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By RY RIVARD and MARIE J. FRENCH - October 10, 2023
RENEWABLES TEST — POLITICO’s Marie J. French: Gov. Kathy Hochul faces a difficult balancing act as her administration weighs a request for increased subsidies from renewable developers who warn that they may otherwise have to scrap projects that are critical for New York’s climate goals.
The state’s Public Service Commission is expected to decide next week whether or not to grant an “inflation adjustment” for four offshore wind and 86 land-based renewable projects. Together, they comprise nearly 25 percent of the state’s projected electricity needs in 2030, when New York must meet a statutory 70 percent renewable electricity target. The total request, if approved as-is by the commission, would increase individual customer bills by about $4.60 each month.
The developers are arguing the extra aid from ratepayers is vital for the projects and to retain public support for clean-energy initiatives by showing the economic benefits of the transition away from fossil fuels.
“It’s an economic challenge, but if we don’t weather it and get these projects across the finish line into construction, it becomes a political challenge because then we can’t demonstrate progress and we’ve lost that momentum,” said Anne Reynolds, the executive director of the Alliance for Clean Energy New York, which requested the adjustment on behalf of developers,
Greening New York’s electricity mix, which today is heavily reliant on gas-powered turbines, is fundamental to meeting the emission reduction goals for the state and New York City.
Adding more renewables makes electrifying transportation and buildings better for the environment and helps neighborhoods disproportionately burdened with polluting power plants. But growing costs for the projects has put many of them in peril in New York, as has happened in neighboring New Jersey and other parts of the country. And in New York, Hochul has yet to say whether she’ll back more public money for the projects, instead punting the problem of rising costs for renewable projects to President Joe Biden.
She signed a letter with other governors in September pushing Biden to do more to support the offshore wind industry, and she touted a deal last week with the federal Department of Energy to help projects access low-cost financing.
But in the short term, the state faces an urgent decision over whether to invest more into the projects or see if they can survive on their own. “It is a bumpy time for the renewables industry and one that the transition will become even more challenging,” said NYSERDA president and CEO Doreen Harris at the authority’s board meeting on Wednesday. “We are leaving no stone unturned.”
— FULL COURT PRESS: In potential signs of escalating concern about what the PSC might decide (or not) on Thursday… Equinor and BP, the developers of the Empire Wind and Beacon Wind projects, filed comments Friday pushing back on those advocating for a re-bidding process for offshore wind, saying that such a step would not reduce costs, that changes to contracts don’t threaten future competitive procurements and that the relief requested won’t have as high of a cost as some have estimated.
They pegged the cost of the three projects’ adjustment at $26 billion on a nominal basis. Plus, the commission shouldn’t try to take away some federal subsidies or otherwise impose new requirements in exchange for the adjustment.
ACE NY similarly filed comments arguing there’s little evidence provided by opponents of the adjustment that projects would not be significantly delayed by a re-bidding process. “Taken as a whole, the record evidence demonstrates the extraordinary and unforeseeable Post-COVID Impacts must be redressed,” a lawyer for the group wrote. (The PSC didn’t set a schedule or ask for any reply comments, but that hasn’t dissuaded folks as the requested decision date looms.)
NYLCV sent a member alert on Friday urging environmental advocates to contact Hochul and comment to the PSC.
“If these projects are allowed to fail, we will fall years behind in meeting our climate targets and ratepayers will face ever higher bills and continued reliance on polluting power plants,” the group warned.
Former New York City Council member Costa Constantinides backed action, targeting Hochul and the PSC in an op-ed placed in AMNY: A “decision to let the offshore wind industry be delayed or die in New York is sentencing another generation of Astoria residents to face the health challenges that we have faced for generations.”
Citizens Campaign for the Environment is also holding an event to back the Empire Wind 2 transmission line and the inflation adjustment for the projects on Wednesday ahead of hearings. More public pressure ahead of the critical decision on Thursday is expected.
— PLUS: Newsday’s Randi Marshall shares the ominous offshore wind industry vibes ahead of a key decision for the Public Service Commission.
MORE WIND UNCERTAINTY — Ocean Wind 2, one of three offshore wind farms approved by New Jersey regulators, has an increasingly uncertain future.
“It is our expectation to build a second New Jersey project, but at this time, we can’t be more specific on what or when that will be,” Stephanie Francoeur, a spokesperson for energy giant Orsted, told POLITICO. Ocean Wind 2 is one of two Orsted projects approved by state officials. Earlier this year, lawmakers and Gov. Phil Murphy’s administration rushed through a bill to save Ocean Wind 1 from financial uncertainty, though that project has also been delayed.
The company’s comments about Ocean Wind 2 come months after Orsted talked about its plans of “reconfiguring” some projects, a term which encompasses a series of possible changes due to economic conditions but also technical considerations. Francoeur said the company is in early stage talks with the state that could result in adjustments to Ocean Wind 2.
Bailey Lawrence, a spokesperson for the governor, said the Murphy administration “recognizes the supply chain and inflation challenges faced by the emerging offshore wind industry not just in our state, but across the Northeast.”
Last week, Orsted put $200 million into escrow meant to help support a wind port the state is heavily invested in, but changes to Ocean Wind 2 could also effect the use of that port. The state has so far approved three projects, the two Orsted projects and another project known as Atlantic Shores, which is likewise facing escalating costs and has not received any special relief yet from the state.
“Despite these challenges,” Lawrence said, “we are continuing to work tirelessly to maximize revenue opportunities at the Wind Port, both from in-state and out-of-state projects. Offshore wind development remains integral to New Jersey’s pursuit of a 100 percent clean energy economy and thousands of family-sustaining jobs, and we are confident that our state will continue to serve – and grow – as a national offshore wind hub.” — Ry Rivard
A message from Leading Light Wind:
Leading Light Wind is charting an American-led clean energy future. As the only American-led project in the New York Bight, we are committed to responsibly building a domestic offshore wind industry that will create thousands of good-paying jobs and advance public health by switching to cleaner, renewable offshore wind energy. Our proposed community benefits programs enable us to invest in the communities where we live and work to ensure an equitable transition. Learn more here.
Here’s what we’re watching this week:
TUESDAY
— The New Jersey Business and Industry Association is hosting a jam-packed Energy Policy Conference today with remarks by New Jersey Board of Public Utilities President Christine Guhl-Sadovy; awards for former PSEG CEO Ralph Izzo, former Senate President Steve Sweeney and Sen. Bob Smith, chair of the Senate Environment and Energy Committee; and panels featuring many others. The hybrid event runs from 8 a.m. to 6 p.m. at Pines Manor 2085 Lincoln Hwy, Edison, NJ 08817 and online, with registration here.
— St. Lawrence County Industrial Development Agency will hold a public hearing about the proposed Air Products and Chemicals green hydrogen facility in Massena, N.Y., 11 a.m. in person and online.
WEDNESDAY
— The New Jersey Board of Public Utilities meets at 10 a.m. and will discuss an escrow payment to the state by Orsted, made as part of a deal to save the company’s Ocean Wind 2 project from financial uncertainty.
— NJ Transit’s board meets, 6 p.m.
— The New York Department of Public Service holds a public hearings on Con Ed’s steam rate case joint proposal, 10:30.
— The New York Department of Public Service holds public hearings on the proposed onshore transmission cable for Empire Wind on Long Island, 1 p.m. and 5 p.m. Citizens Campaign for the Environment is holding a press conference in support of the project and to back an inflation adjustment to the awarded projects beforehand, noon, The Plaza at Long Beach City Hall. “We are urging New York State to move forward with the five selected offshore wind projects and to ensure we do not delay our transition from polluting fossil fuels to renewable energy,” the release says.
THURSDAY
— The Public Service Commission meets, 10:30 a.m. The NYSEG/RG&E rate hike is on the agenda, as is the request from renewable developers for an “inflation adjustment” to their contracts.
AROUND NEW YORK
— ENERGY MOVES: NYPA has hired for a new position: vice president, renewable project development. Vennela Yadhati started on Monday and leads a team under Phil Toia, president of NYPA Development.
“The Power Authority with its expanded authority will have a key role in identifying, developing and building renewable energy projects that will move the state forward to achieve its bold climate action goals,” said NYPA President and CEO Justin E. Driscoll in a statement. “Vennela brings leadership skills and a proven ability to execute renewable generation and energy storage projects.”
Yadhati was most recently at Orsted, the Danish offshore wind company seeking higher payments for one of its contracted New York projects. She’s previously worked at NYPA on distributed energy resources. She’ll lead NYPA’s renewable projects, develop business plans for new initiatives and manage interconnection issues for projects.
WHAT YOU MAY HAVE MISSED
ENERGY CODE UPDATE EFFORT: As part of New York’s path to reducing emissions from buildings, NYSERDA will hold stakeholder meetings on how to define cost-effectiveness for the new energy code. The re-definition will allow policymakers to take into account the social costs of emissions, making more aggressive efficiency measures pencil out as more beneficial for consumers. The meetings are a precursor to the ongoing work of the state’s building codes council to implement requirements for most new buildings to have zero on-site combustion.
NYSERDA may have a special board meeting on the topic to approve draft regulations in November or early December, the authority’s president and CEO Doreen Harris told the board at a meeting earlier this week. “Prior to finalizing a revision to the energy code, the code council must determine that the proposed revision is cost effective,” Harris said. The goal is to finalize the code in March 2025 to hit the statutory deadline of January 2026 for zero-emissions construction for smaller buildings.
The NYSERDA meetings are on Oct. 17, 19, 24 and 26. — Marie J. French
FURTHER CAP-AND-INVEST DELAY: The Department of Environmental Conservation previously targeted the end of this year for issuance of formal draft regulations to implement a cap-and-trade system to meet the requirements of the state’s climate law.
Now, the current goal is for “leanings” of the program to be informally issued to get another round of input before the formal draft rulemaking.
Leanings of the program, “meaning where do we believe the program could best be defined, and ultimately to take feedback from a second round around those leanings so that we can ultimately develop a strong regulatory proposal,” Harris told board members. DEC officials told labor stakeholders in September the target for auctions for the program to begin is 2025. — Marie J. French
MTA’S FLOOD AND EV NEEDS — POLITICO’s Ry Rivard: New York’s Metropolitan Transportation Authority released a lengthy list of needs — to protect against flooding, electrify buses and repair bridges — along with a wish list of tens of billions of dollars of potential expansion projects.
The MTA looked at its millions of assets — from whole stations to train cars to elevators and signals — to come up with the lists of work it needs done over the next two decades. MTA head Janno Lieber called the 20-year list the first assessment with such detailed analysis in the agency’s history. The plan informs the agency’s more immediate five-year construction plans.
The list, known as a needs assessment, was mandated by the state Legislature and intentionally does not come with a price tag for the whole litany of projects spelled out in the report, something officials said was a strategic decision to avoid pitting projects against each other.
Sprinkled throughout the report were warnings of extreme weatherand climate change. Just last week, the system was subdued by flooding brought on by historic rainfall in the region. In the future, there are worries that the rising Hudson River will swallow parts of the Metro-North Hudson Line.
The MTA, after years of budget uncertainty, much of it compounded by the pandemic and the collapse of the daily commute, now has a surprisingly stable budget, thanks to a deal earlier this year in Albany to send more money its way. On Tuesday, Hochul hailed a credit upgrade issued by S&P Global Ratings.
There is also more money on the horizon, thanks to the state’s congestion pricing plan, which would toll drivers coming into parts of Manhattan and raise some $15 billion for the MTA’s capital budget.
BATTERY DREAMS FADE: Ulster County likely won’t get a major new battery company headquarters and manufacturing facility that Gov. Kathy Hochul announced with much fanfare in January.
Zinc8, the company that was apparently poised to bring 500 jobs to the area and invest $68 million, last month abruptly laid off almost all its employees.
“The Company does not generate revenue, and its ability to continue as a going concern is dependent on the Company being able to secure debt or equity financing in short order,” Zinc8 announced in a corporate update. Zinc8 is currently planning to sell stock to raise capital. The company did not respond to questions about its New York investment plans.
The company hasn’t yet received any state money as part of the agreement to come to an Ulster County business park at a former IBM campus, since they were dependent on job creation and investment milestones. “We hope that Zinc8 can overcome these challenges and maintain its commitments to New York State,” said Empire State Development spokesperson Kristin Devoe in a statement. The Ulster County Industrial Development Agency hadn’t yet executed a loan agreement with the company, according to meeting records.
Zinc8’s pitch was an alluring one as the search to commercialize lower-cost batteries with longer durations than current lithium ion technology at scale continues. The company says it can make zinc-air batteries that could provide more than 8 hours of energy with none of the safety risks of lithium ion. The company previously inked a deal with the New York Power Authority for a small demonstration project at the University at Buffalo in 2021. It’s participated in the NYSERDA-supported “Scale for ClimateTech” program.
Democrats and Republicans alike in the Hudson Valley region hailed the announcement. The project was also in line to receive some support through the Inflation Reduction Act.
The apparent demise of this new tenant of the i87 Park is a blow for the county’s economic development efforts. But Amanda LaValle, deputy county executive, said it’s a reminder of the hard won lessons the area learned in relying on IBM. The county’s focus is on a Workforce Innovation Center at the business park where Zinc8 was one of the prospective tenants. “This is unfortunate but we shouldn’t be naive to think this kind of thing can’t happen, especially as companies are trying to get to that critical mass standpoint,” LaValle said. “What IBM taught us was you never put all your eggs in one basket, which is why this is a multi-company campus.” — Marie J. French
NJ LCV ENDORSEMENTS — The New Jersey League of Conservation Voters, one of the few nonpartisan groups that endorses in local elections, released its slate of endorsements this week. Many, but not all, of the candidates are Democrats. Notable Republican endorsements include support for Shaun Van Doren’s bid for reelection as a Hunterdon County commissioner. “We call ourselves nonpartisan, but we make every effort to be bipartisan, and that’s something the environment has always enjoyed in the state of New Jersey,” said the league executive director Ed Potosnak.
The league plans to spend about $400,000 this cycle boosting candidates it supports, an amount Potosnak described as the largest league investment ever in state and local races, money that will be spent by a PAC and Super PAC. The top legislative priorities include keeping Democrats Andrew Zwicker and Vin Gopal in the Senate.
Potosnak said the league considers electability when it makes endorsements, with the goal of electing environmental champions or replacing “fossil fuel loving incumbents.”
Right now, the league is spending a lot of time worrying about flooding, which has repeatedly damaged businesses, communities and public health. But, he said, the league doesn’t expect candidates to take specific actions to win an endorsement. “It’s hard to believe in a place like New Jersey, but we don’t do a quid pro quo in our endorsement process,” Potosnak said. — Ry Rivard