New York climate plan sees renewables, new technology replacing fossil-fueled power

Source: By Jared Anderson, S&P Global • Posted: Wednesday, January 5, 2022

Power demand in New York State is expected to increase by 65% to 80% by 2050 while fossil fuel-fired power generation is simultaneously shut down through a strategy that relies on accelerating renewable energy growth, enhancing power markets and exploring technology solutions.

The state’s climate change mitigation blueprint, officially called the “New York State Climate Action Council Draft Scoping Plan,” constitutes a framework for policymakers as the state moves towards developing a final scoping plan that informs regulations needed to meet the climate goals in 2019’s Climate Leadership and Community Protection Act, or CLCPA.

The CLCPA mandated that New York reach 70% renewable electricity by 2030, develop a zero-emissions power system by 2040 and reduce economy-wide greenhouse gas emissions by at least 85% from 1990 levels by 2050, among numerous other power sector related goals like installing 9,000 MW of offshore wind capacity by 2035.

“With natural gas currently being the principal fossil fuel source for electricity generation in the state, a significant transformation of the power sector is necessary to meet the Climate Act’s requirements of 70% renewable electricity by 2030 and 100% emissions-free electricity by 2040,” according to the draft scoping plan.

A major part of the plan for meeting the goals is the deployment of clean energy resources like land-based wind and solar, offshore wind, hydropower, fuel cells that use renewable fuels, and energy storage.

While programs are in place to help deploy these resources, “aggressive deployment” of clean resources must continue, the plan said.

The Department of Environmental Conservation’s emissions regulatory programs and the New York Energy Research and Development Authority’s procurement programs are the “push-and-pull that is designed to safely phase out the use of fossil fuel for electricity and gradually replace it with renewable technologies,” according to the document that was released on Dec. 30, 2021.

Should reliability needs or risks be identified, emissions-free solutions should be fully explored, such as storage, transmission upgrades or construction, energy efficiency, demand response, or another zero-emissions resource and only after these alternatives are analyzed and “determined to not be able to reasonably solve the identified grid reliability need shall new or repowered fossil fuel-fired generation facilities be considered,” the plan said.

The scoping plan envisions state agency coordination on determining the specific level of emissions reductions that will be needed between now and 2040 along with a renewable energy procurement and interconnection schedule that maintains reliability.

“When setting emission reduction targets, consideration should be given to the location and emissions profile from fossil generating units across the state,” along with planning studies from involved organizations to “inform decisions to address these emissions in the most efficient and effective manner possible,” according to the plan.

Market design tools

Potential market mechanisms that could help remove fossil fuel-fired generating facilities from the system include carbon pricing and valuing environmental attributes either within or outside the New York Independent System Operator markets.

Specifically, a clean dispatch program that creates Clean Dispatch Credits, or CDCs, could be developed. Emission-free, fully dispatchable assets that dispatch during peak load times would generate CDCs and consideration would be given to both capacity and per-MWh payment structures, according to the scoping plan.

Additional strategies for meeting the climate goals include supporting clean energy siting and community acceptance, promoting community choice aggregation, advancing demand-side solutions, and exploring technology solutions.

Regarding the latter, the plan noted the 100% emissions-free by 2040 goal “presents significant challenges” that cannot currently be met by deploying existing technologies, with current studies finding that even after full deployment of available clean energy technologies, “there is a remaining need for 15 GW to 25 GW of electricity generation in 2040.”

Such technologies could include new long duration storage, renewable natural gas, green hydrogen, nuclear, or something yet to be developed. Regardless, the plan calls for “aggressive action and smart planning” to make the needed energy system changes over the next two decades.

Industry reactions

While fairly comprehensive, the plan is light on details regarding how much this energy transition will cost, Gavin Donohue, president and CEO of trade group Independent Power Producers of New York, said in a Jan. 4 phone call.

“The biggest shortcoming in the plan is it does not identify payment mechanisms for reaching the decarbonization goals and consumers don’t know how this will impact their electricity bills,” Donohue said.

“Until we know that, it lacks sufficient detail,” he said.

“A positive aspect of the plan is that it includes provisions that support carbon pricing which can reduce out-of-market subsidies while helping meet decarbonization goals,” Donohue said, adding “it’s noteworthy that the state has finally addressed carbon pricing several years after it was officially proposed by the NYISO.”