In a July order, the New York Public Service Commission authorizes the New York State Energy Research and Development Authority (NYSERDA) to offer longer-term, fixed-price renewable energy credit agreements, extending the maximum term from ten to twenty years. Following the 2004 creation of the New York State Renewable Portfolio Standard, NYSERDA has implemented a program for the procurement of attributes associated with the production of renewable energy, so-called “renewable energy credits” (RECs). Through a competitive solicitation process, NYSERDA enters into REC agreements under which it pays a production incentive for the RECs associated with renewable energy generated and delivered for end use in New York.
Previously, the term of such REC agreements was capped at ten years. In December of 2013, a group of advocacy organizations submitted a petition challenging, among other things, the ten year cap as unduly restrictive. Citing the stability of longer-term agreements, the petitioners argue that twenty year REC agreements would allow developers to hedge risk, ultimately leading to cheaper financing for renewable energy projects. Massachusetts and Connecticut have recently made changes to their REC agreement policies to permit the mitigation of market price risk though bundled energy and REC agreements. And the Commission notes that the “increasing availability of long-term agreements, especially in nearby states, makes it more difficult for New York to compete for these projects.”
Acknowledging the persuasiveness of the comments, the Commission authorizes NYSERDA to enter into REC agreements with terms of up to twenty years. However, the term extensions will not apply retroactively to existing NYSERDA REC agreements. And NYSERDA may still award REC agreements with shorter terms in its discretion. Indeed the Commission expressly encourages NYSERDA “not to enter into contracts for terms longer than the expected useful life of the project.”
Commenters also advanced the adoption of incentive mechanisms alternative to fixed-price REC Agreements including “contracts-for-differences,” which generally provide for a variable attribute price tied to wholesale electricity prices, cushioning the fluctuations of the market. The Commission declined to rule on such proposals in this order, reserving the issue for two other proceedings. Case 14-M-0101, Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision, Order Commencing Proceeding (Issued April 25, 2014); Case 14-M-0094, Proceeding on Motion of the Commission to Consider a Clean Energy Fund, Order Commencing Proceeding (Issued May 8, 2014).
July 22, 2014 Comments Off
On July 3, 2014, the U.S. Department of Energy Loans Program Office published a solicitation for Federal Loan Guarantees for Renewable Energy Projects and Efficient Energy Projects. Under the solicitation, eligible projects include Renewable Energy Projects and Efficient Energy Projects that implement “new or significantly improved technology” and “avoid, reduce, or sequester” the emission of greenhouse gases or other air pollutants, as required by the Energy Policy Act § 1703 (42 U.S.C. § 16513). The solicitation makes available $2.5 billion of loan guarantees “plus an additional amount that can be imputed based on the availability of an appropriation for the credit subsidy cost of such imputed loan guarantee authority.” DOE estimates that the total available loan guarantee authority will be “as much as $4 billion…”
July 17, 2014 Comments Off
Justin Boose, an Energy partner in the firm’s New York office, has penned an article in the July/August issue of the North American Clean Energy newsletter explaining “feed-in tariff” programs and how they can be beneficial to renewable energy production. The article, “Understanding Renewable Energy Feed-in Tariffs”, describes how recent FERC rulings have removed some of the jurisdictional confusion around FIT programs making them a viable option for renewable energy projects.
To read the full article, click here and scroll to page 8.
July 7, 2014 Comments Off
On April 29, 2014, Washington State Governor Jay Inslee signed an executive order outlining a series of “next steps” to reduce carbon pollution within the state, including the creation of a market based carbon pollution cap program and to work towards eventually eliminating the use of electricity produced by coal. Governor Inslee explained that the executive order is the next step in a course of action set by the state in 2008 when it passed a law that generally required a reduction of state-wide carbon pollution, but did not include specific mechanisms to achieve its carbon reduction goal. [Read more →]
May 19, 2014 Comments Off
On April 24, 2014, the New York State Public Service Commission (“NYPSC”) staff released a report and proposal (“Proposal”) that calls for a shift away from the traditional utility model of centralized generation, toward a more decentralized electric grid that relies increasingly on energy efficiency, demand resources and distributed generation. As reflected in the Proposal, this shift would be accomplished by (1) making energy efficiency and distributed resources a primary factor in energy planning, and (2) revising the NYPSC’s ratemaking framework by improving incentives and removing disincentives for distributed generation. The NYPSC staff Proposal expanded on a December 26, 2013 NYPSC order which announced a fundamental reconsideration of regulatory paradigms and markets. [Read more →]
May 19, 2014 Comments Off