Cracks in the Facade of NY Climate Law – Watts Up With That?

Roger Caiazza

After five years of hype, several new reports indicate that New York’s Climate Leadership & Community Protection Act (Climate Act) is not going as planned. Maybe there is hope that ill-considered net-zero transition plans can be stopped before they do irreparable harm to the country.

Clean Energy Standards Biennial Report

The Climate Leadership & Community Protection Act (Climate Act) requires the Public Service Commission (PSC) to issue a review for notices and comments that consider “(a) progress in

meet the overall target for the deployment of renewable energy systems and zero emission sources,

include factors that will or are likely to frustrate progress toward the goal; (b) system distribution by size and load zone; and (c) annual funding and expenditure commitments. The recently released Clean Energy Standards Biennial Review Report (“Biennial Report”) addresses several aspects of these requirements.

The Biennial Report compares the progress of renewable energy deployment relative to the Climate Act’s goal of getting 70% of New York’s electricity from renewable sources by 2030 (70% goal).

Section 5 summarizes the “Path to the 70% goal”. The description of Table 8 “Summary of progress” states:

Assuming a base case load forecast of 164,910 GWh in 2030 as mentioned above, the 70% target is equal to 115,437 GWh. Table 8 below summarizes the contribution to the objective of renewable energy currently operational and contracted, as mentioned above in Section 2 and Section 4 of this Report. In addition, the project of 10 GW of distributed generation in 2030 is safe outside the CES framework.

This illustrates Table 8, (highlights added):

With these conservative assumptions, the amount of renewable generation from operational sources and awarded/contracted in 2030 amounts to 73,292 GWh. In the base case forecast for the 2030 statewide electricity load, there is a renewable energy supply deficit of 42,145 GWh which must be resolved through procurement in the future in order to reach 70% of the target of 115,437 GWh.

Consider these numbers in context. There is a recognized gap of 42,145 GWh that is greater than the number of operational renewable generation in 2022, 2022 renewable energy imports, and generation from projects operational after 2022 (37,692 GWh). Trying to bridge that gap is an ambitious challenge.

Source: Clean Energy Standard Biennial Review Report

While it is encouraging that they admit there is a problem, the solutions they suggest maintain the fiction that they can be done. The Biennial Report proposes to expand renewable buildings to cover the gap and meet the target.

To fill the gap in demand, three annual Tier 1 requests – for 2024, 2025, and 2026 – have now been scheduled and will aim for projects that can be implemented in 2030. However, the amount sold in the request must be adjusted to secure the required amount of 42,145 GWh . The analysis shows NYSERDA should obtain approximately 14,048 GWh per request, assuming no project attrition, or, assuming a 30% attrition rate, a total of 20,068 GWh per request. This volume is higher than the annual procurement amount of 4,500 GWh per Tier 1 demand (before attrition) estimated in the CES 2020 White Paper and the CES 2020 Order.

The State’s best efforts so far to demand renewables are lower than required. The report acknowledges that “the maximum annual new project development rate will be in the range of 6,000-7,000 GWh per year at least in the near term” and is subject to a number of conditions. Table 9 below illustrates whether these reports are possible.

Source: Clean Energy Standard Biennial Review Report

Even under the revised assumptions, the PSC estimates that the 70% renewable energy target will not be achieved until 2033 when historical renewable resource deployment is taken into account. They still can’t let go of the narrative that renewable resources can be deployed on a schedule close to the Climate Act’s mandate. I don’t think this approach is feasible.

Supervisor’s Report

On July 16, 2024, the New York State Comptroller’s Office released an audit of the New York State Energy Research and Development Authority (NYSERDA) and the Public Service Commission (PSC) on implementation efforts for the Climate Act titled Climate Act Goals – Planning, Procurements. , and Progress Tracking (“Supervisor Reports”). This report is particularly gratifying because it confirms the long-held argument that the cost estimates of the Climate Act are unsatisfactory.

The Audit Highlights section of the Oversight Report lists key findings and key recommendations:

Key Findings

While the PSC and NYSERDA have taken reasonable steps to plan for the transition to renewable energy in line with the Climate Act and the Clean Energy Standard, the plan does not include all the important components, including assessing the risks to meeting goals and projected costs. in particular:

• The PSC uses outdated data, and, sometimes, incorrect calculations, for planning purposes and has not begun to address all the current and emerging issues that may increase electricity demand and produce lower projections, such as the increased push for the transition to electric vehicles in the year 2035. and cancellation or delay in renewable energy projects. Between 2005 and April 2023, 12% of contracted large-scale renewable projects were cancelled.

• The costs of transitioning to renewable energy are not known, nor are they reasonably estimated. In addition, the source of funding to cover these costs has not been identified, so ratepayers are the main source of funding. The lack of alternative sources of funding increases the additional risk that the State will be able to achieve its goals in a timely manner. Data shows utility costs have risen sharply over the past two decades and more New Yorkers are struggling to pay their utility bills.

• The PSC has taken steps to address a number of risks and issues; However, it has not yet begun to formally review progress towards the Climate Act’s goals with updated generation and electricity demand forecasts. While the PSC notes that it has until July 2024 to start this assessment, waiting until that point to review all the efforts and costs of the transition to renewable energy increases the risk that the targets of the Climate Act will not be met within the stipulated period.

Finally, a formal back-up plan has not yet been established if the objectives of the Climate Act are found to be unachievable within the defined time frame, unless the PSC suspends or modifies its obligations under the Climate Act and relies on the continued use of fossil fuels to generate. electricity until enough renewable power plants are developed. However, continuing to use fossil fuels as a back-up plan will delay emissions reductions and increase the burden on ratepayers by forcing them to continue supporting fossil fuel generation that may be retired – including the additional cost of infrastructure to transport fossils safely. fuel to where it will be used to produce energy.

Key Recommendations

• Initiate a comprehensive review of the required Climate Act, including assessment of progress toward goals, distribution of systems by burden and size, and annual funding and expenditure commitments.

• Continually analyze existing and emerging risks and known issues to ensure they are evaluated and addressed to minimize impact on the State’s ability to meet the Climate Act’s goals.

• Conduct a detailed analysis of cost estimates for transitioning to renewable energy sources and achieving the goals of the Climate Act. Periodically update and report the results of analysis to the public.

• Determine the extent to which ratepayers can be responsible for covering the costs of implementing the Climate Act. Identify potential alternative funding sources.

The Albany Times Union noted that:

Power industry experts interviewed by the Times Union said when the legislation was passed, there was no analysis of what could be done and what it would cost, and no real plan to decommission the 70-year-old power grid. This week, about 85 percent of the electricity supplied to New York City and Long Island comes from gas and oil.

John Howard, who was a member of the Public Service Commission from 2019 until February, said on Tuesday that he has long questioned why no one can estimate the cost to New Yorkers to transition to clean energy in such a short period of time – and whether it can be done.

“Here we have the largest statute of all practical time in this area, (and) no hearing record, no fiscal record, no background to support the legislation,” he said. “I was on the commission for five years; I couldn’t get a hard figure on the cost.

Howard and other energy industry stakeholders note that many other Democratic-led states, including California, have also adopted bold green energy mandates but are struggling to meet them.

“There was this herd mentality … and I didn’t work from day one; I said that inside,” Howard said.

The first step is to document the net-zero transition plan in detail so that it can be used to track progress. The Oversight Report does not acknowledge this shortcoming.

talk

The report acknowledges that renewable energy is not being deployed fast enough and that cost information is insufficient. This is the first time a state agency has bucked the narrative that the Climate Act is on track and will be affordable.

As important as the footnote to the first sentence in the Introduction. It states: Public Service Law §66-p(4) provides the Commission with the authority to “suspend or modify” the obligations created by the Program if, after holding a hearing, it finds that the Program “impedes the provision of safe and adequate electric service ,” “is likely to impair existing obligations and agreements,” and/or is associated with “increased arrears or significant service interruptions.” This looks like it could be the last resort. Clearly, the schedule will not be met so the obligation must be postponed. I believe that the Audit Comptroller makes the case that there is not enough information available to determine whether there is a “significant increase in arrears or service disconnections.” Perhaps it can also be used to postpone or modify obligations as well.

Conclusion

There is a certain amount of vindication in this report. The work of Richard Ellenbogen, Francis Menton, and I have consistently argued that the schedule is too aspirational, and that costs are not properly documented. A casual reading of the New York Independent System Operator’s resource adequacy report also argues that there will be reliability issues, which has been another theme of our work. Now the question is how the Hochul Administration will respond to the agency’s report. Reversing any order is sure to draw ire from the usual suspects, but failing to address the issue has drawn ire from voters who want reliable and affordable energy.

Roger Caiazza blogs about New York’s energy and environmental issues at New York’s Pragmatic Environmentalist. It represents his opinion and not the opinion of his previous employer or other company he was associated with.

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