NYC plan to import Canadian hydro sparks opposition

Source: By David Iaconangelo, E&E News reporter • Posted: Wednesday, September 9, 2020

A plan to subsidize the importation of Canadian hydropower into New York City is sparking arguments over how the state should overcome a major obstacle to its ambitious 2030 clean power goal.

By decade’s end, New York state needs to get 70% of its power from renewables under the Climate Leadership and Community Protection Act.

Much of the state’s grid zones are already well beyond that mark. But New York City, consumer of one-third of the state’s power, stands apart from the rest of the grid. After the Indian Point nuclear plant shutters next year, the city will get 94% of its supply from fossil fuels.

That has led to an effort to connect it to large-scale Canadian hydropower. Mayor Bill de Blasio (D) has said he intends to contract out for supplies with Quebec’s provincial utility and even help finance an associated $3 billion transmission line.

Gov. Andrew Cuomo (D) is an enthusiastic backer of that effort. And in a June white paper, state energy officials floated their own hydro incentives for New York City in the form of a special tier of renewable energy credits.

Renewable producers that delivered their power directly into the city or sited generation facilities within it should be able to qualify for the credit, suggested regulatory staff and the New York State Energy Research and Development Agency (NYSERDA).

Hydro-Québec, the Quebec utility that would likely benefit from the credit, wants to sell as much as 15% of New York City’s 2019 power consumption through the proposed transmission line. It says that the state’s climate goals will be impossible to meet otherwise.

“The opportunity presented by [the credit] to replace existing fossil fuel-fired generation serving New York City may be the only near-term option of scale,” the company wrote to regulators in an Aug. 31 filing.

But in an outpouring of public comment, dozens of local and national clean energy advocates have raised doubts about the idea and urged regulators to do further study.

Some groups remain uncertain as to whether the credits would safeguard the hydro imports’ low-carbon profile, as claimed, and note that some Indigenous groups in Canada are bitterly opposed to a similar hydropower deal in Maine and Massachusetts.

Others, including national renewable trade groups and incumbent gas interests, warn that subsidizing foreign hydro production could undermine local job creation goals.

Regulators should refashion the credit to prioritize New York’s wind, solar and small-scale hydro producers, wrote a coalition that included in-state clean energy alliances as well as the Solar Energy Industries Association and the American Wind Energy Association, in an Aug. 31 filing with utility regulators.

Importing 1,000 megawatts of hydropower — the capacity of the planned Champlain Hudson Power Express transmission line — would displace about one-third of new wind, solar and other in-state renewables, they estimated.

“[T]he specific design of the policy deserves more public discourse,” they wrote.

Gary Sutherland, a spokesperson for Hydro-Québec, dismissed the notion that hydropower would compete with New York’s renewables.

“The need for clean energy downstate is daunting and will require all the different clean energy options available,” he wrote in an email to E&E News, adding, “There’s more than enough room for everyone.”

The point of the proposed credit, wrote NYSERDA and staff at the Department of Public Service in June, is to create a more reliable source of clean generation than offshore wind — the largest renewable resource located near New York City — and small-scale solar.

The emissions profile of Hydro-Québec’s energy, however, has been under fire from environmentalists, Indigenous groups and even natural gas interests, who say that new imports from the company would simply divert sales from neighboring markets, leaving a void elsewhere to be filled by fossil fuel power.

In their June white paper, New York officials sought to avert that possibility by suggesting power generators could only claim the credit for additional sales of electricity relative to recent levels. And the credit would only apply to power generated above the company’s average output over the last three years.

But in its Aug. 31 filing, Hydro-Québec opposed setting those baselines, arguing it would lead to “unintended consequences” for the state.

Requiring the company to maintain its sales into upstate New York even while more renewables come online would lead to increased curtailment of wind and solar production, the company said. It would also force Hydro-Québec to sell its power during “uneconomic” hours, boosting the cost of hydro imports for New York City.

The company suggested a number of alternatives, like establishing a minimum price at which the power sale requirements would kick in, or allowing the company to bank deliveries made before the construction of a transmission line into New York City.

Decarbonizing the city’s power sources would also help its buildings, which contribute 70% of emissions, comply with a municipal climate law that phases in over the next decade.

Another open question about the renewable credit proposal is whether the state should count credits bought by building owners, as an alternative to emissions reductions, toward its 70% renewable goal for 2030.

Green groups say that would constitute an unnecessary loophole. Large real estate interests, represented by the Real Estate Board of New York, argue it would more accurately reflect “the actual amount of renewable power in New York,” and enthusiastically back the creation of credits, noting “significant interest among building owners” in buying them.

“While many details need to be refined in order to make the program successful,” the group wrote on Aug. 31, the proposed credit “addresses one of the major hurdles to decarbonizing electricity in New York City.”