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New York CES:
Renewable Energy StandardUnderlying Fundamentals
EMA Roundtable
Roman KramarchukManaging Di rec tor | G loba l Power, Emiss ions & Clean Energy
February 2, 2017
2
We Take an Objective ViewWE HAVE NO BIAS OR INTERESTS
Why we’re differentWE TAKE THE TOTAL VIEW OF THE MARKET
We Take an Integrated ViewTOP DOWN, BOTTOM UP AND CONNECTED
We Take an Expert ViewPEOPLE, METHODOLOGY, MODELS & TRAINING
What do we offer?
Analysis & ReportsREGULAR REPORTS AND ANALYST BREIFINGS
Data Sources & ToolsDATA SETS AND INTERACTIVE TOOLS
Seminars / PIRA UniversityANNUAL, REGIONAL KNOWLEDGE SHARING
3
Demand and Targets Outlined
August 2016:
“The Commission requires each New York LSE to serve their retail
customers by procuring new renewable resources, evidenced by the
procurement of qualifying RECs, acquired in the following proportions
of the total load served:
2017 0.6%; 2018 1.1%; 2019 2.0%; 2020 3.4%; 2021 4.8%
2017 expected to yield 974,000 MWh
“This Order also provides for NYSERDA
to conduct regularly scheduled
solicitations for the long-term
procurement of RECs to achieve the
following anticipated and minimum
results for the years 2017 through 2021”
… But Uncertainty Remains
Nov 2016: 2017 Tier 1 RES Obligation on LSEs is actually equal to
0.035%of total load served by an LSE during 2017. (56,142 RECs)
Volume reflects adjustment to reflect Sun Run and other Customer sited
projects
How will these be treated going forward?
Additional Questions about:
Behind the Meter / DER eligibility,
» For long term procurement by NYSERDA, overall Tier 1 eligibility of these
resources, setting of LSE obligations, interactions with voluntary goals.
Treatment of re-powered facilities
Existing renewables / Tier 2 – Maintenance
Etc. etc.
Trends in Weather-Adjusted Load:
NYISO Particularly Weak
Year-
On
-Year
Ch
an
ge
Data through April 30, 2015
Source: PIRA Estimates
New Supply Needed to Meet Goals,
What Will Incent It to Be Built?
Monetization Thru Markets:
Power Prices + Capacity + Ancillary Services + RECs
Key Variables (Wind):
Cost of Turbine / Interconnection
» Wide Range (Wind $1,500 - $4,000 per KW), Location
» PTC/No-PTC, State/Local incentives
Cost of Transmission
» Transmission, line losses (DC vs. AC)
Capacity Factor of Wind
» Wide range (<20% to >50%), Location
Power Fundamentals
» Transmission basis, natural gas prices, retirements, reserve margins,
carbon pricing, demand growth, cost of competing generation, etc
U.S. Utility-Scale PV Project Cost Outlook:
2015-2021
$/MW-week $/kW
0
500
1,000
1,500
2,000
2,500
1,500
1,700
1,900
2,100
2,300
2,500
2,700
2,900
2015 2016 2017 2018 2019 2020 2021Avg. Overnight Cost ($/kW) NC/SC ($/MW-week)
ERCOT ($/MW-week) PJM West ($/MW-week)
CAMX ($/MW-week) NE ($/MW-week)Source: PIRA
Solar Capacity Factors by ISO/RTO
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
SPP CAISO ERCOT NYISO PJM ISONE MISO
All Utility-scale Solar PV Generators
Avg. 2013-2015
Source: S&P Global 2016, PIRA analysis
U.S. Distributed PV Capacity NY Leading YOY Growth
15%
20%
25%
30%
35%
40%
45%
50%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
CA NJ MA AZ NY Other
MW
YOY
Distributed PV Snapshot, Sep 2016
MW
(AC
)
Source: EIA
Total Capacity
12,300 MW
YO
Y
NYISO Wind Queue, New Build
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2017 2018 2019 2020
Under Construction
Pending
MW Capacity
Proposed Online Date
Capacity Value of Intermittent Resources in NY
Unforced Capacity Percentage–Wind
Zones A through J Zone K (land-based) Zone K (off-shore)
Summer 10% 10% 38%
Winter 30% 30% 38%
From NYISO INSTALLED CAPACITY MANUAL
Intermittent Power Resource Unforced Capacity Values,
Based on prior seasonal performance
• Summer: Avg production 14:00 - 18:00 for Jun, Jul and Aug
• Winter: Avg production 16:00 - 20:00 for Dec, Jan and Feb
New Resources: NERC class average values, NYISO estimates.
For Wind – Capacity percentage in the Table above• From Report on Phase II System Performance Evaluation “The Effects of Integrating
Wind Power on Transmission System Planning, Reliability, and Operations” prepared by
GE Energy, March 4, 2005.
Additional Regional Factors / Wildcards
RGGI
» Undergoing program review – potential for higher carbon prices.
» Would increase power prices in New York and in New England
» Increase attractiveness of power imports from neighboring PJM
WCI
» Ontario cap and trade program started Jan 1.
» Ontario prices increase, flows into province face carbon default
factor. Greater incentive for renewables to stay in province
New England IMAPP
» Looking to expand the formal role of the wholesale power markets
beyond low-cost provision of power and reliability – to also
incorporate state emission and clean energy objectives.
» Some tabled proposals would supplant the importance of REC
markets.
New Trump Administration: “Priority List –
Emergency and National Security Projects”?
NYISO Interconnection Queue Projects with
Potential ISO-NE/PJM Impact
Source: PJM
New York REC “Breakeven” Values Required
to Incentivize a New Wind Unit
-5
0
5
10
15
20
25
30
35
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
NY G 30% CF
NY G 35% CF
NY A 30% CF
NY A 35% CF
Note: PIRA estimates based on forecast energy and capacity prices. Assumed Project Cost: $2,000/KW; Capacity factor 30% or 35% PTC
phase-out, National Carbon price starts 2025
$2015/MWh
For 2017:NYSERDA TIER 1 REC: $21.16
ACP: $23.28
Application of Bid Evaluation Criteria w/ Multiple Factors
Could Shift Outcome vs. Market Calculation
NY Renewable Sources Qualified to Generate RECs
in Neighboring States
PJM GATS
» 153 MW of hydro qualified as
MD Tier 1 = 3..9% of Tier I
supply for 2013 compliance
» 0.4 GW of solar qualified as
DC Tier 1
NEPOOL GIS» 1.3 GW NY wind qualified; 96% in MA Class I.
Some wind also qualifies in CT, ME, RI and/or NH
» Nearly all under NYSERDA contract
– 0.2 GW came off contract in 2016; another
0.5 GW from 2nd solicitation expires 2018
» Also landfill & digester gas, hydro
» Wind/LFG from NY supplied 19% of MA Class I
compliance for 2014 (power must be delivered to
NE ISO)
Flight of NYSERDA Wind to other REC programs?
» NY PSC declined to adopt a targeted sub-Tier 2 RES to prevent attrition
of expiring NYSERDA main tier contracts, because:
– Primarily wind units with low O&M
– Barriers to qualifying in other states (vintage/delivery requirements)
– No “imminent” risk; can address at a subsequent triennial program review
In Past, New England RPS Compliance Relied
on NY RECs
Source: Quantifying the Level of Cross-State Renewable Energy Transactions, NREL February 2015
Increased incentive going forward based on growing clean energy requirements?
19Feb 2017
For additional information about PIRA's North American Power or North American Environmental Markets Retainer Services
1-212-438-9146 roman@pira.com
roman.kramarchuk@spglobal.com
Website: www.pira.comTwitter @piraenergygroupLinkedIn www.linkedin.com/company/pira-energy-group
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