The New York State Public Service Commission (“PSC”) recently issued an order that will shape New York’s energy portfolio for years to come. The Clean Energy Standard (“CES”), issued and effective August 1, 2016, is a bold initiative that mandates renewable energy supply 50 percent of the State’s electricity needs by 2030. New York seeks to achieve this goal by focusing on three major areas: (1) large utility scale solar, wind and other renewables; (2) offshore wind; and (3) subsidized nuclear power. The expectation is that by 2030, New York greenhouse gas emissions will be reduced by 40 percent from 1990 levels.
Currently, New York generates about 23 percent of its electricity from renewable resources, but about 80 percent of that comes from hydroelectric. This means that solar, wind and non-hydro renewables account for only five percent of New York’s current electricity requirements.
In order to meet these ambitious goals, solar and wind generation will have to substantially increase. The State believes that there is a lot of potential in offshore wind in the Atlantic Ocean, and the CES sets out a path to developing this resource. The Deepwater Wind Project, off the coast of Montauk, Long Island, is currently going through the regulatory approval process with support from the State. The State hopes that this 90 megawatt wind farm is only the beginning of tapping into offshore wind potential. It is unclear what role offshore wind in the Great Lakes will play, and whether or not it will receive the same State support.
The plan to subsidize nuclear power is somewhat surprising given Governor Andrew Cuomo’s historic position on nuclear energy… Most notably, Cuomo has called for the permanent shutdown of Indian Point Energy Center, a nuclear power plant about thirty miles north of Manhattan. In marked contrast, the State is planning on entering into long-term subsidized contracts with two “at risk” nuclear power plants in upstate New York. Although these plants are no longer competitive in the New York market due to their high operation and maintenance costs, the fear of losing up to 17 percent of the State’s “clean” energy from nuclear power has made the nuclear subsidies a key component in reaching the 2030 Renewable Energy Standard (“RES”).
The CES order reinforces the Governor’s opposition to natural gas – as the resource that many considered to be the bridge between today and 2030. Governor Cuomo banned high volume hydraulic fracturing in New York in December of 2014. Doubling down in April of this year, the Cuomo administration denied necessary water quality permits for the federally approved Constitution Pipeline which proposes to deliver Marcellus formation natural gas from Pennsylvania to New York and other northeast markets.
The CES sets lofty goals in a relatively short amount of time and will have significant impacts on energy generators and customers. The CES requires utilities and retail energy service providers to build new renewable facilities, enter into purchase agreements with other renewable energy generators, or otherwise purchase Renewable Energy Certificates to meet the new RES. Whether the “50 by 30” goal can be met, and the economic impacts absorbed, remains to be seen.