The cancellation of planned offshore wind projects has sparked considerable heartburn and hand-wringing among lawmakers, activists and politically wired businesses and unions, but it’s been good news for the upstate families and businesses who would be paying more than half the cost. For them, each year of delays on scotched projects amounts to future electric-bill savings of upwards of $1 billion—and gives Albany another chance to find a better, less expensive way to go green.

New York’s 2019 Climate Leadership and Community Protection Act (CLCPA) requires state utility regulators to “procure” 9,000 megawatts (MW) of offshore wind capacity by 2035. Since offshore wind isn’t economically competitive, state officials finance projects by guaranteeing a minimum “strike price.” Developers would sell power into the grid at a loss and state government would make up the difference by forcing utilities and large electricity customers to buy credits once the projects come online in the second half of the decade.

The state last fall was, at least on paper, close to meeting a CLCPA target for 70 percent of the state’s electricity to come from renewables by 2030. However, the Public Service Commission, the state utility regulator, turned down demands from four already approved offshore wind projects (and dozens of land-based renewable projects) for increased subsidies, which developers had sought because of supply chain, inflation and other issues.

Two projects—Empire Wind 2 and Beacon Wind—pulled the plug in January (while another two got more money in a process that bypassed the PSC). The state revealed last month that a trio of projects announced in October 2023 wouldn’t be going forward. All told, this mean 6,500 MW of expected offshore wind—and customer charges to subsidize that capacity—would be delayed at least one year.

The PSC has taken a statewide approach to financing renewable energy (that is, spreading the cost everywhere in proportion to the amount of electricity customers use). That means 54 percent of the cost of offshore wind would fall to the 50 counties north of New York City, which generally wouldn’t use any of the electricity from the turbines. That share is expected to rise to 57 percent by 2040 after, among other things, a planned 2030 ban on replacement oil and gas furnaces drives more people to use electric heat. Since upstate has a greater share of detached single-family homes that require more heat, it would pay a bigger share of statewide assessments.

Upstate, for its trouble, would get a token consideration in this arrangement, with a portion of the manufacturing work planned for Albany County ports (though the scope and scale of that work has recently come into question).

This approach is especially inequitable for the parts of upstate west and north of the Hudson Valley, which already get more than 90 percent of their electricity from carbon-free sources (even if partially due to a 2016 state bailout for nuclear plants, explained below).

State officials have been indefensibly opaque about how costs will hit ratepayer bills, or the extent to which possible federal incentives will reduce them. But assuming the two contracted projects would have made $75 per megawatt-hour (all-in) selling into the grid in their first year, and based on the state’s $30.5 billion estimate for 25-year deals for the other three, the cancelled projects would have added an average of about $1.4 billion annually to customer bills once they came online.

Put another way, upstate ratepayers are saving $840 million each year the projects are postponed. And since the state’s two original projects have had their subsidies boosted significantly, it means the cost of proceeding with any of these five would have been contingent on ratepayers—mostly upstate—paying more.

The Hochul Administration remains committed to offshore wind, in part because the effort is a much-needed jobs program for inefficient but politically powerful downstate construction unions. But the postponement of offshore wind costs regardless amounts to rare and needed relief for the upstate economy, which has lagged the state.

The five-year-old statutory commitment to offshore wind has meant the state isn’t pursuing more reliable, lower cost options, such as nuclear energy, which has the potential to expand in neighboring states or Canada and meet much if not all of New York’s “zero-emission” need without directly confronting pockets of anti-nuclear sentiment in and around government. Swapping mentions of “offshore wind” and “renewable” in the Climate Act for “zero-emission” would instantly widen the state’s options—and make its decarbonization goals more attainable.

More to Come

Offshore wind subsidies won’t be the only costs sent up the Hudson. Replacing Long Island and New York City’s gas plants with wind turbines (rather than, say, nuclear reactors) will require batteries or other storage technology that can stand in for the offshore turbines—that is, partially power the region—for days at a time during wind “lulls.” As proposed, the state’s battery storage costs will easily exceed $100 billion (and other estimates suggest the cost could near $1 trillion). These costs, too, will be spread across the state.

Residents and businesses north of New York City will also be picking up most of the bill for New York City to get electricity through a pair of transmission projects—which one developer is touting as a way to lower costs for city residents.

Making matters worse, one transmission project, the Champlain Hudson Power Express, will be delivering Canadian hydroelectric power counted toward New York City’s renewable energy obligations. The same Canadian hydro, however, can’t be counted toward upstaters’ obligations, leaving them to pay more for intermittent land-based wind and solar projects—which will also have to be backed up by batteries.

“Unfair and Unreasonable”

Oddly enough, elected officials in New York City and Long Island have been vocal critics of this sort of arrangement—when their region was getting the short end of the stick.

Eight years ago, downstate lawmakers took issue with being forced, also through a PSC mandate, to subsidize three temporarily money-losing nuclear plants outside Syracuse and Rochester.

At Governor Cuomo’s request, the PSC developed a “zero-emission credit” for which upstate power plants (but not downstate’s Indian Point) qualified. The cost, about $500 million, was spread statewide.

Six lawmakers from New York City and Long Island soon objected, pointing out downstaters would “absorb nearly 60 percent” of the nearly $1 billion two-year cost.

“But there is no way,” they wrote, “that the downstate system uses 60% of the output of those nuclear plants — such a mandate is unfair and unreasonable.”

Three dozen assemblymembers and seven senators, mainly from Long Island and New York City, co-sponsored legislation that would have at least temporarily blocked the subsidies. Components of the proposal were incorporated into the Assembly’s one-house FY18 budget proposal, adopted by the chamber in March 2017.

“In a free market, without the subsidy,” bill sponsor Assemblyman Fred Thiele wrote, “these plants would close because there are cheaper and safer sources of energy available.”

Now there’s something New York should apply statewide.

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