New York Utilities Say State Should Allow Utilities To Develop, Own Large-Scale Renewable Generation To Meet Climate Goals

September 1, 2020

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In comments on a whitepaper from the New York State Department of Public Service (DPS) and the New York State Energy Research and Development Authority (NYSERDA), which had proposed mechanisms to meet the state's goal of meeting 70 percent renewable electricity by 2030 and achieving a carbon free power sector by 2040, the joint New York utilities said the New York PSC, "should allow the State’s electric utilities, should the utilities choose to do so, the opportunity to develop large-scale renewable generation."

"The White Paper estimates that achieving the 70 by 30 goal will require construction of an additional 11,809 MW of new on-shore wind and solar resources, generating 21,420 GWh of energy by 2030, an increase of more than 2,100 GWh per year for 10 years. The proposal laid out in the White Paper contemplates adding onshore large-scale renewable generation at triple the annual rate it achieved in the previous two decades," the joint utilities said

"In light of the immense challenge of meeting the ambitious clean energy goals of the CLCPA, the Commission should allow the State’s electric utilities, should the utilities choose to do so, the opportunity to develop large-scale renewable generation. The State’s large annual renewable generation goals mean there is significant opportunity for many different developers and development models to co-exist," the joint utilities said

"The State has made recent changes that have significantly altered renewable energy development, and which make it timely to reconsider utility interest in renewable generation ownership. Through its authorization of indexed RECs, the State has effectively placed the risk of energy market outcomes for renewable generation resources on customers, removing this risk from third-party owners of renewable generation projects. Additionally, the State, by legislative action, recently authorized NYPA to finance the development of new renewable generation in the state on behalf of its customers. This change permits NYPA to contribute directly to meeting the State’s ambitious renewable electricity goals but may result in competition for third-party renewable energy project developers from a government entity with the potential ability to pass costs directly on to its customers. Shifting market risks to customers and allowing government entities to participate directly in the renewable generation development business undercut previous rationales for the Commission declining to authorize renewable generation ownership by utilities: that third-party ownership was preferable because this protected customers from market risks, and that allowing utilities with their large customer base to participate in the renewable generation market would 'chill' third-party activity," the joint utilities said

"The Joint Utilities believe that the policy preference for third-party ownership of generation, established more than two decades ago due to a general concern about the ability of transmission owners to exercise market power in favor of their own generation assets, should be reconsidered in the context of renewable generation. NYISO now has operational responsibility for the transmission system, and regulators exert oversight for potential marker power concerns from generators. Moreover, renewable generation operates when the fuel resource (the sun or the wind) is available, and cannot be dispatched to take advantage, for example, of a transmission outage that could increase market prices. Finally, renewable generation projects, typically much smaller than large conventional generation plants, are unlikely to be able to exert market power due to their smaller size and intermittency," the joint utilities said

"The Joint Utilities request that the Commission authorize utilities to work with third-party renewable generation developers, under a 'build-transfer' model, to develop and finance renewable energy projects which would be owned by utilities upon commercial operation date, but where project development and construction risks would be carried by third-party developers, and developers would be compensated for bearing these risks," the joint utilities said

The joint utilities are Central Hudson Gas & Electric Corporation, Consolidated Edison Company of New York, Inc., New York State Electric & Gas Corporation, Niagara Mohawk Power Corporation d/b/a National Grid, Orange and Rockland Utilities, Inc., and Rochester Gas and Electric Corporation.

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