In the midst of a global health crisis, this year’s Earth Day will still be a memorable one for renewable energy developers in New York State.
Since the early days of COVID-19, the state’s energy regulators have been committed to moving forward with the goals of the Climate Leadership and Community Protection Act (CLCPA), acknowledging that the energy, climate, and economic development objectives of the state remain a priority and cannot be ignored. The state also acknowledged the current social-distancing protocols and stay-at-home orders will have an acute impact on the construction sector, which encompasses the majority of clean energy jobs statewide.
2020 Offshore Wind Solicitation
Today, in Docket 18-E-0071, the NY Public Service Commission (PSC) voted in favor of the NYS Energy Research and Development Authority (NYSERDA)’s January 28, 2020 “Petition Regarding Offshore Wind Procurement – Authorization for 2020 Procurement” (Petition). The Petition requested that the PSC authorize NYSERDA to issue a solicitation for the competitive procurement of at least 1,000 megawatts (MW) of offshore wind capacity.
By way of background, on July 12, 2018, under the Offshore Phase 1 Order, the PSC adopted a goal of procuring 2,400 MW of offshore wind capacity by 2030. Within the Phase 1 Order, the state adopted a two-phased approach to offshore wind procurement and contracting. Phase 1 was set up to address immediate procurement of offshore wind renewable energy credits (ORECs) for at least 800 MW, while Phase 2 was set up to address long-term issues, including transmission options and environmental impact criteria. Under the 2018 Solicitation, NYSERDA finalized contracts with Equinor Wind US LLC (816 MW Empire Wind Project) and Sunrise Wind LLC (880 MW Sunrise Wind Project).
There have been significant developments in the US offshore wind market as well as in New York State since the issuance of the Phase 1 Order. In July 2019, the state passed the CLCPA; in the meantime, the federal government issued an extension of an 18-percent federal investment tax credit to wind facilities that begin construction in 2020. As a result, in his 2020 State of the State address, Governor Andrew Cuomo directed NYSERDA to issue its second solicitation for offshore wind facilities in 2020.
Under the Phase 1 Order, NYSERDA is required to seek PSC authorization before conducting any further incremental OREC procurements. The Petition, therefore, requested PSC approval to procure at least 1,000 MW of offshore wind capacity, with the flexibility to evaluate bids for up to 2,500 MW, to maximize the competitive outcome of the procurement. In today’s Order, the PSC approved the NYSERDA’s proposed 2020 Solicitation.
Delay of the NYSERDA Tier 1 RES Solicitation
Meanwhile, on Tuesday, NYSERDA announced it will delay its April 2020 Tier 1 Renewable Energy Standard (RES) Solicitation. NYSERDA stated its decision follows the April 3, 2020 webinar held with its stakeholders and its request for information based on how the “COVID-19 crisis has acutely affected New York’s clean energy industry from a human resource, project development, and financial perspective.” According to NYSERDA, some of the renewable developers themselves indicated that NYSERDA issuing a solicitation during this time “could inadvertently spur unsafe behavior on the part of developers who are anxious to be ready to respond.”
Under the 2020 RES Solicitation, NYSERDA was authorized to procure approximately 1.6 million Tier 1 eligible renewable energy certificates (RECs) in accordance with the PSC’s January 16, 2020 “Order Modifying Tier 1 Renewable Procurements” in PSC docket 15-E-0302.
On March 7, Governor Cuomo issued Executive Order 202, declaring a state of emergency in an effort to address COVID-19. Subsequent executive orders have mandated in-person workforce reductions to all businesses except those deemed “essential,” and the state further clarified in its guidance documents that all non-essential construction would have to safely shut down. Consequently, the construction of many clean energy projects that are supported by NYSERDA, including those supported through its annual solicitation under the Tier 1 Renewable Energy Standard, have been suspended.
Barclay Damon will continue to monitor NYSERDA’s updates on the 2020 Tier 1 RES Solicitation and remains available to provide counsel to clients impacted by NYSERDA’s decision and COVID-19 generally, such as determining whether activities are considered “essential” under Executive Order 202.
If you have any questions regarding offshore wind energy development in New York State or how NYSERDA’s ongoing solicitations may impact your projects in New York State, please contact Brenda Colella, Regulatory Practice Area co-chair and co-team leader of the Renewable Energy and Energy Markets Teams, at bcolella@barclaydamon.com; Ekin Senlet, partner, at esenlet@barclaydamon.com ; Ivan Zajicek, associate, at izajicek@barclaydamon.com ; or Angela Sicker, law clerk, at asicker@barclaydamon.com.
We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. You can reach our COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.