Cracks in the NY Climate Act Facade

Roger Caiazza

After five years of hype a couple of recent reports show that New York’s Climate Leadership & Community Protection Act (Climate Act) is not going as planned.  Maybe there is hope that the ill-considered net-zero transition plan can be halted before it does irreparable harm to the state.

Clean Energy Standard Biennial Report

The Climate Leadership & Community Protection Act (Climate Act) requires that the Public Service Commission (PSC) issue a review for notice and comment that considers “(a) progress in meeting the overall targets for deployment of renewable energy systems and zero emission sources, including factors that will or are likely to frustrate progress toward the targets; (b) distribution of systems by size and load zone; and (c) annual funding commitments and expenditures.”  The recently released Clean Energy Standard Biennial Review Report (“Biennial Report”) fulfills some aspects of that requirement.

The Biennial Report compares the renewable energy deployment progress relative to the Climate Act goals to obtain 70% of New York’s electricity from renewable sources by 2030 (the 70% goal). 

Section 5 summarizes the “Path to the 70% goal”.  The description of the Table 8 “Summary of progress” states:

Under the base case load forecast assumption of 164,910 GWh by 2030 as described above, the 70% goal equates to 115,437 GWh. Table 8 below summarizes the contributions towards the goal from currently operational and contracted renewables, as set out above in Section 2 and Section 4 of this Report. In addition, it projects 10 GW of distributed generation by 2030 secured outside the CES framework.

It describes Table 8, (my highlights added):

With these conservative assumptions, the expected amount of renewable generation from operational and awarded/contracted sources in 2030 totals 73,292 GWh. Under the base case forecast for the 2030 statewide electric load, there is a renewable energy supply deficit of 42,145 GWh that would have to be addressed through future procurements in order to reach the 70% goal amount of 115,437 GWh.

Consider these numbers in context.  There is an admitted gap of 42,145 GWh which is greater than the sum of the operational renewable generation in 2022, 2022 imports of renewable energy, and generation from projects operational after 2022 (37.692 GWh).  Trying to cover that gap is an ambitious challenge.

Source: Clean Energy Standard Biennial Review Report

While it is encouraging that they admit there is a problem, the suggested solution maintains the fiction that it can be done.  The Biennial Report proposes to double down on building renewables to cover the gap and meet the target. 

To fill the expected gap, three Tier 1 annual solicitations – those for 2024, 2025, and 2026 – are currently scheduled and will seek projects capable of deploying by 2030. However, the amounts procured in these solicitations would need to be adjusted to secure the needed quantity of 42,145 GWh. The analysis suggests NYSERDA would have to procure approximately 14,048 GWh per solicitation, assuming no project attrition, or, assuming a 30% attrition rate, an amount of 20,068 GWh per solicitation. This volume is significantly higher than the annual procurement quantity of 4,500 GWh per Tier 1 solicitation (before attrition) estimated in the 2020 CES White Paper and 2020 CES Order.

The best efforts of the State to date for renewable solicitations are far lower than what is needed.  The report admits that “the maximum annual new project development rate would likely be in the range of 6,000-7,000 GWh per year at least in the near term” and that is contingent on meeting a number of conditions.  Table 9 below describes what the report argues is feasible.

Source: Clean Energy Standard Biennial Review Report

Even under the revised assumptions the PSC projects that the 70% renewable energy goal will not be achieved until 2033 when the historic renewable resource deployments are considered.  They still cannot let go of the narrative that the renewable resources can be deployed on a schedule that is close to the Climate Act mandates.  I do not think this approach is feasible.

Comptroller Report

On July 16, 2024 the New York State Comptroller Office released an audit of the New York State Energy Research and Development Authority (NYSERDA) and Public Service Commission (PSC) of their implementation efforts for the Climate Act titled Climate Act Goals – Planning, Procurements, and Progress Tracking (“Comptroller Report”).  This report is particularly gratifying because it confirms my long-held argument that the Climate Act cost estimates are unsatisfactory.

The Audit Highlights section of the Comptroller Report lists the key findings and key recommendations:

Key Findings

While PSC and NYSERDA have taken considerable steps to plan for the transition to renewable energy in accordance with the Climate Act and Clean Energy Standard, their plans did not comprise all essential components, including assessing risks to meeting goals and projecting costs. Specifically:

• PSC is using outdated data, and, at times, incorrect calculations, for planning purposes and has not started to address all current and emerging issues that could significantly increase electricity demand and lower projected generation, such as increased push to transition to electric vehicles by 2035 and the cancellation or delay in renewable energy projects. Between 2005 and April 2023, 12% of contracted large-scale renewable projects were canceled. 

• The costs of transitioning to renewable energy are not known, nor have they been reasonably estimated. Moreover, funding sources to cover those costs have not been identified, leaving the ratepayers as the primary source of funding. The lack of alternative funding sources adds additional risk to whether the State can meet its goals timely. Data shows utility costs have already risen sharply over the last two decades and more New Yorkers are having difficulty paying their utility bills. 

• PSC has taken steps to address some risks and issues; however, it has not yet begun to formally review progress toward Climate Act goals with updated generation and electricity demand forecasts. While PSC noted it has until July 2024 to begin this assessment, waiting until that point to fully review all efforts and costs of the transition to renewable energy increases the risk that Climate Act goals will not be met within the established time frame.

Finally, a formal backup plan has not been established in the event Climate Act goals are found to be unachievable within the prescribed time frames, other than PSC suspending or modifying the obligations under the Climate Act and relying on the continued use of fossil fuels to generate electricity until sufficient renewable electric generation is developed. However, continuing to use fossil fuels as a backup plan would delay emission reductions and increase the burden on ratepayers by forcing them to continue to support fossil-fuel generation that otherwise could be retired—including the additional cost of the infrastructure to safely transport the fossil fuels to where they will be used to generate energy.

Key Recommendations

•            Begin the required comprehensive review of the Climate Act, including assessment of progress toward the goals, distribution of systems by load and size, and annual funding commitments and expenditures.

•            Continuously analyze the existing and emerging risks and known issues to ensure they are evaluated and addressed to minimize impact on the State’s ability to meet Climate Act goals.

•            Conduct a detailed analysis of cost estimates to transition to renewable energy sources and meet Climate Act goals. Periodically update and report the results of the analysis to the public.

•            Assess the extent to which ratepayers can reasonably assume the responsibility for covering Climate Act implementation costs. Identify potential alternative funding sources.

The Albany Times Union noted that:

Power industry experts interviewed by the Times Union have said at the time the legislation was passed there was no analysis done on what’s achievable and at what cost, and no real plan for pulling away from a power grid that’s more than 70 years old. This week, roughly 85 percent of electricity being supplied to New York City and Long Island is from gas and oil.

John Howard, who was a member of the Public Service Commission from 2019 until February, said Tuesday that he had long questioned why no one could estimate the cost to New Yorkers of transitioning to clean energy in such a short amount of time — and whether it could be done.

“Here we have the biggest statute of all time practically in this area, (and) no hearing record, no fiscal note, no background to underpin the legislation,” he said. “I was on the commission for five years; I couldn’t get hard numbers on costs.”

Howard and other energy industry stakeholders noted that many other Democrat-led states, including California, also adopted bold green energy mandates but are struggling to meet them.

“There was this herd mentality … and I think it was unworkable from day one; I said so as much internally,” Howard said.

The first step must be to document the net-zero transition plan in sufficient detail so that it can be used to track progress.  The Comptroller Report does not acknowledge this deficiency.

Discussion

These reports admit that the renewables are not being deployed fast enough and there is insufficient cost information.  This is the first time any state agency has broken the narrative that the Climate Act is on track and will be affordable. 

As important is a footnote for the first sentence in the Introduction.  It states: Public Service Law §66-p(4) provides the Commission with authority to “temporarily suspend or modify” the obligations created by the Program if, after conducting a hearing, it finds that the Program “impedes the provision of safe and adequate electric service,” “is likely to impair existing obligations and agreements,” and/or is related to “a significant increase in arrears or service disconnections.”   This looks like it could be the eventual path forward.  Clearly, the schedule is not going to be met so that obligation will have to be suspended.  I believe that the Comptroller Audit makes the case that insufficient information is available to determine whether there is “a significant increase in arrears or service disconnections.”   Perhaps that can also be used to suspend or modify the obligations too.

Conclusion

There is a certain amount of vindication in these reports.  The work of Richard Ellenbogen, Francis Menton, and myself has consistently argued that the schedule was overly aspirational, and the costs were not documented appropriately.  A plain reading of the New York Independent System Operator resource adequacy reports also argue that there will be reliability issues, which has been another theme of our work.  Now the question is how the Hochul Administration will respond to these agency reports.  Backing off any of the mandates will certainly bring howls of outrage from the usual suspects but failing to address the issues risks outrage from the voters who want reliable and affordable energy.

Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.