New York's ambitious climate goals set the stage Sept. 17 for a broader discussion about how U.S. power markets are straining to accommodate state-level momentum toward cleaner energy sources, according to energy experts plus state and federal officials.
The Green New Deal means different things depending on who is asked, but in New York it means the Climate Leadership and Community Protection Act that was signed into law by Gov. Andrew Cuomo in July, Gavin Donohue, CEO of Independent Power Producers of New York, said during the merchant generator trade group's fall conference in Saratoga Springs, N.Y.
"These are the most aggressive mandates in the nation and they will prompt a seismic shift in our entire state economy," Donohue said.
The goals include 6,000 MW of behind-the-meter solar by 2025; 3,000 MW of energy storage by 2030; 70% of the state's electricity coming from renewable sources by 2030; 9,000 MW of offshore wind by 2035; zero-emission power by 2040; and an economywide emissions reduction of 85% from 1990 levels by 2050, Donohue said.
Notwithstanding the power market and physical energy system changes that will be needed to accomplish these goals, power markets are already under pressure.
"We have an energy system that's under stress," New York Public Service Commission Chairman John Rhodes told the conference. "Load growth and peak growth are down and we have forecasts that show both of those trending up while costs are rising even as wholesale power prices have come down and stayed low. And the result is steady pressure on economics and costs at a time when we are emitting too much carbon."
Rhodes said he believes in markets because they deliver innovation and as long as they continue doing so, "we will have unlimited faith and reliance on markets."
New York ISO CEO Rich Dewey also expressed faith in markets, saying they are the most viable means of meeting the state's goals.
Market disruption
However, power market stress stretches beyond New York and up to the federal level.
The U.S. Federal Energy Regulatory Commission has "been a little crazy" for a variety of reasons, Commissioner Richard Glick said.
There has been a lot of turnover among commissioners in the past few years and now there is some confusion over who can vote on what.
The staff changes and voting issues have resulted in a lot of pending items that need to be resolved.
"We owe it to you all in industry and others who need certainty about what the [market] rules are," Glick said. "You need to make multimillion-dollar investments without uncertainty … and some issues have been sitting out there for too long."
Glick mentioned several generic proceedings, including reforms to the Public Utility Regulatory Policies Act, an item that will be on FERC's agenda at its public meeting on Sept. 19. Other items that need attention are considering greenhouse gas emissions as part of natural gas pipeline siting and two notices of inquiry on electric transmission regarding utility return on equity and incentivizing transmission buildout.
Comments have been filed on those issues, and Glick said he does not know when FERC will get to them but that hopefully it will be soon.
Capacity markets also need attention.
"Capacity markets are complex to begin with, but in some markets we've had just constant tinkering," Glick said, adding. "Sometimes these markets don't really seem to be markets when we keep constantly changing the rules."
The current economic situation with historically low gas prices and low load growth is "putting a squeeze" on generators around the country, Glick said.
Climate goals like in New York are going to put more pressure on capacity markets, he said, and the "concern is if you push back on states and make it hard for them to pursue their resource policies we're just making it harder on capacity markets."
Utility commissioners in Illinois and New Jersey have asked if maybe they should encourage utilities to drop out of the PJM Interconnection, Glick said.
"We could endanger the future of capacity markets and at the very least we need to figure out how to accommodate state policy with a less combative approach," he said. "The path FERC has taken in the past … has put it on a collision course with a number of states that would be very problematic for markets in general" if continued.
Jared Anderson is a reporter for S&P Global Platts, S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.
