What will it take for New York’s Tier 1 large-scale renewables to deliver on CES Biennial Review timeline? 

Part 1 of SEA’s New York REMO Clean Energy Standard Biennial Blog Series

Publish Date: November 19, 2024

Written by: Po-Yu Yuen, Director; and Chinmayee Atre, Consultant

Estimated Reading Time: 10 Minutes

Large-scale renewables (LSR) procured by New York State Energy Research & Development Authority (NYSERDA) under the Tier 1 Renewable Energy Standard are a critical pillar of New York’s strategy to meet its 70% renewable energy target. The state’s procurement targets are ambitious, requiring sustained annual deployment to meet the revised pathway outlined in the CES Biennial Review. But can LSR deliver at the necessary scale and pace?

Understanding the LSR Targets

The CES Biennial Review specifies that achieving 70% renewable energy by 2033 would require an annual Tier 1 LSR procurement volume of 5.6 TWh over six years (2024 – 2029) to fill the gap between the statewide goal and incremental supply brought forward through other CES supply programs (e.g., offshore wind, VDER solar). Assuming the Biennial Review’s a 30% attrition rate, and its estimates of development lead time to commercial operation, this annual procurement volume would translate to roughly 3.9 TWh of incremental production each year to reach 23.5 TWh/yr incremental Tier 1 LSR contribution by 2033 (redline line in Figure 1).

SEA’s assessment of Tier 1 LSR deployment – based on our review of individual project development status, historical interconnection and permitting application processing time in New York, and outlook on supply chain conditions – suggests a more cautious outlook, with the outcome largely hinging on New York’s ability to accelerate LSR development lead time. Using outputs from our July New York Renewable Energy Market Outlook (NY REMO) analysis, we projected annual production from not-yet-contracted Tier 1 LSR projects (modeled to be awarded in RESRFP23-1 and subsequent requests for proposals (RFPs)) under alternative deployment timing scenarios. Our fastest deployment scenario (light blue line in Fig. 1) assumed that future Tier 1 LSR projects (modeled to be awarded in RESRFP 25-1 and thereafter) would take five years to progress from RFP issuance to commercial operation. In this scenario, Tier 1 LSR deployment would be on-pace to meet New York’s 2033 need for achieving its 70% renewable energy goal. A delay to that development lead time by even one year (six-year lead, green areas in Fig. 1) will mean that the CES Biennial Review’s proposed Tier 1 LSR deployment trajectory is unlikely to be met until a year later, and further delay to the assumed development lead (seven-year lead, dark blue line in Figure 1) could put New York an additional year behind. In addition, if load expectations are higher than assumed in the Biennial Review or if other CES supply falls short of expectations (e.g., Tier 1 LSR attrition higher than the 30% assumed in the Biennial Review), even more Tier 1 resources may be needed to be deployed than pictured here, further stressing the supply chain and interconnection and permitting processes.  

Development lead time for Tier 1 LSR is crucial for New York to be on pace with achieving the pathway envisioned in the Biennial Review. Our examination of recently operational LSR projects’ development experience shows that, on average, Tier 1 LSR projects in New York have been taking six to eight years (See Figure 2) to progress from bid submission to commercial operation. While some projects achieve faster timelines, a significant portion experience delays due to permitting, interconnection, and site development challenges.

However, these recent timelines could very well be outliers given the various disruptions due to COVID-19 triggered supply chain constraints and development delays. In addition, there are encouraging prospects for shortening development lead times relative to this recent experience. Recent regulatory reforms, including streamlined permitting under Section 94C and the FERC Order 2023-directed NYISO interconnection process reform, could help reduce bottlenecks and support faster project development. Higher maturity thresholds for both the NYSERDA Tier 1 LSR RESRFP and the NYISO interconnection process – which may necessitate that only more advanced projects can respond – also suggest shorter lead time between RFP and deployment. Yet challenges persist: Global supply chain constraints and competition for labor within New York could create ongoing bottlenecks, especially as development pipeline grows. Additionally, exhaustion of low-hanging fruit project sites would push development to more complex topography that may take longer to develop. These headwinds may create variability in achieving the target deployment volumes by 2033.

Accelerating Development to Meet Volume Needs

Meeting the Biennial Review’s targets will depend on the state’s ability to consistently deploy significant volumes of LSR within compressed timelines while sufficiently managing projects’ risk exposure so as to support achieving successful commercial operation. Simplifying RFP requirements and ensuring clear, transparent permitting processes could help maintain a steady pipeline of projects. Balanced siting criteria that minimize complexity while protecting environmental standards can also support efficient project development. Additionally, addressing local workforce and supply chain challenges will be key to sustaining momentum.

From a developer’s perspective, the need for accelerated deployment timeline underscores the importance of project maturity and viability in future procurements. This creates both a challenge and an opportunity: higher maturity requirements may raise the bar for participation, but they also provide clearer pathways to secure contracts and attract investment. We will dive deeper into the potential implications to developers’ development pipeline planning and investment strategies in our third blog of the series, How will prioritizing viability and maturity in procurement impact prices and costs?

For the retail sector – New Yorks’s ESCOs, Community Choice Aggregations, and end users looking to establish and meet energy budgets, the lack of visibility into Tier 1 LSR deployment over time, and the uncertain need for incremental Tier 1 LSR to fill the gap if other CES supply falls short, create new challenges. Starting 2025, with a shift to a load-based Tier 1 compliance model, CES compliance costs are entirely tied to the availability of CES supply, but the volume and mix of supply (from different technologies and CES tiers), and the timing of their deployment remain highly uncertain. This variability could complicate the ability of retail providers to formulate competitive price offerings, emphasizing the need for forward analysis to navigate these uncertainties and ensure retail prices reflect the evolving CES supply landscape.