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N.Y. Agency: "Preferred" Mechanism For Large-Scale Renewables Is RFP Allowing Utility-Owned Generation To Compete With PPAs

June 1, 2015

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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com

The "preferred" mechanism for promoting large-scale renewable (LSR) development in New York is an open-source solicitation using a state entity as soliciting entity and the electric distribution companies as the PPA buyer or project owner, a NYSERDA report concludes

Based on the criteria in NYSERDA's study of large-scale renewable development, "the preferred LSR support mechanism is the open-source solicitation using a State entity as soliciting entity and the EDCs as Bundled PPA buyer or project owner," the report said.

"This assessment finds that an open-source competitive solicitation is the option most likely to deliver the largest quantity of LSR at the least cost. By creating competition between PPA and utility-ownership options, this policy is expected to attract the broadest range of projects in response to periodic solicitations, resulting in the greatest leverage for annual LSR planning budgets," the report said.

"Open-source solicitations may significantly alter the value proposition for utilities. Utilities would have the opportunity to acquire new renewable generation projects pursuant to bid contracts and earn a regulated rate of return on the investment if the bid projects have competitive merit. On the other hand, they would be purchasers under PPAs if PPAs are determined to have competitive merit," the report said.

The report also offered alternative mechanisms, such as state or EDC of procurement various contracts without the allowance for utility ownership.

For PPAs, the report notes that a key component of utility PPA procurements is the establishment of cost recovery mechanisms which would provide strong assurance to utilities that the net cost of the products (energy and RECs) purchased under a PPA are recovered from distribution customers. "Because net costs would be recovered from (or net benefits would accrue to) distribution customers on an equal basis, there should be no impact on competitive retail markets," the report said.

The New York PSC sought comments on the report, with questions including:

i. Should utility owned generation (UOG) be allowed to compete with privately-owned projects in an open-source solicitation?

ii. If so, should utility participation be capped at a certain percentage of total projects or percentage of individual project ownership? At what percentage levels should these caps be set?

Case 15-E-0302

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