New York State to Spend $191 Million to Buy Renewable Energy Certificates from 17 Projects

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Renewable electricity project development in New York got a boost June 2, when the state announced it would purchase $191 million of renewable energy certificates (RECs) from 17 renewable energy projects. This sum is in addition to the price of electricity contained in power-purchase agreements (PPAs) between developers and utilities in the state. Each REC represents the environmental benefits associated with the production of 1 megawatt-hour of electricity from renewable sources like windfarms. In some states with renewable portfolio standards, developers can generate two revenue streams, electricity and RECs, from the same renewable electric project.

New York state has an aggressive renewable portfolio standard (RPS)--30% of its electricity must come from renewable sources by 2015. In announcing that it will purchase these RECs, the state is taking steps to meeting its RPS target.

The state is paying a weighted average of $22.01 per REC. A spokesman for the New York State Energy Research and Development Authority (NYSERDA) (Albany, New York), one of two state agencies administering the REC purchase program, declined to say what the state would pay for RECs from the different projects.

Four wind power projects account for about 80% of the generation capacity associated with these RECs. Those four projects have a combined total investment value (TIV) in excess of $500 million.

The state's $191 million in REC purchases will support construction of about 308 megawatts (MW) of renewable electricity generation, 249 MW of which will be wind power. By purchasing the RECs, the state is supporting construction of 13 grassroot generation projects, expansion of an existing hydropower generator and repowering of three other hydro projects.

In announcing the REC purchases, New York Governor Andrew Cuomo (D) said: "For New York to lead the way in innovation and technology, we must provide the resources and support necessary to enhance clean energy projects today. New York has one of the most ambitious and responsible renewable energy targets in the nation. These projects represent the future of energy in New York state and will result in a grid that is efficient, affordable, clean and reliable for generations to come. I congratulate the recipients of these awards."

In addition to generating clean electricity, Gov. Cuomo estimated that the 17 projects would create $500 million in value to the state over their 20-year lifetimes.

Cuomo said the state would purchase RECs from these four grassroot windpower projects:

• Stony Creek Wind Farm, a 94-MW project scheduled to be built in Wyoming County, with a TIV of $175 million

• Allegany Wind Farm, a 59-MW facility to be built in Cattaraugus County with a TIV of $160 million

• Howard Wind Farm, a 51-MW project scheduled to be built in Steuben County, valued at $106 million

• Marble River Wind Farm, originally proposed as a 216-MW facility with a TIV of $432 million, but now scaled back to a 45-MW facility, to be constructed in Clinton County

The state also will purchase RECs from seven grassroot landfill gas generators, two anerobic digester projects, one hydro project that will be expanded and three other hydro projects that will be repowered. Construction start dates were not immediately available.

Francis J. Murray Jr., president and chief executive of NYSERDA, said the state's RPS "has been instrumental in attracting private investment in renewable energy and supporting the state's clean-energy agenda." He said the projects would create jobs, improve the environment and strengthen the state's energy security.

"Renewable energy, along with our energy efficiency efforts, provides our best hope toward ending dependency on fossil fuels, improving regional economies, and reducing harmful emissions," added Garry Brown, chairman of the New York Public Service Commission (Albany), which regulates utilities in the state.

Earlier this year, New York announced the availability of up to $250 million in support for renewable projects. So why did the state only buy $191 million of RECs from these 17 projects? A spokesman for NYSERDA told Industrial Info Resources, "We only award projects that meet our rigid standards for economic benefit and cost. So regardless of the amount of applications we receive, we would only fund the ones that meet our standards. There were $191 million worth of projects that we deemed acceptable and were able to negotiate contracts with."

Citing competitive factors, the NYSERDA official declined to say whether the state's solicitation was over- or under-subscribed. But he did say that any funding not used this time around will be offered again for the next round of funding.

New York State is funding the REC purchase with a surcharge on the bills of customers served by shareholder-owned utilities. The state first established an RPS in 2004 to promote the development of new renewable energy resources. To date, the state said that its RPS has supported the development of 56 large-scale projects, including 18 windfarms, 25 hydroelectric facility upgrades, eight landfill-gas projects, three power plants that will partially displace coal with biomass, and two anaerobic digester gas facilities. In total, these facilities will represent more than 1,883 megawatts of new renewable generating capacity.

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