Clean Energy Standard

Summary

NOTE: The Climate Leadership and Community Protection Act, enacted in July 2019, sets targets of 70% renewable electricity by 2030 and 100% carbon-free electricity by 2040. This act requires the state Public Service Commission to develop a regulatory program to meet these targets by June 30, 2021.

The New York Public Service Commission (PSC) adopted a Clean Energy Standard (CES) in August 2016, instituting a timeline for the load serving entities* (LSE) in the state to procure at least 50% of the electricity consumed in the state from renewable energy resources by 2030. The Clean Energy Standard is designed to succeed the New York Renewable Portfolio Standard (RPS) which reached its final target at the end of 2015.

The Clean Energy Standard is divided into three Tiers. Tier 1 and Tier 2 constitute the Renewable Energy Standard (RES) component of CES, which totals to 50% renewable energy goal by 2030. Tier 3 is an additional component of CES designed to support the state’s existing nuclear facilities as a bridge to 50% renewables. The emission credits from nuclear sources cannot be used for compliance towards the state’s RES goals.

Eligible Technologies

Renewable energy electric generation resources that are eligible for the RES component include: biogas (including anaerobic digestion and landfill gas), biomass, fuel cells, hydro (without new storage impoundment), solar, tidal/ocean, and wind. Biomass generators that are co-fired with fossil fuels are eligible, but they receive credits only for electricity generated from the biomass portion of the fuel. Click here for additional details regarding eligibility of resources. The incremental production associated with the upgrade of an existing facility is eligible for the RES if it meets certain requirements. The requirements vary based on whether the project utilizes an intermittent resource (i.e., hydro, wind or solar) or a non-intermittent resource (i.e., biomass, fuel cells) to produce energy. Only the production resulting from the incremental upgrade will be considered eligible for the RES program.

Tier 1- New Renewable Resources

CES does not include a carve-out for any particular generation resource. Unlike other states where Tier 1 is reserved for a particular set of renewable resources, the Tier 1 in CES is designed to promote eligible new renewable energy generation resources. All eligible renewable energy resources that came into operation after January 1 2015 are classified as Tier 1 resources.

In February 2017, the Public Service Commission approved Phase I of the implantation plan for CES. The implementation plan provides detailed eligibility criteria for new RES resources based on size, geographical location, energy delivery requirements, and date of operation. In addition to new generation facilities, facilities that have performed significant upgrades, facilities that are repowered, or facilities that have been relocated might also qualify if the meet certain NYSERDA eligibility requirements. As of February 2017, the PSC has not determined if net metered Distributed Energy Resources would be eligible to generate Tier I RECs. The issue of DERs is being evaluated on a separate REV** proceeding (Case 15-E-0751) which will determine compensation for DERs.

The table below provides a general percentage obligation for the LSEs in the state for each year. Each LSE annual requirement will be determined by multiplying their electric load by the percentage requirement. The table also provides total corresponding energy obtained in Megawatt-hours (MWh) and the total percentage of renewable energy resources obtained through the state based on forecasts of future loads. The requirement after 2021 to 2030 will be determined by the PSC on three year period basis.

Year	% of LSE total load	Renewable Resource MWhs	% Renewbale Resource
2016 (Baseline)	-	41,296,000	25.71%
2017	0.6%	42,270,000	26.32%
2018	1.1%	43,037,270	26.81%
2019	2.0%	44,420,100	27.69%
2020	3.4%	46,598,371	29.08%
2021	4.8%	48,826,642	30.54%

For compliance year 2018, the price of the Renewable Energy Credits (RECs) is $17.01/MWh, and the price of the Alternative Compliance Payment (ACP) is $18.71/MWh.

Tier 2- Maintenance Tier

The Tier 2 will serve as a maintenance program to support existing renewable energy resources that existed under the previous NY RPS. Eligibility for Tier 2 is limited to run-of-river hydro up to 5 MW, wind, biomass direct combustion that were in commercial prior to January 1, 2003, and were originally included in New York’s baseline of renewable resources when the RPS program was first adopted. Each facility seeking funds under Tier 2 must demonstrate that the facility will cease operations without maintenance contracts. Tier 2 maintenance contracts will be awarded on a case-by-case basis, and funds issued will be tailored to the needs of the facility.

Tier 3- Zero Emissions Credit requirement

Tier 3 of the CES program is designed to support the state’s existing nuclear facilities as one of the zero emission resources necessary to achieve New York’s goal to reduce its greenhouse gas emissions by 40% by 2030. The Zero Emission Credit (ZEC) provides credit for the zero-emissions environmental attributes of a qualified nuclear generation facility in the state. In addition to Tier 1 RECs, the LSEs have an obligation to purchase Zero- Emissions Credits (ZECs). Beginning April 1, 2017, each LSE will be required to purchase ZECs from NYSERDA based on the percentage of their electric load.

NYSERDA will offer qualifying nuclear facilities a multi-year contract to purchase Zero Emission Credits (ZECs) until March 21, 2029. The ZEC price will be adjusted every two years. The first two years of the ZEC price has been set to $17.48 per MWh. The subsequent ZEC price will be adjusted every two years according to the formula developed by the commission.

Compliance Mechanism

Under the previous RPS program, New York used a central procurement model where New York State Energy Research and Development (NYSERDA) executed long term procurement of renewable energy credits (RECs) from renewable energy facilities. NYSERDA retired these RECs as compliance for the RPS and there were no requirements the LSE. For CES, the NYSERDA will continue its role as a central procurer of RECs but unlike previous RPS the compliance requirements have been assigned to the LSEs. NYSERDA will continue to procure RECs through scheduled annual solicitations set forth in compliance and procurement schedules. All the load serving entities (LSE) are obligated procure and retire proportion of their load through renewable energy via purchase and retirement of qualifying Renewable Energy Credits (RECs).

A REC represents the environmental attributes of 1 MWh of renewable energy generated. NYSERDA administers the New York Generation Attribute Tracking System (NYGATS) which tracks and issues the RECs in the state. The LSE will be able to meet their obligations by purchasing the required amount of Renewable Energy Credits (RECs) from NYSERDA or by purchasing qualified RECs from other sources. Starting from 2018, NYSERDA will sell Tier 1 RECs to LSEs on a quarterly basis, as available. For the compliance period 2018, the price of the RECs is set at $17.01/MWh. The lifetime for the RECs is not specified; more guidance regarding treatment of the RECs will be provided by the PSC in subsequent implementation orders.

An LSE that does not meet their obligations will be required to pay an Alternative Compliance Payment (ACP) to NYSERDA. The ACP is not viewed as a penalty for non-compliance, but as an alternative avenue for compliance. The rates for alternative compliance payments is $18.71/MWh for compliance year 2018, and will serve as maximum cap for the potential cost for a REC.

More details of the CES program will be published by the PSC in its implementation orders, available on the PSC website in the proceeding for Case No. 15-E-0302.

*Load Serving Entities (LSE) include all the investor-owned distribution utilities, energy service companies (ESCOs) Community Choice Aggregation programs (CCAs), jurisdictional municipal utilities, and self-supplying customers through NYISO. Micro-grids and CHP generators are not considered to be LSEs.

**The PUC initiated the REV proceedings on April 2015 following Governor Cuomo’s vision towards a comprehensive reform in the State’s power industry with a broad goal to align electric utility practice and the regulatory paradigm with the technological advances. The REV initiative seeks to create next generation of utility business models that is customer centric and is driven by technological innovation and private investments to provide resilient, affordable, and clean energy in the State. Other initiatives that are part of the REV include the Green Bank, NY Sun, and BuidSmart NY.

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