreasonably burdensome,’” Gerrard said. “There’s no clear explanation anywhere of why that change was made or what it amounts to. My own view is that it probably means that economic considerations can certainly be a factor in addition to everything else that used to be considered.”