Clean Energy Standard

NOTE: The Climate Leadership and Community Protection Act (CLCPA), enacted in July 2019, sets targets of 70% renewable electricity by 2030, and 100% carbon-free electricity by 2040. This act requires the state Public Service Commission to develop a regulatory program to meet these targets by June 30, 2021. The Public Service Commission adopted rules to meet the expanded targets in October 2020.

The New York Public Service Commission (PSC) adopted a Clean Energy Standard (CES) in August 2016, instituting a timeline for the load serving entities* (LSE) in the state to procure at least 50% of the electricity consumed in the state from renewable energy resources by 2030. The Clean Energy Standard was expanded in October 2020 in order to meet the requirements of the Climate Leadership and Community Protection Act of 2019 (S.B. 6599), which set targets of 70% renewable electricity by 2030, and 100% carbon-free electricity by 2040.

The Clean Energy Standard is divided into two main components: the Renewable Energy Standard (RES) (which itself has several sub-components, formerly Tiers 1 and 2 of the CES) and the Zero Emission Credit (ZEC) (formerly Tier 3 of the CES). The changes made in October 2020 also add an additional program, Tier 4, to the RES, focused on renewable energy being provided to New York City. New York also has a separate Offshore Wind Standard; projected offshore wind capacity to be installed through this program is reflected in the capacity requirements of the RES programs.

Eligible Technologies

The changes required by the CLCPA altered the technologies eligible for the RES programs. The CLCPA defines renewable energy as "systems that generate electricity or thermal energy through use of the following technologies: solar thermal, photovoltaics, on land and offshore wind, hydroelectric, geothermal electric, geothermal ground source heat, tidal energy, wave energy, ocean thermal, and fuel cells which do not utilize a fossil fuel resource in the process of generating electricity." This definition excludes biomass, biogas, and fuel cells powered by fossil fuel resources (as well as biomass and biogas), which had been eligible for some programs under the 2016 CES. The CLCPA also allows for broader eligibility for hydropower, which had been restricted to low-impact run-of-river and existing resources under the 2016 CES. The October 2020 order implementing the CLCPA requirements retained the existing limitations on hydropower for use in the Tier 1 program, but adopted a new program, Tier 4, that can include additional hydropower resources so long as they do not involve new storage impoundments. The October 2020 order also excludes new biomass, biogas, and non-renewable fuel cell resources from future Tier 1 procurements, but will allow previously procured resources of these types to count towards Tier 1 requirements through 2029.

Distributed energy resources compensated under the VDER framework, either through Phase One Net Metering or the Value Stack, are not eligible for participation in any of the CES programs; those resources have separate mechanisms available for compensation of their environmental values. Though, as with offshore wind, generation from distributed resources is considered in setting targets under the CES programs. 

Tier 1- New Renewable Resources

Unlike other states where Tier 1 is reserved for a particular set of renewable resources, the Tier 1 in CES is designed to promote eligible new renewable energy generation resources. All eligible renewable energy resources that came into operation after January 1 2015 are classified as Tier 1 resources. 

In February 2017, the Public Service Commission approved Phase I of the implantation plan for the CES. The implementation plan provides detailed eligibility criteria for new RES resources based on size, geographical location, energy delivery requirements, and date of operation. In addition to new generation facilities, facilities that have performed significant upgrades, facilities that are repowered, or facilities that have been relocated might also qualify if they meet certain NYSERDA eligibility requirements. 

The table below provides a general percentage obligation for the LSEs in the state for each year. Each LSE annual requirement will be determined by multiplying their electric load by the percentage requirement. The requirements from 2021 to 2030 will be determined by the PSC on a three year period basis.

The October 2020 order adopting modifications to the CES approved reduced LSE percentage obligations for the years 2021 and 2022, with a corresponding figure for 2023, based on permitting and construction delays associated with the COVID-19 crisis. The revised percentages are 2.04% for 2021, 5.61% for 2022, and 8.20% for 2023. In March 2022, the Commission revised the percentages to 3.25% for 2022 and 6.16% for 2023, citing delays caused by supply-chain and staffing challenges. In this order, the Commission also announced a 6.45% obligation for 2024.

Year                             % of LSE total load2016 (Baseline)- 2017                             0.6%2018                             1.1%2019                             2.0%2020                             2.84%2021                             2.04%2022                             5.61%2023                             8.20%
For compliance year 2022, the price of Tier 1 Renewable Energy Credits (RECs) was $19.01 - $22.25/MWh, and the price of the Alternative Compliance Payment (ACP) was $35.00/MWh.

In April 2023, the Commission approved a petition to transform the Tier 1 program from a percentage obligation approach to a load share obligation method based on the actual Tier 1 RECs available from both NYSERDA’s centrally purchased RECs and the utilities’ VDER RECs. The order also discontinues the purchase of ACPs, which do not add to the state's renewable energy acquisition.

Tier 2- Maintenance Tier

The Tier 2 serves as a maintenance program to support existing renewable energy resources that existed under the previous NY RPS. Eligibility for Tier 2 is limited to run-of-river hydro up to 10 MW, wind, biomass direct combustion that were in commercial use prior to January 1, 2015, and were originally included in New York’s baseline of renewable resources when the RPS program was first adopted. Each facility seeking funds under Tier 2 must demonstrate that the facility will cease operations without maintenance contracts. Tier 2 maintenance contracts are awarded on a case-by-case basis, and funds issued are tailored to the needs of the facility.

The October 2020 order adopting modifications to the Clean Energy Standard also established a competitive solicitation under Tier 2 for additional renewable resources that entered operation prior to January 1, 2015. The third and final solicitation of the Competitive Tier 2 program closed on September 15, 2022.

Zero Emission Credit Requirement

The Zero Emission Credit (ZEC) requirement is designed to support the state’s existing nuclear facilities as one of the zero emission resources necessary to achieve New York’s goal to reduce its greenhouse gas emissions by 40% by 2030. The ZEC provides credit for the zero-emissions environmental attributes of a qualified nuclear generation facility in the state. In addition to Tier 1 RECs, the LSEs have an obligation to purchase ZECs. Beginning April 1, 2017, each LSE will be required to purchase ZECs from NYSERDA based on the percentage of their electric load. 

NYSERDA will offer qualifying nuclear facilities a multi-year contract to purchase ZECs until March 21, 2029. The ZEC price will be adjusted every two years. The first two years of the ZEC price has been set to $17.48 per MWh. The subsequent ZEC price will be adjusted every two years according to the formula developed by the commission. 

Tier 4 - New York City Renewable Energy

Tier 4, created in October 2020, aims to procure renewable energy capacity to supply New York City (NYISO Zone J). Tier 4 involves a competitive solicitation by NYSERDA of up to 1,500 MW of renewable capacity. The technologies eligible for Tier 4 are the same technologies that are eligible for Tier 1, with the additional requirement that the capacity from these technologies must be located in New York City or be delivered to it via a new transmission interconnection that is connected after October 15, 2020 (except for hydropower). Hydropower resources involved in Tier 4 must have commenced construction by June 18, 2020, while non-hydropower resources must enter commercial operation after October 15, 2020. 

The competitive solicitation for Tier 4 began in January 2021 and resulted in two contracts being awarded. Combined, these projects are expected to deliver 18 million MWh of clean energy per year to New York City.

Compliance Mechanism 

Under the previous RPS program, New York used a central procurement model where NYSERDA executed long term procurement of RECs from renewable energy facilities. NYSERDA retired these RECs as compliance for the RPS and there were no requirements for the LSE. For CES, NYSERDA will continue its role as a central procurer of RECs but unlike the previous RPS, the compliance requirements have been assigned to the LSEs. NYSERDA will continue to procure RECs through scheduled annual solicitations set forth in compliance and procurement schedules. All LSE are obligated procure and retire proportion of their load through renewable energy via purchase and retirement of qualifying RECs. 

A REC represents the environmental attributes of 1 MWh of renewable energy generated. NYSERDA administers the New York Generation Attribute Tracking System (NYGATS) which tracks and issues the RECs in the state. The LSE will be able to meet their obligations by purchasing the required amount of RECs from NYSERDA or by purchasing qualified RECs from other sources. Starting from 2018, NYSERDA will sell Tier 1 RECs to LSEs on a quarterly basis, as available. For the compliance period 2018, the price of the RECs is set at $17.01/MWh. The lifetime for the RECs is not specified; more guidance regarding treatment of the RECs will be provided by the PSC in subsequent implementation orders. 

A LSE that does not meet their obligations will be required to pay an Alternative Compliance Payment (ACP) to NYSERDA. The ACP is not viewed as a penalty for non-compliance, but as an alternative avenue for compliance. The rates for alternative compliance payments was $18.71/MWh for compliance year 2018, and served as the maximum cap for the potential cost for a REC. 

More details of the CES program will be published by the PSC in its implementation orders, available on the PSC website in the proceeding for Case No. 15-E-0302.

*Load Serving Entities (LSE) include all the investor-owned distribution utilities, energy service companies (ESCOs) Community Choice Aggregation programs (CCAs), jurisdictional municipal utilities, and self-supplying customers through NYISO. Micro-grids and CHP generators are not considered to be LSEs. 

**The PUC initiated the REV proceedings in April 2015 following Governor Cuomo’s vision towards a comprehensive reform in the State’s power industry with a broad goal to align electric utility practice and the regulatory paradigm with the technological advances. The REV initiative seeks to create the next generation of utility business models that is customer centric and is driven by technological innovation and private investments to provide resilient, affordable, and clean energy in the State. Other initiatives that are part of the REV include the Green Bank, NY Sun, and BuildSmart NY.