By William Opalka
New York state is proposing to invest $1.5 billion in large-scale renewable energy development over the next decade under a revised procurement strategy to reduce costs.
The New York State Energy Research and Development Authority made the proposal in a report released early this month. “The current approach has been good, but we can do better,” said Richard Kauffman, the state’s chairman of energy and finance.
Unlike most state renewable portfolio standard programs, which delegate renewable purchases to utilities, New York designated NYSERDA to act as a central procurement agency.
NYSERDA said the $1.5 billion investment is comparable to the state’s spending since it created its RPS in 2004. The programs have led to the construction of 1,900 MW of clean generation, although the RPS goal of 29% for this year will not be met.
A 32-MW project on Long Island is the only large-scale solar project in the state, according to the Long Island Power Authority. The American Wind Energy Association says New York had 1,749 MW of installed wind capacity at the end of 2014.
The report recommends several new strategies that it said would allow it to obtain renewable resources at lower costs, optimize siting of projects and extend benefits to customers.
It said long-term bundled power purchase agreements would provide developers predictable revenue streams, allowing them to obtain cheaper financing and reducing the levelized cost by at least $11/MWh. Securitizing debt and opening projects to financing vehicles such as “YieldCos” — publicly traded companies formed to own operating assets that produce a predictable cash flow — could reduce costs further.
It also invited comment on whether utilities should be permitted to bid against other developers for renewable projects, saying the competition could also reduce costs.
Procurements should take into account not just price, the report said, but also plant retirements, price forecasts and integration with storage and demand response to ensure projects are sited where they provide the greatest system and customer benefits.
It called for ways to address insufficient demand volumes, contract durations and credit supports that it said had crimped voluntary renewable purchases.
A 10-year budget commitment of $1.5 billion would stimulate investment and help renewables become self-sustaining without subsidies.
The report was filed in response to a Feb. 26 New York Public Service Commission order laying out the role of renewables under the Reforming the Energy Vision overhaul of the state’s energy industry. (See New York PSC Bars Utility Ownership of Distributed Energy Resources.)
The PSC will hold a technical conference to discuss the report, with initial public comments due July 22.