By Christopher Rizzo and Karen E. Meara. Published in the New York Law Journal.
As we have detailed in these pages before, the state’s Climate Leadership and Community Protection Act (CLCPA) sets ambitious goals for reducing greenhouse gas emissions from all sectors of New York’s economy. First and foremost, the Act requires immediate transformation of the power sector, mandating that 70% of the state’s electricity come from renewable sources by 2030, and at least 9000 megawatts from offshore wind by 2035. New York is well on its way to achieving both those goals. The New York State Energy Research and Development Authority (NYSERDA) is planning its third procurement for offshore wind development. We devote this column to highlighting the state’s substantial and ongoing progress on offshore wind.
Background: Offshore Wind Before the CLCPA
The fight against climate change hinges in large part on “greening the grid.” For example, a high-efficiency electric building heating system still causes greenhouse gas emissions if the electricity it uses comes from an oil or gas-fired power plant. The same is true for electric vehicles. While upstate New York already gets most of its electricity from zero-emissions power sources, downstate New York relies primarily on fossil fuels to keep the lights on. New York needs to dramatically increase its supply of zero-emission electricity downstate if ambitious efforts to electrify buildings and cars are going have their full decarbonizing effect. The state has repeatedly recognized that offshore wind is uniquely capable of solving transmission and siting constraints in the downstate area, replacing downstate fossil fuel generation, and, in turn, reducing not only carbon emissions but also local air contaminants.
New York state’s push to develop offshore wind has been in the works since well before passage of the CLCPA. In a 2016 Clean Energy Standard Order, the Public Service Commission directed NYSERDA to “identify appropriate mechanisms” by which the PSC and the state could “exploit its geographic advantage to develop offshore wind” to achieve the state’s clean energy goals, which at the time were to procure 50% of its electricity from renewable sources by 2030.
NYSERDA’s resulting Offshore Wind Master Plan laid the foundation for the PSC to issue a 2018 order setting the state’s first Offshore Wind procurement requirement. Specifically, the PSC directed NYSERDA to solicit at least 800 MW of offshore wind renewable energy credits on behalf of, and eventually to be sold to, local utilities (known as “load serving entities” or “LSEs”), and ordered LSE’s to purchase those credits in proportion to each LSEs share of state load. The 2018 PSC Order also included a requirement that LSEs secure 2400 MW of electricity from offshore wind by 2030. Ultimately NYSERDA procured nearly 1700 MW of ORECs via the 2018 solicitation. The two contracted projects—Sunrise Wind and Empire Wind—are projected to be operational in 2025 and 2026 respectively.
In addition, in 2017 the Long Island Power Authority contracted for 130 MW of offshore wind in connection with a general solicitation for new sources of cost efficient power. LIPA’s South Fork Wind Farm is under construction and is expected to be New York state’s first operational offshore wind project.
New York’s CLCPA Raises the Bar for Offshore Wind
With the passage of the CLCPA, New York state took its efforts to develop offshore wind to a whole new level; the Act requires the PSC, by July 1, 2024, to establish programs requiring load serving entities to procure 9 gigawatts (9000 MW) of electric generation from offshore wind by 2035. Two years ahead of that deadline, the PSC looks to be well on its way. In addition to the 2018 Order that resulted in NYSERDA’s procurement of nearly 1700 MWs of electricity from offshore wind, a 2020 solicitation and potential 2022 solicitation are expected to bring the state’s total offshore wind capacity in development to 6300 megawatts. That is a remarkable achievement in a very short time frame.
The 2020 Solicitation. After passage of the CLCPA, the PSC ordered NYSERDA to issue a second offshore wind solicitation, “to procure the environmental attributes [i.e. the ORECs] associated with 1,000 MW or more of additional offshore wind in 2020, with the flexibility to consider attributes for projects totaling 2,500 MW if the pricing and other terms are sufficiently compelling.” Case 18-E-071, Order Authorizing Offshore Wind Solicitation in 2020, at 17 (issued April 23, 2020) (2020 OSW Order). The PSC made clear it found this flexibility warranted based on both past experience and a recognition that the infrastructure supporting the development of New York’s nascent offshore industry was at a critical moment: “The unexpectedly low prices in the first solicitation, coupled with NYSERDA’s expectation that critical decisions regarding manufacturing footholds will be made by many offshore wind suppliers within the next twelve months, bolsters the need to display a significant commitment for these resources.” Id. The state was able to take full advantage of that flexibility, selecting two projects—Empire Wind 2 and Beacon Wind—that would generate 2490 MWs. Beacon is projected to be operational by 2028 and Empire Wind 2 by 2027. Both the 2018 and 2020 solicitations included provisions to incentivize investment in port infrastructure that will be critical to the development and maintenance of the industry.
Subsequent Orders. After two solicitations that generated better than anticipated results compared to projections in the 2018 Offshore Wind Master Plan, in 2021 the PSC issued another order on offshore wind. Rather than authorizing a single procurement, the 2021 Order authorized NYSERDA to “conduct annual offshore wind solicitations, beginning in 2021, in amounts necessary to achieve the statewide goal of 9 GW of offshore wind.”
Also in 2021, the PSC was presented with the results of the Power Grid Study, a report mandated under the Accelerated Renewable Energy Growth and Community Benefit Act to assess the changes in local and bulk transmission infrastructure needed to incorporate renewable energy from multiple sources, including offshore wind, into New York’s electric grid. In response to the Power Grid Study, the PSC issued an order in January 2022 directing NYSERDA to make various related changes to its upcoming solicitations, including requiring eligible bidders to provide measures for “the potential integration of the project into a meshed network system” as opposed to assuming projects would be connected to the grid via a radial transmission line. These measures are expected to increase grid reliability and flexibility associated with offshore wind.
NYSERDA is planning a third procurement for an additional 2,000 to 4,640 MW of offshore wind. As in past bids, NYSERDA will sign contracts with winning bidders to purchase ORECs at specified prices. Based on the draft RFP, bidders will be required to have an investment plan for upland facilities to support offshore manufacturing and supply chain infrastructure, and winning investment plans will receive up to $300,000,000 in state assistance. Per the 2022 PSC Order, NYSERDA is authorized to award additional scoring credit for proposals that include an energy storage component. And as discussed above, all bidders will be required to account for how a project could be integrated into a meshed grid rather than served by a single radial line.
Unsuccessful Litigation Against Offshore Wind
Since 2018 when New York began its formal program to develop offshore wind, there have been half a dozen lawsuits against state and federal agency approvals of offshore wind projects in the United States. Courts have so far dismissed the lawsuits on procedural grounds. With the federal government, northeastern states and environmental organizations aligned in supporting offshore wind, the lawsuits face an uphill battle. The most recent, Save Long Beach Island v. U.S. Department of Interior (D.D.C.2022) is a case in point. The plaintiffs, a civic group and an individual, claim that the U.S. Bureau of Ocean Energy Management violated the National Environmental Policy Act by failing to prepare an environmental impact statement before selecting five proposed recipients of leases for underwater lands in the New York Bight for wind development. The federal agency defendants have moved to dismiss based on strong court precedent that the mere selection of winning bidders pursuant to a request for proposals (and without binding leases in place yet) is not an action under NEPA triggering environmental review. BOEM carries out environmental review after making initial project selections but before signing any leases or contracts with developers. This practice is consistent with a long line of both federal and state court decisions and state agency practice under the State Environmental Quality Review Act. The motion to dismiss is not fully briefed but the court is likely to grant it.
Christopher Rizzo and Karen E. Meara are members of Carter Ledyard’s Environmental and Land Use practice.
Reprinted with permission from the June 23, 2022 edition of the New York Law Journal © 2022 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or email@example.com.