January 22, 2020
We all know that New York has set its sights on a clean, renewable, carbon-zero future for both the city and the state. Solar, wind, and other renewables will undoubtedly play a huge part in achieving the ambitious targets outlined in the Climate Leadership and Community Protection Act (CLCPA). Incentivizing developers to build and support a renewable New York will be vital, and a new order from the New York State Public Service Commission (PSC) has done just that—encouraging developers even further.
The PSC has given authorization to New York State Energy Research and Development Authority (NYSERDA) to rejig its pricing structure for Tier 1 solicitations. This will allow NYSERDA to innovative and incentivize by creating a new pricing structure for ongoing Tier 1 solicitations. The core intention of this new pricing structure is to reduce capital costs for New York developers, thus encouraging them to further develop clean energy sources throughout the state. It is hoped that the new pricing structure will also alleviate the risk for developers, and ultimately result in lower costs for New York energy consumers.
With this PSC order, NYSERDA has been directed to provide developers with support and additional financial options when seeking bids for renewable energy projects. Up to now, NYSERDA offered developers a traditional fixed-price, but with this order a greater range of compensation offerings will become available. NYSERDA will be able to offer developers compensation for environmental attributes associated with the generation output of their solar or wind project. This additional form of compensation will be based on a reference market index which changes on a monthly basis across the lifespan of the project contract.
This opens up a whole host of new opportunities for renewable energy developers. NYSERDA providing an indexed renewable energy credit (REC), as well as continuing to allow for more conventional fixed-price bids, means more flexibility for prospective solar or wind developers in New York. Now, with this new pricing structure for Tier 1 solicitations, developers will be able to adapt their bids to better reflect their own financial and operational requirements, as well as keeping their bids more in line with the markets.
This new structure will differ from traditional fixed-price bids and better incentivize New York renewable energy developers in a number of important ways. In the case of the traditional fixed-price REC, provided exclusively until now, a fixed as-bid REC price would be provided throughout the lifetime of the project contract. Instead, with this new indexed approach to pricing structure, market risk is reduced for renewable developers. This, in turn, will lead to a reduction in bid prices and, over time, a reduction in contractual costs which benefits the end consumer. Indexed bidding ensures that ratepayers benefit from the reduced financial costs of renewable energy projects, as well as fewer changes to their energy bills.
NYSERDA has encouraged renewable energy developers to review the order and consider these new options ahead of their 2020 Tier 1 solicitation process. You can review the order by clicking here, read the full press release here, or visit the NYSERDA website here to learn more and keep up to date on the latest New York clean energy news.
To learn more about New York renewables, or to pursue your own renewable energy project, contact YSG Solar today. You can send an email to info@ysgsolar.com or call us at 212.389.9215.
By Shane Croghan
Sources:
https://www.nyserda.ny.gov/All-Programs/Programs/Clean-Energy-Standard