Amidst the recent ups and downs in wind markets across the U.S., in 2013, New York State saw its stream of project development slow to a trickle. Although some influencing factors lie beyond the reach of state-level jurisdiction, there are real and achievable steps that New York can take to reinvigorate the market and put development back on track.
The case for wind power is as strong as ever. It continues to be the most cost-effective technology for ensuring fuel diversity and a non-polluting energy supply, and as more energy planners turn their focus to grid resiliency and energy security, the complementary role of wind power with clean on-site generation is an increasingly valuable asset. In order for New York to make additional progress in using its domestic wind resources, the industry needs certainty, consistency and the reassurance of a long-term commitment beyond 2015, which is the current expiration date of the state’s renewable portfolio standard (RPS) program. Policymakers are already engaged in the initial stages of program evaluation, and early action in 2014 will be crucial to ensure continued investment.
Back in 2004, when the RPS was first adopted, New York State had a mere 48 MW of wind power capacity. Over the next nine years, thanks in large part to this innovative program, that number increased beyond 1.6 GW, which is over 4% of the state’s nameplate generating capacity. Despite this progress, the state is significantly behind in meeting the target goal of 30% renewables by 2015, which translates to 10.4 million MWh of renewable energy production annually for the customers of the investor-owned utilities.
However, the RPS is not adding clean energy to the state’s generation fleet just for its own sake. It is also about increasing the diversity of New York’s energy supply, reducing air pollutant emissions and using investment in clean energy infrastructure as a tool to promote statewide economic development. Evidence of these benefits has been clearly demonstrated. In the New York State Energy Research and Development Authority’s (NYSERDA) most recent annual program review, it noted that RPS Main Tier (e.g., wind) projects are anticipated to add over $1.1 billion to the New York economy through their respective operating lives, while contributing to significant reductions in pollutant emissions.
The lack of forward progress with the RPS in 2013 can be attributed, in part, to the state’s challenges in navigating shifting energy markets and policy uncertainty at the federal level, which led to prolonged delays in the procurement cycle. The good news is the review process presents program administrators with an opportunity to explore different approaches to long-term contracts that better reflect changing marking conditions. There is also potential to gain fresh perspectives from New York’s new guard of energy leaders at NYSERDA, the New York State Public Service Commission (PSC) and within the office of Gov. Andrew Cuomo, D-N.Y.
As New York’s review of the RPS gains traction going into 2014, policymakers will soon be setting a course for the future of this and other statewide initiatives in support of clean energy and energy efficiency. Pending an extension of the program, ratepayer collections for new RPS projects are scheduled to end in 2015. At the end of 2012, NYSERDA’s progress at achieving the 2015 target fell slightly below 50%, and there are previously collected funds that remain unallocated. In public discourse, the state hasn’t strayed from its overarching commitment to clean energy, so falling short of the 2015 goal isn’t necessarily a coup de grâce. However, there are some looming threats to the ability of the RPS to continue a meaningful level of support for wind power.
In particular, there are concerns that funds earmarked for central generation, primarily wind, may be diverted to other technologies or even other programs, such as Gov. Cuomo’s new Green Bank initiative, which is still in the very early phases of development. That said, many stakeholders are hopeful the Green Bank and support for other technologies will be a complement to wind power rather than its undoing, especially because a comprehensive energy policy that effectively addresses climate change, air quality and economic development necessitates an all-of-the-above approach for clean energy technologies.
The preferred road map for development of New York’s wind energy capacity includes extending the RPS beyond 2015 with continued ratepayer collections and a commitment to doubling installed land-based wind capacity by 2020. New York should simultaneously jump-start offshore wind development, which could begin with procurements by the New York Power Authority and Long Island Power Authority. The state’s procurement strategy must include competitive requests for proposals twice a year under the RPS and should utilize either contracts for differences or require utilities to enter into long-term power purchase agreements with cost recovery as a hedge against increased gas prices. In addition, some combination of the two Green Bank products could be used to help lower capital costs for project developers and, in turn, for the state and ratepayers.
Beyond a commitment to wind power procurement, transmission upgrades to facilitate project development will also help stimulate the New York market. As anyone who is familiar with New York’s grid will know, eliminating the bottlenecks between upstate wind resources and downstate demand is crucial, yet remains elusive. The need is at least acknowledged, though, and initiating transmission upgrades to help facilitate renewable energy development is an explicit action item of Cuomo’s N.Y. Energy Highway Blueprint. The PSC is now reviewing proposed projects in various Energy Highway-related proceedings, but the state needs to ensure that these upgrades and new lines will, in fact, be effective in facilitating wind development rather than fossil fuel generation. There is good reason to prioritize wind resources: Doing so will help deliver lower-cost power to the downstate area while providing economic-development benefits to the host communities located upstate, and can also help offset the loss of tax dollars from shuttered fossil plants.
New York has seen some degree of progress in siting, but it has yet to tap into a perfect formula. The Power NY Act of 2011 re-established a statewide process, referred to as Article X, for the siting of generating facilities 25 MW or greater. Prior to the enactment of Article X, new power plant applications were subject to a variety of state and local siting laws, chief among them being the New York State Environmental Quality Review Act (SEQRA).
When the new Article X was enacted, projects already under development were given the option to continue with SEQRA or switch to the Article X process, which is administered by a multi-agency siting board.
In theory, the new Article X process provides greater certainty and a more streamlined process, with the added benefit of allowing the siting board to overrule any local law it deems unreasonably burdensome. It will be difficult to fully judge the effectiveness of Article X until more projects have gone through the process, but known concerns can and should be addressed in the meantime.
One major issue is the abundance of erroneous information and small, but voluble, pockets of opposition that appear in areas seeing early stages of project development. As such, community-level stakeholders continue to need education and support to enable fact-based decision-making. Whether through SEQRA or Article X, the state should help wind developers address community concerns but not let vocal minorities delay or prevent projects that meet environmental standards.
Wind continues to play an incredibly important role as a cost-effective technology that provides fuel-mix diversity while helping the state mitigate the price volatility of natural gas. It has also been an economic boon to upstate communities and offers a secure source of clean central generation to match clean distributed generation. (This point is particularly salient with solar power, given the complementary times, both daily and seasonally, of these generation types.) Fortunately, none of the aforementioned recommendations – ensuring continued program activity and funding, supporting transmission needs, and addressing siting concerns – is a major departure from the state’s past initiatives in renewable energy and environmental planning.
However, concrete actions in the coming year, ideally sooner rather than later, are necessary to maintain existing investments and ensure wind development continues in New York. w
Spotlight: New York
Can New York Reset Its Wind Energy Destiny?
By Valerie Strauss & Laura Lyman
Refining policy, enhancing transmission and energy planning, and addressing siting challenges can help the state reach its full potential.
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