City vs. State
ALBANY, N.Y. — With Democrats now in control of both chambers of the state legislature, New York power producers might reasonably expect faster legislative support for Gov. Andrew Cuomo’s goals of 70% renewable energy by 2030 and a carbon-neutral grid by 2040.
But uncertainty still looms around those efforts, according to John Reese, senior vice president of Eastern Generation and chairman of the Independent Power Producers of New York (IPPNY).
“With all the changes going on, it’s hard to assess whether we’re going down the right path or a blind alley,” Reese said Wednesday at IPPNY’s 33rd annual Spring Conference.
A New York City resident, Reese cited a recent move by the mayor and City Council to improve energy efficiency in buildings and to revive the Champlain Hudson Power Express project to bring 1,000 MW of Canadian hydropower to Manhattan.
“IPPNY has been a long opponent to that project, particularly when it comes to the issue of carbon,” Reese said. “If you’re moving existing resources from one place to another, you’re not saving any carbon; you’re playing a shell game. … Certainly the preference would be to have new New York resources that contribute to the tax base, that contribute to jobs.”
The Climate Mobilization Act passed by the City Council on April 18 includes a definition of renewable energy credits that conflicts with the state’s Clean Energy Standard regarding the role of hydroelectric resources, said State Sen. Kevin Parker (D), chair of the Energy and Telecommunications Committee.
“The city’s language would allow certain large-scale hydro resources, which currently are not eligible [for RECs] under CES due to their evolving empowerments, that are not sources of methane emissions, to be eligible for the city’s program, hence the conflict,” Parker said.
“The conflicting RECs mean that the city’s end consumers and taxpayers would need to pay twice, once for the city’s REC and then again for the state’s REC [for other resources], and that Con Ed would be required to buy under the CES … which would require extra payment for Con Ed to secure eligible RECs,” Parker said.
The city’s program to import non-CES-eligible Canadian hydro also sends a negative signal to renewable energy investment in the state, especially for offshore wind, he said.
State Assemblymember Michael Cusick (D), chair of the Energy Committee, said he and Parker co-sponsored legislation that would require a feasibility study on achieving the state’s clean energy goals, “to support the incredible growth in offshore wind, energy storage and other resources.”
“The bill passed out of our committee, and I’ve spoken with people on getting that language in whatever package we have at the end of the session,” Cusick said, adding that he would also be pushing legislation on grid security, particularly cybersecurity.
IPPNY CEO Gavin Donohue thanked both lawmakers for “leading the charge” in dealing with the New York Power Authority in the competitive marketplace and legislating public procurement procedures through “a combination of practicality and reasonableness.”
NYISO Interim CEO Robert Fernandez touched on the same subject when he said, “The focus today is on buyer-side mitigation.
“At the beginning [of NYISO markets 20 years ago], many people were concerned about suppliers setting artificially high energy prices and improper wealth transfers,” Fernandez said. “Instead, today we grapple with uneconomic entry, subsidies and price suppression in the capacity market.
“We have mandatory buyer-side mitigation rules, we apply them, and it’s the economics of a particular project that will determine whether that will be subject to an offer floor or not,” he said. “That’s all that’s going to determine that. There are no outside influences telling us how to move the meter on buyer-side mitigation testing.”
Carbon Pricing and Technology
Fernandez also referred to NYISO’s work on pricing carbon into its wholesale energy markets, which has relied heavily on assistance from consulting firm Analysis Group.
“I’m hopeful that with [Analysis Group senior adviser] Sue Tierney’s help we can get the state on board and get this concept down to FERC for approval,” Fernandez said. “I believe that the chair of our Public Service Commission is genuinely receptive to it and is just asking us to demonstrate better the benefits of carbon pricing over the existing [zero-emission credit] and REC programs.” (See More Details Divulged on New NYISO Carbon Pricing Study.)
Dale Bryk, the governor’s deputy secretary for energy and environment, highlighted energy efficiency as a “huge economic engine” employing thousands of electricians and contractors throughout the state.
Cuomo in January proposed increasing the state’s renewable portfolio standard from 50% to 70% by 2030, nearly quadrupling its offshore wind energy goal to 9 GW by 2035, doubling distributed solar generation to 6 GW by 2025 and deploying 3 GW of energy storage by 2030. (See New York Boosts Zero-carbon, Renewable Goals.)
Bryk dismissed the idea of the state using carbon offsets as an alternative to reducing pollution as “some kind of get-out-of-jail free card.”
“If you look at the experience in New York with Regional Greenhouse Gas Initiative offsets or components, they were never used,” Bryk said. “The way the program was designed, that really never made sense.
“If we’re talking about decarbonizing every sector, there really isn’t any place to get offsets, so the framing is different, but the concept of carbon neutrality and that flexibility is absolutely critical,” he said. “It’s not always linear, it’s not always numeric … we’re all-in for performance metrics, but we want to develop them in a professional way.”
Mark Younger of Hudson Energy Economics said Bryk had neglected to address carbon pricing. “I don’t see how you can do an efficient change without internalizing the externalities … which all the literature shows lets you put the solar resources in an area where they knock out carbon rather than just happen to get subsidies from the state. So how do you do this without putting a price [on carbon], not just in the electric sector, but in all the sectors?”
“We have carbon pricing with RGGI, but I think of it as a cap on pollution that’s going down over time,” Bryk replied. “You sell pollution permits, that’s your price. The driver is the cap. We want people to have a price signal and see the long-term price signal and declining cap. What I care about is pollution going down … so you don’t only have a price, you don’t lead with price. We want to have both the price signal, the cap, and energy efficiency policies, because it’s not all about price.”
Jacob Worenklein, chairman of Ravenswood Power Holdings, which owns the largest power plant in New York City, said the great challenge is technology, “because we can in fact reduce carbon to zero right now, but nobody would do so … because the cost would be so huge.”
“When will we get the technology and when can we expect to begin to test technology that will enable us to do exactly what we’re talking about, say, by the 2035 or so time frame?” he asked.
Bryk likened the idea of encouraging new technologies to that of being “proactive with” workforce development — “and not just assume that that’s going to happen because the investment is there.”
“Just because you have policies … even with the price signal, that doesn’t bring you all of the technological innovation that we may need,” Bryk said. “What can the state be doing to help drive that R&D work and the commercialization demo projects?”
– Michael Kuser