This 297-page study is issued by the New York State Department of Public Service (DPS). The supporting analysis in it was led by the New York State Energy Research and Development Authority (NYSERDA) working in collaboration with DPS. NYSERDA and DPS acknowledge the contributions of Sustainable Energy Advantage, LLC (SEA) and SEA’s subcontracting consultants AWS Truepower, Antares Group, and Daymark Energy Advisors for their primary analytical role in the development of the analysis for Tier 1 and Tier 2 in this Study.
The executive summary is here:
The Clean Energy Standard Cost Study (Study) complements and advances the Clean Energy Standard (CES) Staff White Paper (1). The White Paper was published on January 25, 2016 and proposes the CES as New York’s policy to deliver the goals of generating 50% of our electricity from renewable resources like solar, wind, and hydro renewable electricity by 2030, while also ensuring that upstate nuclear plants continue to generate so that the carbon savings provided by these plants are maintained. The CES builds on the State’s nationally leading efforts to reduce greenhouse gas emissions 40% by 2030 and 80% by 2050, protect the health and safety of New Yorkers, and stimulate economic growth, including the Reforming the Energy Vision initiative, Clean Energy Fund administered by NYSERDA, Regional Greenhouse Gas Initiative, and plans to eliminate coal generation by 2020.
A benefit-cost analysis of the CES is required to support the Public Service Commission’s (PSC) obligation to ensure electric prices are just and reasonable. The Study examines the impact that key cost drivers can have on overall consumer bills, and will assist the PSC to design and implement a cost-effective CES. The Study estimates that, even in this period of lower electricity prices due to historically low natural gas prices, New York can meet its clean energy targets with less than a 1% impact on electricity bills (or less than $1 per month for the typical residential customer) in the near term and shows net positive benefit of $1.8 billion by 2023. (1) Case 15-E-0302. Reference is also made to the analysis provided in the Draft Supplemental Environmental Impact Statement (EIS) published on February 23, 2016, see: http://documents.dps.ny.gov/public/MatterManagement/MatterFilingItem.aspx?FilingSeq=154829&MatterSeq=48235
The implementation of the CES is aligned with Reforming the Energy Vision (REV) and the Clean Energy Fund(1), which will reduce ratepayer collections over time and reduce the costs of clean energy technologies such as solar, wind, and energy efficiency through programs like NY-Sun, the Green Bank, and Research & Development. All of these investments will help to lower the cost of achieving the 50% renewables goal.
This Study provides analysis examining the cost impact of variations in key cost driver assumptions. A “base case” scenario – which reflects mid-point assumptions for each key factor – is used as a reference point for comparison. The conclusions presented in this study are based on analysis covering the period to 2023. This coincides with the timing of periodic reviews of the CES by the PSC as proposed in the White Paper, and recognizes that any projection extending to 2030 (and the decades that follow) is subject to significant uncertainty. The net benefits of the CES to 2023 of $1.8 billion reflect program costs and the benefits associated with lower carbon emissions.
The CES forms a crucial component of efforts to deliver the New York State targets of reducing carbon emissions by 40% by 2030, and 80% by 2050, both by maintaining emission reductions from existing nuclear and renewable energy facilities, and achieving further carbon reductions through new renewable energy deployment. The Study quantifies these carbon benefits using the “social cost of carbon” as published by the U.S. Environmental Protection Agency. 6 (1) Case 14-M-0094, Proceeding on Motion of the Commission to Consider a Clean Energy Fund, January 21, 2016, www.nyserda.ny.gov/About/Clean-Energy-Fund
This Study concludes that the CES can be achieved in a manner that balances cost impact and results in net benefits, and several variables favor investment in renewable energy deployment. Specifically: 1. Two of the cost drivers that show significant upward or downward changes in overall cost under high and low cost scenarios are also factors that New York State can influence to a large extent: procurement structures and the total amount of energy use. This emphasizes the importance of ongoing work to determine the mix of procurement structures (as set out in the White Paper), as well as state energy efficiency programs, such as the Clean Energy Fund, to reduce electricity consumption. 8
- Future developments in energy prices are uncertain, and are expected to be an important driver of the program cost of the CES. However, swings in CES program costs as a result of energy prices would be balanced by opposite effects on ratepayers’ overall electricity bills. For example, lower-than-expected energy prices could increase the CES program costs, but this would be offset by a reduction in energy bills from lower wholesale energy prices.
- While interest rates and technology costs also have an impact, the analysis indicates that – over the Study period to 2023 – it is smaller than that of the other drivers examined. This also suggests that a technologyneutral approach to structuring the CES Tiers is an appropriate design choice.
- The current federal tax credits are an important contributor towards reducing the cost of renewables to New York State, and a further extension of the tax credits at their current level could result in a substantial further reduction of the costs.
- The current combination of low energy prices, low interest rates and available tax credits presents a uniquely favorable environment for near-term investment into renewables as proposed by the White Paper. The benefits from these investments can be realized with less than a 1% near-term bill impact.
- Using the standard Federal and State regulatory approach to valuing avoided carbon emission, the CES delivers a significant net benefit for all New Yorkers over the Study period.
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