Cracks in the surface of New York climate bill — is Watt upset about it?

Roger Kayaza

After five years of hype, several recent reports indicate that New York’s Climate Leadership and Community Protection Act (Climate Act) is not going as planned. Perhaps there is hope of halting ill-conceived net zero transition plans before they do irreparable damage to the country.

Clean Energy Standard Biennial Report

The Climate Leadership and Community Protection Act (Climate Act) requires the Public Service Commission (PSC) to issue a notice and comment review to consider “(a)

Meet the overall goal of deploying renewable energy systems and zero-emission sources,

Includes factors that will or may impede progress toward the objectives; (b) System distribution by size and load zone; (c) Annual funding commitments and expenditures. The recently released Clean Energy Standards Biennial Review Report (the “Biennial Report”) meets certain aspects of this requirement.

The two-year report compares progress in renewable energy deployment to the climate bill's goal of 70% of New York's electricity coming from renewable sources by 2030 (the 70% goal).

Section 5 summarizes the “path to achieve the 70% goal”. The description of the “Progress Summary” in Table 8 states:

Based on the above base case load forecast assumption of 164,910 GWh in 2030, the 70% target equates to 115,437 GWh. Table 8 below summarizes the contribution of currently operating and contracted renewable energy sources to achieving this target, as described in Sections 2 and 4 of this report. In addition, it expects to achieve 10 GW of decentralized power generation outside the CES framework by 2030.

It describes Table 8 (I've added emphasis):

Based on these conservative assumptions, renewable energy generation from operational and awarded/contracted sources is expected to total 73,292 GWh in 2030. Based on the base case forecast of the state's electric load in 2030, Renewable energy supply gap is 42,145 GWh In order to reach the 70% target of 115,437 GWh, this issue must be addressed through future procurement.

Consider these numbers in context. The recognized shortfall is 42,145 GWh, which is greater than the sum of operating renewable energy generation in 2022, renewable energy imports in 2022, and operating project generation after 2022 (37.692 GWh). Trying to bridge this gap is a daunting challenge.

Source: Clean Energy Standard Biennial Review Report

While it's encouraging that they acknowledge there's a problem, the proposed solution still retains the fiction that it can be done. The biennial report recommends doubling down on investment in renewable energy to close the gap and meet targets.

To fill the anticipated shortfall, three annual Tier 1 tenders (2024, 2025 and 2026) are currently planned and will seek projects that can be deployed by 2030. The amount to secure the required quantity is 42,145 GWh. The analysis shows that assuming no project losses, NYSERDA would have to purchase approximately 14,048 GWh per tender, or 20,068 GWh per tender assuming a 30% wastage rate. This amount is significantly higher than the annual procurement volume (before consumption) of 4,500 GWh per Tier 1 tender estimated in the 2020 CES White Paper and the 2020 CES Order Form.

The state’s best efforts at renewable energy bidding so far fall well short of what is needed. The report acknowledges that “the maximum annual rate of new project development is likely to be in the range of 6,000-7,000 GWh per year, at least in the short term” and that this is subject to meeting a number of conditions. Table 9 below describes what the report considers feasible.

Source: Clean Energy Standard Biennial Review Report

Even under revised assumptions, the PSC expects that the 70% renewable energy target will not be achieved until 2033, taking into account historic deployment of renewable resources. They still can't give up on the argument that renewable resources can be deployed on a timetable close to that set out in the climate bill. I don't think this approach is feasible.

Audit 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 Public Service Commission (PSC) climate bill implementation, titled “Climate Bill Objectives – Planning, Procurement” , and progress tracking (the “Audit Report”). This report is particularly gratifying because it confirms my long-held view that the Climate Bill’s cost estimates are unsatisfactory.

The Audit Highlights section of the Comptroller's report sets out the main findings and key recommendations:

Main findings

While the PSC and NYSERDA have taken considerable steps to plan for the transition to renewable energy under the Climate Act and Clean Energy Standard, their plans do not include all important components, including assessing the risks and projections of achieving their goals. cost. Specifically:

• The PSC uses outdated data and sometimes incorrect calculations for planning purposes and has not yet begun to address all current and emerging issues that could significantly increase electricity demand and reduce projected generation, such as increasing efforts to move towards 2035. Canceling or delaying the transition to renewable energy projects for electric vehicles. Between 2005 and April 2023, 12% of large-scale renewable energy project contracts were cancelled.

• The costs of transitioning to renewable energy are unknown and have not been reasonably estimated. Additionally, funding sources to pay for these costs have not yet been determined, leaving taxpayers as the primary source of funding. The lack of alternative funding sources adds additional risks to the country's ability to achieve its goals in a timely manner. Data shows that utility costs have risen dramatically over the past two decades, with more New Yorkers struggling to pay their utility bills.

• The PSC has taken steps to address some risks and issues; however, it has not yet begun a formal review of progress towards the Climate Act targets and updated generation and electricity demand forecasts. Although the PSC states that the review will not begin until July 2024, waiting until then to fully review all efforts and costs of the transition to renewable energy increases the risk that the climate bill goals will not be achieved within the set timeframe.

Finally, if it is found that the goals of the Climate Act cannot be achieved within the specified timeframe, no formal back-up plan has been developed, other than the PSC suspending or modifying its obligations under the Climate Act and relying on the continued use of fossil fuels to generate electricity. Renewable energy generation. However, continuing to use fossil fuels as a back-up plan will delay emissions reductions and force taxpayers to continue supporting fossil fuel generation that might otherwise be retired, thereby increasing taxpayer burdens, including the additional cost of infrastructure to safely transport fossil fuels to deliver the fuel to Where it will be used to generate energy.

Main recommendations

• Commence the necessary comprehensive review of the climate bill, including an assessment of progress towards the targets, allocation systems by load and size, and annual funding commitments and spending.

• Continuously analyze existing and emerging risks and known issues to ensure they are assessed and addressed to minimize impacts on the State’s ability to achieve climate bill goals.

• A detailed analysis of cost estimates for transitioning to renewable energy and meeting the climate bill’s goals. Regularly update and report analysis results to the public.

• Assess the extent to which taxpayers can reasonably bear responsibility for the costs of implementing climate bills. Identify potential alternative funding sources.

The Albany Times Union noted:

Power industry experts who spoke to The Times-Union said the legislation was passed without an analysis of achievable goals and costs, and without a real plan to exit a grid that is more than 70 years old. This week, about 85% of the electricity in New York City and Long Island comes from natural gas and oil.

John Howard, who served on the Public Service Commission from 2019 to February, said Tuesday that he has long questioned why no one could estimate the cost for New Yorkers to transition to clean energy in such a short period of time and whether it would this way.

“We actually have the largest regulation ever in this area, and there's no record of hearings, no fiscal explanation, no background to support the legislation,” he said. “I've been on the committee for five years; I can't get exact figures on the costs.

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

“There's this herd mentality… I didn't think it would work from day one; I said that internally as well.

The first step must be to document the net zero transition plan in enough detail that it can be used to track progress. The comptroller's report did not acknowledge this shortcoming.

discuss

The reports acknowledge that renewable energy is not being deployed fast enough and that there is insufficient information on costs. It's the first time any state agency has broken with the idea that a climate bill is on track and will be affordable.

Equally important is the footnote to the first sentence of the introduction. It states: If after a hearing it is found that the scheme “prevents the provision of safe and adequate electric service,” “is likely to impair existing obligations and agreements,” and/or is associated with “a substantial increase in arrears or service interruptions,” . This looks like it may be the ultimate path forward. It is clear that the timetable will not be met and therefore the performance of obligations must be suspended. I think the Auditor General's audit showed that there was insufficient information to determine “whether there has been a significant increase in arrears or service interruptions.” Perhaps this could also be used to suspend or modify obligations.

in conclusion

There is a certain amount of evidence in these reports. The work of Richard Ellenbogen, Francis Menton, and my own has consistently argued that timetables were overly idealistic and that costs were not properly documented. A brief reading of the New York Independent System Operator's resource adequacy report also indicates that there will be reliability issues, which is another theme of our work. The question now is how the Hochul government will respond to these agency reports. Abandoning either mandate is sure to draw the ire of the usual suspects, but not addressing these issues could draw the ire of voters who want reliable and affordable energy.

Roger Caiazza blogs about energy and environmental issues in New York at the Pragmatic Environmentalist of New York. This represents his opinion and not that of his previous employer or any other company with which he is associated.

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