Strong federal and state energy policies have led to an explosion of renewable energy development in the United States, particularly in the Northeast. New York State has become a leader in establishing renewable energy goals and mandates that, in turn, are driving the economy.
Under the Climate Leadership and Community Protection Act (CLCPA), passed by the legislature in June 2019, the State of New York committed to 70 percent of electrical generation from renewable energy sources by 2030. More specifically, the CLCPA includes the following goals:
- 6,000 MW of solar by 2025
- 3,000 MW of energy storage by 2030
- 9,000 MW of offshore wind by 2035
- 100 percent carbon-free electricity by 2040
- 85 percent reduction in greenhouse gas emissions from 1990 levels by 2050
To facilitate these goals, the New York State Energy Research Development Authority (NYSERDA) has, over recent years, implemented a number of incentive programs, including, among others, the NY-Sun Program, Energy Storage Incentive Program, solicitation for offshore wind renewable energy certificates, and solicitation of large-scale renewables Tier-1 renewable energy credits. More information about each of these programs can be found here. NYSERDA’s competitive programs have presented significant growth opportunities for renewable energy developers, especially in the solar, wind, and battery storage industries. Despite the fact that many of these programs have been fulfilled and closed, opportunities remain and more incentive programs are expected to be announced in the future.
Other legislative acts New York State has taken to advance renewable energy development includes the formation of the Office of Renewable Energy Siting (ORES) and a uniform tax assessment model for renewable energy assets.
As part of the Accelerated Renewable Energy Growth and Community Benefit Act, adopted in April 2020, the state overhauled the siting program for major renewable energy facilities, formerly under the jurisdiction of New York State Board on Electric Generation Siting and the Environment under Article 10 of the Public Service Law. The act created a new Office of Renewable Energy Siting within the Department of State to have exclusive siting permit authority of all proposed renewable energy projects consisting of 25 MW or more (with projects of 20–25 MW allowed to opt in). The act further simplified the siting program for major renewable energy projects by:
- Eliminating a number of time-consuming pre-application procedures and documents
- Establishing a uniform set of standards and conditions applicable to each type of major renewable energy facility
- Mandating that the final permitting decision be made no later than 12 months from the date the application was deemed complete
Most recently, with the passage of the 2022 Budget Bill, the state legislature adopted amendments to the Real Property Tax Law, creating a new RPTL Section 575-b, which tasked the New York State Department of Taxation and Finance, in consultation with NYSERDA, to develop a standard appraisal methodology for solar and wind energy systems with a nameplate capacity equal to or greater than 1 MW.
On October 15, 2021, the New York State Department of Taxation and Finance published its appraisal model using a discounted cash flow approach and a discount rate to be applied to the model. The discount rates are based on investment risk associated with the system type and size; they are separated into three distinct categories, including: large-scale solar (5 MW or larger), VDER solar (1–5 megawatts), and wind (1 MW or larger). The model is subject to change annually; however, for the meantime, it provides a uniform tax assessment structure for solar and wind energy facilities.
The programs and legislative acts discussed above have proven successful in attracting renewable energy developers to New York—including many foreign companies. On Earth Day 2021, then-Governor Cuomo announced that more than 20 large-scale renewable infrastructure projects were under construction, creating more than 2,000 jobs and nearly $1.5 billion in private investment. These numbers are anticipated to grow annually as more projects receive ORES approval and commence construction.
Despite this progress and prosperity, there are challenges. With the current supply chain crisis, renewable energy developers are experiencing delays in receiving materials, which are largely sourced overseas. This is causing costly delays in construction schedules. Many developers who have used NYSERDA programs or renewable energy credits or both are committed to paying prevailing wage and using New York State suppliers and contractors, which are also in short supply. Further, foreign developers should consider other legal issues that may arise with cross-border development, including corporate formation and governance, labor and employment, permitting, and various taxation issues.
It remains to be seen if New York’s programs are enough to attract the amount of renewable energy development needed to reach the State’s CLCPA goals, but for now, opportunities exist for developers to seize.