5 Key Takeaways from New York’s 2022 RES Solicitation RFI

Since its first solicitation in 2017 (RESRFP 17-1), the New York State Energy Research and Development Authority (NYSERDA) has continued to evolve its annual RES solicitations for RECs from Tier 1 large-scale renewables (LSR) to adapt to changing project development environment, advance existing policy objectives and address new ones, and improve the contracted project success rate to achieve the state’s Climate Leadership and Community Protection Act (CLCPA) goals.

Ahead of its sixth RES solicitation in 2022 (RESRFP22-1), on July 7 NYSERDA issued two Requests for Information (RFI) on key topics and proposed major solicitation modifications in response to continued LSR development observations and new market issues and trends. The response deadline to both RFIs is July 28.

Among the two, 20-page 2022 RES Solicitation RFI (RESRFI22-1) seeks stakeholder review and feedback on 19 (!) topic areas and proposed changes relative to the RESRFP22-1 solicitation. Here are our five key takeaways:

  • Greater emphasis on complimentary generation portfolio may see a shift in award mix.
  • Delayed RESRFP22-1 schedule could provide more certainty.
  • New Optional Inflation Adjustment measure aims to mitigate inflationary risk exposure, but its effectiveness depends on the details.
  • Viability and readiness of bids continue to be a prioritized objective.
  • There are several wild cards.

Stay tuned for our blog post next week on the Capacity Accreditation RFI (LSRRFI22-1) which focuses on proposed changes to the Index REC and Index OREC pricing structure that are designed to accommodate the upcoming NYISO capacity accreditation rule changes.

Greater emphasis on complimentary generation portfolio may see a shift in award mix

Utility-scale solar has dominated recent RES solicitations in terms of both the number and volume of bids and the number and volume of awards. Under the past two solicitations NYSERDA collectively selected 43 solar projects (~8,600 GWh), one hydro project (6 GWh), and no wind projects, as shown in Table 1.

*Includes total capacity of 3 proposed repowered generation units.

This trend could shift, as New York’s policy and system planning effort progressively values resource diversity as a pathway to advancing the state’s renewable energy and climate goals, the AD/CVD development highlights the vulnerability of placing all eggs in one technology basket, and upstate renewable energy penetration begins to test the limits of a grid in transition. The following changes and considerations identified in the RFI highlight an increased focus on a complimentary renewable generation portfolio that could signal a move toward a more diverse award mix for RESRFP22-1 and future solicitations.

Solicitation Resource Mix:

In its RFI, NYSERDA has suggested that it would place a higher emphasis on selecting a diverse award mix for RESRFP22-1 that is complimentary to its existing operating and pipeline LSR projects in order to support the achievement of the 70% by 2030 renewable energy goal. Specifically, NYSERDA has expressed an openness to leverage the ‘Portfolio Risk Factors’ option in the RFP, which allows adjustments to the final award group to avoid heavy dependence on renewable generation in one location or from one technology, as well as to avoid selecting a portfolio of resources that would impose negative system impacts, such as curtailment, congestion, and need for network upgrade or transmission development. This option has always been a feature of the RES solicitation, although it is our understanding that NYSERDA has not materially utilized this measure to date. NYSERDA is seeking stakeholder input in the RFI on the risks and benefits of employing this measure.

Energy Deliverability:

NYSERDA is considering increasing the Minimum Threshold Requirement for energy deliverability, by requiring projects intending to interconnect to constrained areas with little to no headroom (as indicated by the February 1, 2022 Utilities Headroom Data Filing) to demonstrate its ability to provide full energy deliverability without causing incremental curtailment to operating and pipeline LSR projects that are contracted to NYSERDA. SEA will more thoroughly examine the volume of uncontracted LSR pipeline projects that may be impacted by this requirement in future New York Renewable Energy Market Outlook (NY-REMO) analysis.

Related to energy deliverability, NYSERDA is also planning to require all bidders to provide comprehensive curtailment assessment information as a Minimum Threshold Requirement for RESRFP22-1.

Peak Coincidence:

NYSERDA is also proposing to revise its evaluation for peak coincidence to be based on project production profile’s marginal contribution to meeting future load forecasts in consideration with other operating and pipeline renewable projects and other zero-emissions generation. Greater preference would be given to projects that has a complementary impact with existing operating and pipeline renewable projects.

The emphasis on a complimentary generation portfolio could translate to more diversity in the award mix for RESRFP22-1, both within the cohort and in relation to existing operating and pipeline projects. We may see land-based wind come off the bench in the upcoming solicitation. Interest in energy deliverability and peak coincidence could also suggest an increasing role for paired storage projects (see Table 2 for the numbers of paired storage bids and selection in recent solicitations). Local system impact considerations could also facilitate greater geographic diversification in the award mix. It is worth noting that selecting a diverse award mix (instead of choosing the least-cost portfolio) would likely come at a cost premium (although that may offset otherwise increased costs of resource integration), a factor that NYSERDA would need to balance against the value of a complimentary renewable generation portfolio, as well as other objectives in its evaluation and selection process.

Over time, a continued emphasis for greater award resource diversity could also influence developers’ siting and development strategies to prioritize favorable technologies, development configurations and locations, as well as attract other technologies, such as offshore wind, to look for opportunities in subsequent solicitations.

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SEA will be analyzing the impacts of these issues in the upcoming NY-REMO Market Fundamentals Briefing 2022#1 on August 9. To discuss how our NY-REMO market analysis service of the New York CES can help you stay smart on the upcoming RESRFP22-1, please contact Po-Yu Yuen (pyuen@seadvantage.com