The Tier 2 Bill establishes a new Tier 2 Renewable Energy Credit (REC) market for existing large-scale, renewable energy resources that sell energy within the New York Control Area. Resources are eligible if they (1) have 25kW+ of capacity (and up to 50MW for hydropower), (2) are an eligible technology under current rules, (3) are physically within the New York Independent System Operator’s (NYISO) jurisdiction, and (4) meet specific deliverability requirements.
Eligible existing renewable resources must not have an REC contract with NYSERDA or a load serving entity and otherwise meet deliverability and eligibility requirements according to NYSERDA.
The Public Service Commission (PSC), in consultation with NYSERDA, is directed to establish a program requiring load serving entities (utilities, ESCOs, etc.) to purchase Tier 2 RECs to ensure “continued viability” of eligible resources. The PSC will provide annual targets and mandates from 2019 to 2030 to ensure demand for Tier 2 RECs during that time to achieve the 50 by 30 target. The targets and mandates should reflect the quantity of renewable energy generation that services total load in the state for each annual period. The PSC will proportionally allocate Tier 2 REC requirements to load serving entities based on their load, and LSEs must demonstrate compliance through annual filings.
Tier 2 REC prices will be annually set at 75 percent of the weighted average cost of the Tier 1 REC prices from the prior calendar year. Eligible resources may seek additional assistance from NYSERDA through contracts for a minimum of 10 years, subject to a financial hardship test.
Because the Tier 2 Bill suggests rolling eligibility from 2019 to 2030 and an intent to keep eligible resources online and contributing to New York State’s goal of 70 percent renewable energy generation by 2030, the Tier 2 Bill creates an attractive financial incentive to keep renewable generation online and continue operation after initial REC contracts expire.
If you have questions on how this Tier 2 Bill may affect your business or project, please contact a member of our Regulatory or Project Development Practice Areas.