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United States: Renewables drive in New York state

Third round of green power mandate.

New York state is issuing incentives in order to spark a new round of wind plant construction. The move comes after almost two years since it last issued credits, which act as a premium on the basic energy price for suppliers of renewable energy.

This third round is part of the state's Renewables Portfolio Standard (RPS), the law that compels utilities to take a percentage of their power from clean sources. Renewable energy suppliers deemed eligible for the credits had to submit their bids by November 4.

Green Energy credits

The RPS process works in New York through valuable renewable energy credits being awarded to renewables developers by the New York State Energy Research and Development Authority (Nyserda), a quasi-public energy agency. Developers add the credits to their underlying power sales arrangements.

For those arrangements, wind developers take either power purchase agreements with utilities or fluctuating market prices from New York's wholesale electricity market, or a combination of both - with the credits added in. The credits act as a premium on top of the basic power sale price, which helps make renewable energy more cost competitive with traditional generation. In the past, this credit sum has amounted to between $15 and $22/MWh, with fluctuation between RPS rounds, says Carol Murphy, executive director of the Alliance for Clean Energy New York.

Murphy adds that the current RPS round has a pool of around $95 million to add on top of regular market rates, but she would not be drawn on how much extra renewables capacity the funding is likely to bring forward.

Wind energy and hydropower is expected to take most of the contracts, as in two previous rounds that helped to bring New York to its current 1.3 GW of installed renewables/wind from 470 MW two years ago.

When deciding who receives the credits, Nyserda assigns 70% of the marks to the economic viability of the project and 30% to projected local economic benefits. In past rounds, says Murphy, those local economic benefits have been borne out. When the law was first enacted in 2005, it called for an expert consultant analysis in 2009 to determine the success of the law and its benefits to energy consumers in New York.

"It's all proven to have panned out the way everybody expected in terms of dollars invested giving back direct benefits," says Murphy. Consultant reports recently released show that for every 1 GW of renewables capacity deployed in New York, there is a saving to energy consumers of $300 million by offsetting or displacing more expensive and polluting electricity resources.

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