NEW YORK, Sept. 8, 2016 /PRNewswire/ -- A decision by the New York Public Service Commission (PSC) to require 50% of the state's electricity to come from renewable sources could have broad implications for energy markets and regulatory structures nationwide, according to S&P Global Market Intelligence.
The objective of the New York Clean Energy Standard (CES) plan is to reduce greenhouse gas emissions from 1990 levels by 40% by 2030, and by 80% by 2050. The proposal is notable for being the first of its kind to formally recognize the zero-carbon-emitting potential of nuclear facilities, which have come under price pressure as wholesale power prices have declined. The CES aims to address this by creating three tiers of compliance that provide incremental renewable energy credits; supporting payment mechanisms based on zero emission credits (ZECs) for existing nuclear facilities; and, when necessary, supporting existing renewable energy generation.
Based on detailed analysis of the CES plan, S&P Global Market Intelligence has made a series of projections charting its potential impact on the current energy generation mix in New York and beyond. Following are some of the report's key observations:
- Continued Reliance on "At Risk" Nuclear Plants: Without financial support from the state, New York's major nuclear operators announced their intention to retire 3,370 megawatts at three nuclear plants by the end of 2017, potentially causing a 7% increase in wholesale prices, according to the S&P Global Market Intelligence estimates. By committing to keep these plants funded, nuclear power generation should hold steady in the region, where it currently accounts for 34.1% of energy generation.
- Greater Emphasis on Renewables: About 15 GW of renewable capacity will need to be built by 2030 to meet CES requirements, resulting in a 4.2% average annual growth rate of renewable energy generation.
- Wind and Solar Renewables Favored: Under current plans, which do not include any impounded hydroelectric plants, the majority of renewable power generation is expected to come from wind, solar and biomass alternatives.
- Potential Continued Revision: After 2021, renewable power standards are to be determined every three years
- A Framework for Other States: Legal challenges are to be expected. Although similar plans have been overturned by courts in Maryland, New Jersey, and Ohio, the New York PSC contends that its plan does not violate the Federal Power Act. Once the dust settles from any legal challenges that may ensue, the New York plan could serve as a model for other states with nuclear facilities that are at risk of closing due to cost challenges.
"Like many other states, New York is demonstrating a continued interest in renewable energy," said Lisa Fontanella, Principal Analyst, S&P Global Market Intelligence. "But what makes this unique is the recognition by a government entity of how nuclear power can form one part of a renewable package. If these are the expected legal challenges, other states may follow New York down the same path."
The full S&P Global Market Intelligence report, The New York Clean Energy Standard – A 360 View, is available here.
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SOURCE S&P Global Market Intelligence