By William Opalka

New York policymakers grappled last week to find the most cost-effective way to reach the state’s 50% renewable energy target by 2030 while maintaining a competitive electricity market.

The New York Public Service Commission held a technical conference June 9 to discuss the state’s proposed Clean Energy Standard, the roadmap intended to transition the state away from fossil fuel — and eventually nuclear — generation (15-E-0302).

“Without question, thinking about how we are going to get new resources into our mix is key to our success,” PSC Chair Audrey Zibelman said.

At the conference, industry stakeholders debated whether power purchase agreements, renewable energy credits or some combination of both would be the best way to achieve renewable goals without exposing consumers to price risks in an environment of low natural gas prices. The state is moving away from the current centralized procurement by the New York State Energy and Research Development Authority.

Under both the PPA and REC approaches, the total payment per megawatt-hour, including energy and capacity, would be set at the start of the project. Under fixed-price RECs, the generator would be exposed to fluctuations in commodity value (energy and capacity revenue).

Under a bundled PPA, ratepayers would accept commodity price risk, with the net program cost determined based on the difference between the PPA and energy and capacity values. “Where at any point in time the value of energy/capacity exceeds the contracted PPA amount, the program cost per megawatt-hour becomes negative (i.e., [load-serving entity] customers benefit from paying the renewable electricity generator less than the market value of energy and capacity),” explained the PSC staff’s cost study, which was released in April.

The study assumed PPAs and RECs would be used equally to procure the 5.2 GW of Tier 1 renewables envisioned by 2023. Those resources would be dominated by land-based wind (38%) and solar power developed under the NY-Sun initiative (52%). The remainder would be supplied by utility scale solar, bioenergy, hydropower, imports and offshore wind. (See NYPSC: Minimal Cost to Meet 50% Renewable Goal.)

New York currently has about 2.5 GW of renewables: almost 2,000 MW of wind resources and 500 MW of solar.

Gavin Donohue, president of the Independent Power Producers of New York, said the REC-only approach is what brought the state to its current level of success. “It takes the risk away from ratepayers and puts it solely on … the generator sector,” he said. “We feel very strongly that if it’s not broke, don’t fix it.”

Donahue said long-term fixed contracts wouldn’t permit consumers to benefit from innovations that might lower power prices.

“The PPAs don’t reflect the changes over the long term in the marketplace,” he said.

Anne Reynolds, executive director of the Alliance for Clean Energy New York, said developers who belong to her group say the current REC model has limitations.

“Yes, the REC-only approach has gotten us a good deal of renewables built, but if you look at the pace of what we’ve accomplished over the past 10 years, it is not enough to get us to 50%,” she said.

“We think the way to do that is to attract the maximum number of developers we can to New York so that you get a robust lineup of projects and you get good competition.”

Consumers would benefit from long-term low prices and generation that doesn’t rely on fossil fuels, she said.