NYSERDA requests comments on whether the initial Tier 4 RFP should be amended to specify benefit sharing from a future federal transmission-specific Investment Tax Credit, responses due by April 9 at 5 pm; additional responses to RFP questions also posted

On April 6, 2021, the New York State Energy Research and Development Authority (NYSERDA) provided a brief update on its initial Clean Energy Standard (CES) Tier 4 Request for Proposals (T4RFP21-1) via email. As discussed in Flash Update 20-42, on October 15, 2020, the Public Service Commission (PSC) issued an Order Adopting Modifications to the Clean Energy Standard in Case 15-E-0302. The PSC determined that the existing CES tiers and location-based marginal prices would not incent enough renewable generation located in, or delivered to, NYISO Zone J for the State to meet its CLCPA targets. As a result the PSC found that there is a need for a new tier designed specifically to increase renewable energy deliveries into New York City. As discussed in Special Flash Update 21-1.1, on January 13, 2021, NYSERDA released an initial Clean Energy Standard Tier 4 Request for Proposals (T4RFP21-1), seeking environmental attributes from renewable energy delivered into NYISO Zone J.

Updates from NYSERDA on T4RFP21-1 include:

• Request for Comment: NYSERDA issued a Request for Comment soliciting feedback on whether the T4RFP21-1 solicitation should be amended to add a provision to the Tier 4 Renewable Energy Certificate Standard From Purchase and Sale Agreement that would require the counterparty to share any benefits from a transmission-specific Investment Tax Credit (ITC). The Request for Comment noted that no such tax credit exists under current law, but that on March 31, 2021, President Biden introduced a major infrastructure proposal (previously discussed in Flash Update 21-13) that included an ITC targeted at high voltage transmission facilities. In addition, NYSERDA noted that the status of the high voltage transmission ITC is unlikely to be known when final Tier 4 proposals are due on May 12, 2021, making it difficult for bidders to know whether or not to reflect the impact of a transmission-specific ITC in their bid submissions. NYSERDA highlighted several questions for which it is seeking comment, including:
  • Whether or not the RFP should impelement a transmission ITC benefit-sharing mechanism;
  • How NYSERDA might characterize and define the types of incentives that would be subject to benefit sharing; and
  • How a benefit structuring mechanism might be structured, including whether or not net present value should potentially factor into any calculations, whether or not bidders should be allowed to specify benefit sharing approaches, and whether or not a pre-determined percentage for cost sharing should be applied to all bidders.

Comments are due by 5:00 pm EDT on April 9, 2021 and must be submitted to res@nyserda.ny.gov.

• Responses to Step Two Questions: NYSERDA posted responses to additional Step Two questions, with notable topics including:
  • Unforced Delivery Rights: NYSERDA noted that Tier 4 eligibility only requires delivery of energy and that qualification as a resource/delivery of unforced capacity is not required;
  • Bidding the Same Project Portfolio in Multiple Proposals: NYSERDA clarified that a project, or portfolio of projects may be bid into multiple proposals (e.g. a portfolio of projects bid with delivery on different transmission lines), while noting that the proposals should clarify whether the proposals are mutually exclusive or concurrent.
  • Economic Benefits Associated with Facilities That Have Existing Tier 1 Agreements: NYSERDA clarified that, for facilities that have an existing Tier 1 agreement, economic benefits provided or realized by the facility after January 1, 2021 may be claimed under a Tier 4 agreement as well.

In their email, NYSERDA indicated that additional questions on Step Two applications may be submitted to res@nyserda.ny.gov through May 3, 2021. Responses will be posted to the Clean Energy Standard Tier 4 webpage on a rolling basis, with all responses posted by NYSERDA by May 7, 2021.