On September 25, as part of New York City Climate Week, E2 members and guests gathered for a business roundtable, “A New Energy Vision for New York State – New Models, New Markets,” with Richard Kauffman, Chairman of Energy and Finance for New York.
Kauffman laid out NYS’s sweeping agenda for modernizing the state’s energy system and transitioning to a low carbon economy. The vision calls for more distributed energy resources, increased customer engagement in energy management, and greater reliance on markets and private capital.
The underlying theme is “market transformation”. Kauffman cited an example of existing challenges: most residential energy efficiency measures are already cost effective, and over 70 different programs are offered around the state – but at the current retrofit rate, it will take 1000 years to retrofit all existing homes. Subsidies alone are not working to achieve the state’s energy efficiency goals.
Kauffman urged the private sector to engage in creating the new rules and come forward with new ideas and pilot projects now – not wait until “the regulatory oceans boil” and proceedings are concluded. He wants new ideas to be incorporated as the process evolves, to enable quick moves from demonstration projects to mass deployment.
Even as regulatory proceedings are underway at the Public Service Commission to move to more competitive electricity markets (see more on REV), new models are being tested in regions of high demand:
- Brooklyn – A new substation to handle the growing load in the traditional system would have cost over $1 billion. ConEd proposed an alternative solution to utilize distributed generation, combined heat and power and demand response to serve the load – and defer investment in a substation.
- Central Hudson – Hudson Valley Electric & Gas Company is proposing community solar and distributed generation in capacity constrained areas.
- Long Island – PSEG is incentivizing solar and 50MWs of storage instead of building new generation and new distribution.
The state is addressing the transformation through multiple approaches. Among them:
- NY Sun: A 10-year, $1bn commitment for solar installation; incentive levels are tied to sale and eliminated when the market has been created. The 10 year declining incentive structure of NY Sun provides an example where the supports are tied to scale, with incentives eliminated when the market has been created.
- NY Green Bank: A specialized finance institution that works through intermediaries to bridge – gaps in financial markets for smaller projects and those that currently have limited use of bond markets.
- Clean Energy Fund: Ratepayer funds will be restructured into a single fund under NYSERDA, and directed towards new programs for “Market Development” and “Technology and Business Innovation.”
- K-12 Solar: Community aggregation offers a path to accelerating distributed resources. NYS’ K-12 Solar program has signed up 400 schools in 21 counties, with the aim of making schools the center point for efforts to reach parents, business and town halls.
- NY Prize: A $40 million prize competition open to communities around the state to provide local service and address resiliency.
Kauffman concluded his remarks by noting that renewable portfolio and energy efficiency standards have fallen short of their targets. He urged E2 and our guests to see the comprehensive approach now being put into place as a more cost-effective and sustainable way to reduce CO2. By using public programs to stimulate and create markets for private activity, innovation and investment, the goal is immediate – and long term – emissions reductions with clean, distributed energy resources.
As a postscript – On December 4, E2 submitted comments on NYSERDA’s Clean Energy Fund Proposal. While generally supportive of the state’s objectives, our conclusion was explicit: “GHG reductions can’t just be an ‘outcome’. NYSERDA needs to develop a set of overarching GHG objectives and metrics that enable it to prioritize programs, assess progress and make mid-course corrections. We urge that the goals be appropriately aggressive, with interim targets that ensure the state is “on track” to achieve its emissions reduction goals.
On December 17, E2 and a coalition of groups will submit comments to Governor Cuomo to share our concern regarding new hydraulic fracturing (“fracking”).