On October 24, 2023, Governor Kathy Hochul announced “the largest state investment in renewable energy in United States history” including three offshore wind and 22 land-based renewable energy projects “totaling 6.4 gigawatts of clean energy, enough to power 2.6 million New York homes and deliver approximately 12 percent of New York’s electricity needs once completed.” These projections are needed to implement the New York Climate Leadership & Community Protection Act (Climate Act). This post looks behind the hype and what it really means.
I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 350 articles about New York’s net-zero transition. I have devoted a lot of time to the Climate Act because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good by increasing costs unacceptably, threatening electric system reliability, and causing significant unintended environmental impacts. The opinions expressed in this post do not reflect the position of any of my previous employers or any other organization I have been associated with, these comments are mine alone.
Overview
The Climate Act established a New York “Net Zero” target (85% reduction and 15% offset of emissions) by 2050. It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council (CAC) is responsible for preparing the Scoping Plan that outlines how to “achieve the State’s bold clean energy and climate agenda.” In brief, that plan is to electrify everything possible using zero-emissions electricity. The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies. That material was used to develop the Draft Scoping Plan. After a year-long review, the Scoping Plan recommendations were finalized at the end of 2022. In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation. In addition, New York must contract with developers to provide the enormous wind and solar resources necessary for a zero-emission grid.
If it’s failing, double down
One of the rules Irina Slav argues that the net-zero transition leadership climate crusaders follow is “If it’s failing, double down”. New York’s transition has not reached the point where we have performance data that shows that renewables cannot deliver the promises of Climate Act advocates. However, Hochul’s announcement for more new contracted projects when existing projects under development have begged for renegotiation is a perfect example of this rule.
In mid-October the Public Service Commission denied requests by European energy firms Orsted, Equinor, BP and other renewable developers to charge customers billions of dollars more under future power sale contracts for four offshore wind and 86 land-based renewable projects. “These projects must be financially sustainable to proceed,” Molly Morris, president of Equinor Renewables Americas, told Reuters, noting Equinor and BP will “assess the impact of the state’s decision on these projects.” Soon thereafter Governor Hochul announced a “10-Point Action Plan to Expand the Renewable Energy Industry and Support High-Quality Clean Jobs in New York State”. A couple of weeks later New York State Energy Research & Development Authority (NYSERDA) described what was included in the doubling down “largest-ever investment in renewable energy”. According to the announcement, “Three offshore wind and 22 land-based renewable energy projects totaling 6.4 gigawatts will power 2.6 million New York homes and deliver 12% of New York’s electricity needs in 2030”. This post unpacks these claims and looks at the projects themselves.
Offshore Wind Projects
The NYSERDA offshore wind project page describes the results of NYSERDA’s third competitive offshore wind solicitation:
NYSERDA provisionally awarded three projects totaling 4,032 MW, enough to power 2 million homes: Attentive Energy One (developed by TotalEnergies, Rise Light & Power, and Corio Generation), Community Offshore Wind (developed by RWE Offshore Renewables and National Grid Ventures), and Excelsior Wind (developed by Vineyard Offshore).
There is no question that this project award is a key component of the net-zero transition. One of the legal mandates of the Climate Act is 9,000 MW of offshore wind by 2035. The Scoping Plan Integration Analysis projects offshore wind capacity of 6,200 MW by 2030 and 9,000 MW by 2035. The capacity in these projects is 45% of the mandate. NYSERDA claims these projects are supposed to provide about ten percent of New York’s electricity load, but I estimate that the energy produced is closer to 9% in 2030.
The Solicitation Awards Fact Sheet explains that the combined portfolio of projects is expected to:
- Generate enough renewable, locally-produced energy to power more than 2 million homes, or approximately 10 percent of New York’s electricity load.
- Deliver $3.4 billion in commitments to Disadvantaged Communities, in alignment with New York’s Climate Act goals.
- Contribute more than $85 million to support wildlife and fisheries research, mitigation, and enhancement.
- Deliver over $100 million to training New York’s workforce to build and service offshore wind projects.
- Commit nearly $300 million to Minority and Women Owned Business Enterprises (MWBEs) and Service-Disabled Veteran Owned Businesses (SDVOBs).
- Reduce greenhouse gas emissions by 7 million metric tons annually, the equivalent of taking over 1.6 million cars off the road every year.
- Provide billions of dollars in public health benefits resulting from reduced exposure to harmful pollutants—including fewer episodes of illness and premature death, fewer days of school or work missed, less disruption of business, and lower health care costs.
- Commit to purchase more than $500 million in U.S. iron and steel and to include Project Labor Agreements, labor peace agreements, and prevailing wages.
The expectations for these projects cover a wide range of benefits to favored constituencies. The Climate Act mandates that at least 35% of the investments support Disadvantaged Communities but just how that is calculated is unresolved. I worry that funding the transition is going to be expensive enough without diluting the efficiency with this type of mandate. I wish I could say that the $85 million to support wildlife and fisheries research will cover the costs to monitor the effect of construction on whales but I am not optimistic that will be the case. There is no question that the trades workforce has to be expanded for all the construction projects, but I am not sure throwing money at it is going to create incentives for people to choose those careers. The money towards specific businesses is transparent pandering to a political constituency and increases the difficulties of the transition. NYSERDA claims 7 million metric tons of reductions per year, but I estimate 3.9 million metric tons. The claim for billions of public health benefits does not stand up to scrutiny. The final $500 million commitment is another transparent appeal to a political constituency, this time organized labor.
The NYSERDA 2022 solicitation page provides information about costs to New Yorkers:
All three projects are anticipated to enter commercial operation by 2030. The average bill impact for customers over the life of the projects will be approximately 2.73 percent, or about $2.93 per month. The weighted average strike price of the awarded offshore wind projects over the life of the contracts is $96.72 per megawatt hour in 2023 (real) dollars, which equates to a nominal weighted average strike price of $145.07 per megawatt hour. The strike prices comprising the weighted average cited above are subject to certain adjustments in accordance with the terms of the awarded contracts, including, in some cases, adjustments based on certain price indices, interconnection costs and/or receipt of qualifying federal support.
The offshore wind industry is new and requires development of infrastructure and supply chain support. The announcement also includes this:
Delivering on Governor Hochul’s commitment to make New York State a hub for the U.S. offshore wind supply chain, this procurement includes continued support for offshore wind turbine manufacturing, which leverages over $2 in privately committed capital for every $1 of New York public funding.
NYSERDA is also awarding $300 million in state investment to enable the development of two supply chain facilities including nacelle manufacturing and assembly by GE Vernova, along with blade manufacturing developed by LM Wind Power Blades USA, both planned for New York’s Capital Region. This investment has the capacity to supply almost one-third of the total regional demand for offshore wind by 2035, which will unlock $968 million in public and private funding, create 1,700 direct and indirect jobs backed by prevailing wage and project labor agreements, and result in over $3 billion in direct spending in the State. Additionally, these projects also align with available federal tax credits, enabling future savings to New York’s ratepayers.
This is another buried cost of the Climate Act transition. They brag that they are leveraging over $2 in privately committed capital for every $1 of New York public funding. I see that as a 33% subsidy. The rest of the discussion is another example of political pandering.
New York’s Land-Based Renewable Energy Procurement
The NYSERDA announcement also described other projects included in the procurement:
In addition, New York also announced its latest round of conditional land-based large-scale renewable awards, which are comprised of 14 new solar projects, six wind repowering projects, one new wind project, and one return-to-service hydroelectric project, totaling a combined 2,410 megawatts – enough new renewable generation to power over 560,000 New York homes annually for at least 20 years. These projects are expected to spur over $4 billion in direct investments and create over 4,100 good-paying short- and long-term jobs across New York State.
As shown in the following table there are four sets of projects in the procurement. There are 14 solar projects totaling 1,495 MW, six wind project repowering projects totaling 612 MW, a new 298 MW wind project, and a 5 MW hydropower project.
The Large-scale Renewables 2022 Renewable Energy Standard Solicitation summary states:
NYSERDA awarded 22 large-scale renewable energy projects from the 2022 Renewable Energy Standard solicitation. The awarded projects are located throughout New York, including one paired with a utility-scale energy storage facility. Planned to be operational by 2028, these projects are expected to spur over $4 billion of direct investment and will create more than 4,100 short- and long-term jobs in development, construction, and operations and maintenance. Payments under these awards will not commence until projects have begun commercial operation after having obtained all required permits and local approvals.
The description of these projects leaves out some relevant points. These awards do not guarantee the projects will be built because not all the projects have completed applications and given the volatility of the supply chains and inflation the developers may decide not to proceed if they think they cannot make money. All these are intermittent sources and require energy storage to guarantee that the energy can be used when it is needed. Of the total of 2,410 MW proposed the only energy storage facility included is only for 20 MW capacity and I could not find out how much energy (MW-hours) were planned. Somebody else is going to have to subsidize these projects for the energy storage necessary to keep the lights on. The description talks about the direct investments and job creation but neglects to point out that the largest solar project is not in New York State so the job creation does not accrue to New York.
The Solicitation summary goes on to claim:
As these projects proceed, NYSERDA will continue to work with their developers, other State agencies, and stakeholders to preserve and protect New York’s valuable agricultural and environmental resources as part of the project development process. Once operational, these projects will add 2,410 megawatts of new renewable capacity and are expected to generate enough clean energy to power more than 560,000 homes each year and reduce carbon emissions by more than 2 million metric tons annually, the equivalent to taking over 440,000 cars off the road every year.
The claim that NYSERDA will work with the developers to “preserve and protect New York’s valuable agricultural and environmental resources as part of the project development process is a hollow gesture. As I have said many times there is no implementation plan that formally protects those resources and until a plan that explicitly protects farmland and cumulative environmental resources is implemented this is all just talk. My estimate of the carbon dioxide reduction is consistent with the 2 million metric ton projection. Finally, note that these projects will provide 3.1% of the expected load in 2030.
Finally, the cost impacts are described:
The average bill impact for customers over the life of the projects will be approximately 0.31 percent, or about $0.32 per month. The weighted average strike price of the awarded projects over the life of the contracts is $60.93 per megawatt hour in 2023 (real) dollars, which equates to a nominal weighted average strike price of $80.96 per megawatt hour. The strike prices comprising the weighted averages cited above are subject to certain adjustments in accordance with the terms of the awarded contracts based on certain price indices
There is a ramification of the six wind repowering projects that affect 612 MW of capacity. All six projects came online in 2008. I found a description that said:
Operational since 2009, Altona Wind is a project to which AES is excited to bring new life. The repowering of the wind park will incorporate significant component and control systems replacement with design improvements, resulting in greater energy production and improved energy reliability and availability. Repowering will ensure continued, significant economic benefits to the local community via HCA (Host Community Agreements) and PILOT (Payments in Lieu of Taxes) agreements.
This is notable because the Integration Analysis did not retire any of the existing wind resources in its projections. It appears that the total costs out to 2050 should include repowering costs every 15 to 20 years. The failure to incorporate that nuance means that the cost projections that NYSERDA claims show that benefits outweigh the costs are biased low.
Conclusion
The political theater associated with the “largest state investment in renewable energy in United States history” hides real problems. My experience with every aspect of the Climate Act is that detailed examination uncovers more uncertainty related to reliability. A key consideration renewable resources is energy storage but only one of the 22 projects included any energy storage (20 MW of storage to 2,410 MW of generating capacity with no estimate of energy ,MWh, storage capability). There is no feasibility analysis that demonstrates that the current approach will work. Instead, the only plan appears to be contract for as many resources as possible and hope it all works. Coupled with the aspects of the transition plan that are designed to appeal to particular political constituencies regardless of their effectiveness relative to the transition, this approach is doomed.
My other concern is costs. To their credit the announcements did include an expected cost to consumers totaling $3.25 per month for 12% of the energy needs in 2030. Assuming the costs for the remaining energy needs are the same, the increase in costs jumps to over $27 per month just for energy supply. The Hochul Administration has never provided all the costs to consumers for the Climate Act or provided details of the costs and expected emission reductions associated with the Scoping Plan control strategies. I have found that the Integration Analysis used to develop the Scoping Plan assumed that renewable development costs would decrease over time. Recent events have shown that is not happening. In addition, the fact that a renewable developer has a contract to repower wind turbines demonstrates that the Integration Analysis presumption that replacements out to 2050 were not needed is wrong. Therefore, the costs will be much higher than claimed.
Despite the lack of a feasibility analysis and the flawed cost estimates the Hochul Administration is racing ahead doubling down that someday the reliability issues will be resolved and the costs will fall. I think the New York electric system is headed to a reliability and affordability crisis.
Pragmatic Environmentalist of New York 