New York, New Path, New Opportunities

Navigating the Revised 70% Renewable Energy Target and CES 3.0

Written by: Po-Yu Yuen, Director and Mary McMahon, Principal Analyst

Publish Date: July 3, 2024

Estimated Reading Time: 5 Minutes

In 2019, New York’s Climate Leadership and Community Protection Act (CLCPA) set an ambitious target: 70% of the state’s electricity from renewable energy sources by 2030. However, the latest draft 2024 Clean Energy Standard (CES) Biennial Review Report (Biennial Review) from the New York State Energy Research and Development Authority (NYSERDA) and Department of Public Service (DPS) Staff concludes that achieving this target by 2030 is no longer likely. The combination of renewable supply contract attrition and expected electric demand growth has necessitated a revised pathway for New York’s third iteration of its Clean Energy Standard (the “CES 3.0”). The new path, though delayed from its original course, could motivate evolutionary changes and new approaches to the CES that bring refreshed opportunities for developers and investors.  

New Reality: The Setbacks to Reaching 70% Renewable Energy

Since the inception of the CES in 2017, New York has made strides in renewable energy development. However, a series of development headwinds have led to significant renewable contract attrition and stalled progress. These headwinds include global factors such as inflation, supply chain disruptions, and elevated interest rates fueled by the ‘black swan’ combination of COVID-19 and the Ukraine war, as well as interconnection and permitting process bottlenecks.

Data Source: Large-scale Renewable Projects Reported by NYSERDA: Beginning 2004, Accessed 6/12/2024
* Data does not include results from RESRFP23-1; Includes some overlapping capacity for projects that have cancelled their contracts, rebid, and re-awarded in a subsequent solicitation.
** Includes the three provisionally awarded contracts for ORECRFP22-1 that did not move forward.

Meanwhile, expected growth in statewide electric load due to economic development and beneficial electrification has increased the anticipated renewable energy generation needed to reach the 70% renewable energy target.

The Biennial Review estimates that New York needs to deploy an additional 42,145 GWh of annual large-scale renewable energy production through future procurements to achieve 70% renewable energy by 2030. Filling this gap would require more than ten times the large-scale renewable deployment New York has achieved in the last seven years over the next five years. Despite a maturing industry and enhancements in regulatory processes underway, this pace of deployment far exceeds realistic expectations, given lingering development challenges and looming political uncertainties.

New Path: Updated Target Timeline

Based on this new reality, the Biennial Review outlines an updated path to 70% renewable energy with a later target date of 2033 (with potential divergence depending on the load trajectory). This pathway also adds three more Tier 1 large-scale renewable solicitations for 2027 to 2029, on top of the three planned for 2024 to 2026. The average annual Tier 1 large-scale renewable procurement volume for each solicitation would increase from 4,500 GWh per year to 5,600 GWh per year. Furthermore, the review concludes that the state will need significant incremental contribution from offshore wind (18,753 GWh or approximately 4.3 GW) beyond what has been contracted to date by 2033. NYSERDA and DPS Staff will monitor the state’s progress and adjust the path as necessary in future Biennial Reviews.

New Opportunities: Proposed CES 3.0 Reforms

Even with a delayed timeline, significant progress will be required for New York to achieve its 70% renewable energy target. The Biennial Review outlines a range of CES 3.0 reform opportunities to overcome existing renewable energy development challenges and ensure that the state stays on course.

In particular, the Biennial Review highlighted opportunities to reform many elements of the existing large-scale renewable procurement framework, from evaluation scoring to the inflation price indexing mechanism, Index REC contracting structure, and contract tenors. These proposed options primarily emphasize project viability and the need to enhance project certainty and enable adaptability to market risks. The Biennial Review also raised possible enhancements, including carve-outs or specific solicitations, as well as price bonuses, to encourage land-based wind generation to achieve system and land-use benefits.   

The Biennial Review also signals interest in finding new approaches to accelerating renewable development, including allowing regulated utilities to develop and own renewable generation. While New York’s prior considerations of allowing utility owned renewable energy generation met with significant resistance, the authorization granted by the legislature for the New York Power Authority ownership in 2023 and the pressure to offset elevated development cost may spark new interest in ways to access lower-cost capital. The Biennial Review also considers the option to create Renewable Energy Zones (REZ), a strategy successfully deployed in Texas, to better align renewable energy development with planned transmission and economic initiatives.

Many details of the options proposed in the Biennial Review still need to be clarified, and their acceptance will be tested in the upcoming stakeholder process. While the outcome of the proceeding is pending, these proposed options highlight New York policymakers’ understanding of the critical juncture in the CES landscape and the urgent need for substantial changes to achieve the updated renewable energy target. This pivotal moment offers a significant opportunity for market participants to engage, provide input, and help shape New York’s new path to reaching 70% renewable energy.

New Landscape: Leverage Expertise to Prepare for this Policy Evolution with a Comprehensive and Well-Founded Market View

The Biennial Review will soon be filed with the State Register, initiating a 60-day stakeholder comment period. The outcome of this proceeding could significantly reshape New York’s large-scale renewable energy deployment and costs, which will alter the course of CES compliance volume and cost trajectories.

Stay informed on every development of the proceeding through SEA’s New York Eyes & Ears Renewable Energy Regulatory, Policy, Legislative and Wholesale Market Tracking & Analysis Service.

Get ahead of the proposed changes with our New York Renewable Energy Market Outlook (NY-REMO) subscription service. Our in-depth REMO market fundamentals analysis of Tier 1 large-scale renewable procurement and CES compliance costs provides the insights you need to understand policy implications and market shifts.

Equip yourself with a comprehensive and well-founded market view to optimize your business planning and make informed decisions in this dynamic landscape. Subscribe to our suite of New York subscription services now to ensure you are prepared. Contact us about a No-Obligation Trial for Eyes & Ears and schedule a demo session for NY-REMO.