New York Clean Energy Standard
3 min readNew York has introduced the Clean Energy Standard (CES) in an effort to increase the development of clean energy technology and decrease greenhouse gas emissions from the power sector.
On January 25th, the Department of Public Service (DPS) Staff filed a CES White Paper in response to Governor Andrew Cuomo’s directive last year. This would convert New York’s environmental goals into enforceable requirements.
On August 1st, the New York Public Service Commission (NYPSC) issued an order adopting the CES . The CES will reduce carbon emissions by 40% below 1990 levels and adhere to the state mandate of sourcing fifty percent of power from renewables by 2030. Increasing renewable resources will help New York meet the “50 by 30” mandate. It will also aid in an overall decline of air pollutants from fossil fuel combustion by cutting thousands of tons of nitrogen oxide, sulfur dioxide, and particulate matter a year. The CES will work in conjunction with other regulatory and retail market design changes being pursued by New York, such as Reforming the Energy Vision (REV).
The CES order includes three tiers outlined below.
- Tier 1: New Renewable Generation
- Tier 2: Existing Renewable Generation
- Tier 3: Maintenance of Existing Eligible Nuclear Facilities
Two new programs will implement the three tiers listed above:
- Renewable Energy Standard (RES)
- Zero Emission Credits (ZEC)
Renewable Energy Standard (RES)
Under Tier 1, all Load Serving Entities (LSEs) statewide will be required to procure and integrate renewable energy as a certain percentage of total electricity load beginning in 2017. The total percentage required will increase as time goes on. Eligible resource categories for Tier 1 will include Biogas, Biomass, Liquid Biofuels, Fuel Cells, Hydroelectric, Solar, Tidal/Ocean and Wind, with an in-service date on or after January 1, 2015.
Tier 2 will include resources that already exist to support continued contribution to meeting New York goals. As part of this process, the New York State Energy Research and Development Authority (NYSERDA) will manage the sale of Renewable Energy Certificates (RECs) or Alternative Compliance Payments (ACPs) directly with LSEs. By this December, NYSERDA will publish the REC price and estimated REC quantity that it will offer for the 2017 compliance period on its website. LSEs will be required to purchase a certain number of RECs or make Alternative Compliance Payments to NYSERDA.
Below are the compliance percentages for the first five years.
Zero Emission Credits (ZEC)
The PSC’s order provides compensation to eligible nuclear facilities for their production of Zero Emission Credits (ZECs). The ZEC price is calculated using a formula based on the federal government’s projected social cost of carbon (in nominal dollars per short ton of CO2).
Over a period of 12 years, NYSERDA will manage ZEC contracts with eligible nuclear facilities. Effective April 2017, LSEs will be required to purchase a percentage of ZECs based on their load share in relation to total load served by all LSEs. LSEs will be permitted to recover these costs as part of their commodity bill. The ZEC price for the first two-year tranche has been set at $17.48/MWh. The ZEC value will be adjusted every two years based on the formula mentioned above.
What Does This Mean for Your Business?
The CES order adopted by the PSC earlier this month requires implementation plans to be filed for the PSCs review following a public comment period. Over the next few months, the DPS Staff, NYSERDA and other stakeholders will discuss the programs mentioned above and will outline LSEs’ duties under the CES. They will also discuss NYSERDA’s role in the administration of the procurement process for RECs and ZECs.
New York State has outlined aggressive environmental goals; and it’s important to develop an energy strategy that incorporates the clean energy, climate initiatives. Reach out to your Business Development Manager to discuss the best option for your business.