NY’s latest power play

by Kenneth Girardin |  | NY Torch

Renewable energy companies aren’t building the windmills and solar panels Governor Andrew Cuomo hoped for when he pledged in 2015 to have 50 percent of the state’s electricity come from renewables by 2030. Cuomo’s latest solution? The state will build them itself.

Part GG of Cuomo’s proposed Transportation and Economic Development (TED) Article VII budget bill would let the state Power Authority, which owns and operates the massive hydroelectric dams at Niagara Falls and Massena, “finance, plan, design, engineer, acquire, construct, operate or manage” renewable energy projects, defined as “solar power, wind power, hydroelectric, and any other generation resource authorized by any renewable energy standard adopted by the state for the purpose of implementing any state clean energy standard.”

It’s difficult to overstate what type of change this represents in state energy policy, which since Cuomo was elected has been to cajole private interests into investing in utility-scale renewable energy projects without the state building them itself.

The state since 2013 has been financing green energy projects through the Cuomo-created Green Bank, which last year reported having lent $259 million for the purpose and committed another $85 million. More importantly, the state Public Service Commission’s 2016 Clean Energy Standard ordered utilities and anyone getting power directly from the grid to begin buying renewable energy credits (RECs), a mechanism by which renewable generators could remain profitable while selling electricity into the grid at a loss.

That heavy-handed approach, by which the state puts up the capital and then makes people buy the product, still isn’t delivering the desired results. The state has twice had to slash the amount of RECs it’s requiring utilities and others to buy simply because not enough eligible renewable energy is produced here (and since power generated by rooftop solar panels didn’t count toward the total).

NYPA, by the way, is authorized already to use its profits from the large hydroelectric plants to buy energy on the market, a mechanism by which it was hoping to prop up offshore wind developers as recently as 2011. This brute-force legislation would go the last mile and let NYPA build and operate them itself.

That, however, opens up a new array of problems. For one thing, NYPA would have to pay artificially inflated construction costs, since it’s subject to the state’s archaic prevailing wage law. NYPA’s expenses would also be elevated by mandatory contributions to the state pension system, the state’s arbitrary requirement to contract with minority- and woman-owned business enterprises (MWBEs) and the work rules set out in the authority’s union contracts. And all of this would be happening while NYPA’s finances are being drained by the money-losing canal system, which state legislators transferred to the Authority last year.

It is, in short, the Cuomo administration’s last resort.

The move is likely necessary to maintain even the appearance New York is making progress toward the governor’s ballyhooed “50-by-30” goal of having half the state’s electricity come from renewables by 2030. That target, the Empire Center explained in 2016, raises significant cost, land-use and transmission issues, all while New York simply isn’t the most practical place to deploy solar panels or wind turbines.

The difficulty in reaching 50 percent is compounded by the artificial constraints placed on the state’s own initiatives. All Canadian hydroelectric power—and any existing renewable generators—are disqualified from competing for the newest set of renewable energy subsidies. And, as noted in this space previously, the renewable push itself has been something of a green smokescreen for the Clean Energy Standard’s real purpose: a multi-billion dollar bailout of upstate nuclear plants toward which 99.3 of related funds will flow by the end of 2018.

The governor’s criticism of New York’s renewable energy spending in his written 2013 State of the State message still holds true: “despite all of this spending, NYS is not on track to achieve its clean energy goals.”

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- Kenneth Girardin is the Policy Analyst at the Empire Center for Public Policy.