Revisions to New York’s Main Tier RPS will increase contract lengths for large-scale renewable projects from 10 years to 20 years, providing greater investor certainty.

On July 2, 2014, the New York State Public Service Commission (PSC) announced major changes to the state’s Main Tier Renewable Portfolio Standard (RPS) program to promote large-scale renewable projects.  Importantly, the PSC authorized the New York State Energy Research and Development Authority (NYSERDA) to award large-scale renewable energy contracts – Main Tier solicitations – of up to 20 years in length, doubling the current length of 10 years.  It also directed NYSERDA to issue one Main Tier solicitation in 2014 and at least one additional solicitation in 2015.

According to the PSC, the changes will bring RPS Main Tier into closer alignment with the current market.  While RPS Customer-Sited Tier, which focuses on smaller projects, has undergone changes to its incentive structure and budgets, prior updates to RPS Main Tier have not kept pace with evolving market conditions.  The PSC expects longer-term contracts to provide greater revenue certainty and reduce financing risk.  RPS is supported through ratepayers’ surcharge and the changes will not affect already established rate collections.

New York’s RPS is the state’s primary policy initiative to advance renewable energy development and requires the state to contract approximately 10 million MWh of renewable energy annually by 2015.  The bulk of energy required to reach the target is obtained through RPS Main Tier solicitations.  To date, contracts established through eight Main Tier solicitations have resulted in an annual production of approximately 4.6 million MWh of renewable energy.  Further, direct investments of approximately $2.7B are expected over the projected life of renewable energy facilities procured through RPS Main Tier program.

The PSC noted that the changes complement two important proceedings – the New York Reforming the Energy Vision (REV) initiative, and the Clean Energy Fund – initiated to examine the role of utilities and establishment of markets to procure and deploy clean energy resources.  The two initiatives will determine the future of the state RPS, including the viability of alternative incentive mechanisms.

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