With the Biden administration pushing hard on renewable energy development and a more supportive FERC, New York now has the federal wind at the back of its ambitious clean energy goals set forth in the state’s Climate Leadership and Community Protection Act (CLCPA).
A few contentious details remain to be worked out, however, such as revising NYISO’s buyer-side mitigation (BSM) rules and deciding the fate of the state’s hard wrought carbon pricing proposal, state officials and FERC Chair Richard Glick told about 200 participants at the Independent Power Producers of New York’s (IPPNY) annual Spring Conference this week.
“2020 has ushered in a sea of change in the energy and environmental policy arena due to the coronavirus pandemic and the election, coupled with efforts to comply with the CLCPA,” IPPNY CEO Gavin Donohue said. “In New York there is an emphasis on how to build back better as we make our way out of the coronavirus pandemic.”
Donohue is a member of the state’s Climate Action Council (CAC), which charged with developing the plan for implementing the CLCPA and preparing a scoping plan by Jan. 1, 2022, for economywide greenhouse gas emission reductions. The CLCPA requires that 70% of the state’s electric load be served by renewable resources by 2030, and the procurement of 6 GW of solar by 2025, 3 GW of storage by 2030 and 9 GW of offshore wind by 2035.
State Regulator’s View
“We have now entered the era of decarbonization,” said John Howard, interim chair of the Public Service Commission. Carbon pricing “needs to be universal, meaning all the carbon inputs, and it needs to be at least nationally based.”
A national carbon tax “certainly will provide some of the market signals that the New York ISO and other ISOs have suggested, but I think [it] would also give us a more fair distribution of those new costs on customers and businesses through all sectors, from liquid fuels, natural gas and other carbon sources,” Howard said. “And I would hope that the Congress would listen to us.”
Regarding capacity markets, the most important thing is to deal with BSM, Howard said.
“I do not believe it is appropriate that [BSM] be charged for state-mandated initiatives, whether they be renewables, storage or other of the like,” Howard said. “It certainly will put us in New York at a disadvantage and already gives me concerns on how much the entire program will cost and add, I believe, unnecessary costs.”
NYISO in April put forward a plan to revise its capacity market rules, especially those on BSM, by this fall to address regulators’ views that they hinder the cost-effective deployment of state-subsidized resources like solar and wind. (See NYISO Outlines Goals for Capacity Market.)
“I do believe that FERC Chairman Glick and our NYISO will work together constructively to get over this hurdle, which I believe is our first near-term hurdle,” Howard said. “Failure to get over the hurdle will make us have to revisit … initiatives for varying resource adequacy. I’m hopeful that we can have a more amicable outcome, because by and large up until the mandated large renewable projects and storage, things have been going pretty well.”
Legislators’ Perspective
State Sen. Kevin Parker, chair of the Energy and Telecommunications Committee, said his top priority is fostering economic recovery coming out of the COVID-19 pandemic.
As for the energy sector, he listed his top three priorities as transitioning the 2.5 million vehicles in the state to other forms of energy, mainly electric; retrofitting tens of thousands of old buildings for energy efficiency; and supporting jobs and social justice in clean energy development.
“It’s not so much what goes into the pipe, but what comes out of the stack that is the ultimate factor we need to pay attention to,” Parker said. “I believe in natural gas as a bridge fuel … but a natural gas moratorium doesn’t take reality into account. … A gas moratorium is unnecessary.”
The CAC’s Power Generation Advisory Panel on Monday recommended that the full council adopt a moratorium on building new gas-fired power plants and related infrastructure — with the caveat that it did not achieve consensus on the idea. (See NY Power Panel to Recommend Gas Infrastructure Moratorium.)
“You have a PSC chairman who says he doesn’t want carbon pricing until it’s a national policy, but that is not even on the horizon, and how are we going to pay for all this clean energy infrastructure we need?” Parker said.
State Assembly member Michael Cusick, chair of the Energy Committee, said that with about two weeks left before the summer adjournment, the pace of legislation passage would pick up.
The Assembly on Monday passed A3768, “which will provide parity in net energy metering for fuel-flexible linear generators,” Cusick said. “It will be helpful moving forward in the state of New York. … Fuel-flexible generating equipment can be powered by a variety of clean fuel sources and can seamlessly transition between energy sources when necessary to maintain system reliability.”
Cusick said the Assembly “also recently passed A7136, which establishes a sales tax exemption for residential and commercial energy storage equipment, and storage is one of the priorities of our committee in the Assembly.”
View from FERC
Capacity market issues bumping up against state preferences for generating resources, particularly in ISO-NE, NYISO and PJM, have been at the forefront of regulatory debates, Glick said Wednesday.
“We may not necessarily see eye-to-eye at all times in terms of the proper role that the capacity markets should play and how they should interact with state-preferred electric generation resources,” Glick said. “There are certainly strong arguments about the impact state subsidies have on capacity prices and what that means for resource adequacy, but my guess is we could find some common ground.”
A series of commission orders in recent years has engendered very strong reactions from stakeholders, and a FERC technical conference on PJM’s market in March showed there is a general consensus that the current system is not sustainable, Glick said.
“RTOs may need changes to their energy and ancillary services markets to address greater levels of intermittency,” Glick said. “If we don’t act soon, the states are going to do it by themselves. … That’s part of why I think time is of the essence.”
The commission also is looking at transmission development to promote better regional and interregional transmission planning, as well as better cost allocation and interconnection processes, he said.
Regarding a moratorium on natural gas infrastructure in New York, Glick said his dissatisfaction with the commission’s approach to siting natural gas pipelines doesn’t mean he’s against pipelines.
“Sometimes they’re needed, sometimes not, and it’s best to consider them on a case-by-case basis,” Glick said.
COVID-19 Hit NYC Hard
Power demand in the continental U.S. trended up over the last couple of weeks, and demand is also tracking higher year over year, said S&P Global Platts’ Jared Anderson, who moderated a panel on the economic impacts of the COVID-19 pandemic on the power sector.
Overall, month-to-date demand as of May 8 was only 0.7% below non-COVID models, pointing to significant recovery from May 2020 on a weather adjusted basis, according to S&P data, with NYISO peak load averaging 16.4 GW in April, up 3% year over year.
“The picture has brightened considerably, both nationally and for New York,” said Adam Kamins, director at Moody’s Analytics. “New York is still operating more than 20% below what we would consider normal capacity. … That is significantly lower than the U.S., which is closer to about 10% below normal.”
New York and Massachusetts are by far the two states that are furthest from normal, which “is troubling, and the gap isn’t narrowing yet, but I would expect the gap will narrow in the month ahead,” Kamins said.
Retail sales increased in about half of all New York counties over the past year, but New York City posted an average decline of 24%, with Manhattan hit worse than the other four boroughs, Kamins said.
Chris Namovicz, head of the electricity, renewables and coal modeling team at the U.S. Energy Information Association, said the agency projects that economic conditions will continue to improve nationally as the pandemic lessens, and that total 2021 electricity demand is up 2.1% compared to a 3.9% decline last year.