Regulators greenlight contracts for renewable energy delivery into New York City

The New York Public Service Commission April 14 approved contracts for the 1,250-MW Champlain Hudson Power Express and 1,300-MW Clean Path transmission projects that will deliver renewable power into New York City as part of a decision that split some of the commissioners.

"Today's decision is a major step forward in achieving New York State's goal of 70% of our energy from renewable resources, while paving the way for thousands of high-quality jobs, spurring billions in economic activity, reducing our dependence on fossil fuels, and ushering in a cleaner, greener New York for all," Governor Kathy Hochul said in an emailed statement.

The commission voted 5 to 2 to approve contracts with the companies sponsoring the projects (15-E-0302) during a PSC meeting held in Albany and webcast.

The New York State Energy Research and Development Authority in November 2021 initially approved the two contracts to deliver solar, wind and hydropower into the city through the transmission lines, with an expected average Tier 4 renewable energy credit cost of $28.29/MWh for both projects.

The 1,250-MW Champlain Hudson Power Express project has been under development for many years and would involve building a high-voltage direct current line from the Canadian border into the city that would primarily run under the Hudson River and existing rail lines. CHPE is being developed by Transmission Developers, backed by private equity firm Blackstone. The project would be supplied with hydropower from provincially owned Hydro-Québec's reservoir system and is expected online by 2025.

Clean Path New York combines a 1,300-MW, 174-mile underground HVDC transmission line with over 3,400 MW of new wind and solar projects in upstate New York, with availability and reliability maximized by the existing Blenheim-Gilboa pumped hydro storage facility. The project, a partnership of the state New York Power Authority and private companies Invenergy and energyRe, is expected online by 2027.

A major rationale for creating the Tier 4 REC program was to enable renewable energy resources to be delivered into New York City which relies heavily on fossil fuel-fired power generation. As mandated in the Climate Leadership and Community Protection Act, the state is targeting a 70% renewable electricity supply by 2030 and a zero-emission grid by 2040.

A PSC staff analysis projected that by 2040 statewide electric generation will increase by at least a third due to electrification efforts, a staff member said during the PSC meeting. About 17 GW of dispatchable generation will still be needed in the state for reliability, of which at least 7 GW will be needed in New York City, staff said.

"Other than hydrogen and renewable gas, neither of which may turn out to be eligible as renewables under the CLCPA, the selected Tier 4 projects are the only other option," staff said.

Controversial decision

As part of the comment process, major New York electricity consumers, merchant power generators and environmentalists had opposed the CHPE project, largely citing potential winter deliverability concerns, while supplier Hydro-Québec refuted these claims.

Trade group Independent Power Producers of New York and some environmental groups said they prefer the Clean Path project because it would be supplied with in-state renewable energy resources, thus benefitting local companies and economies.

Several PSC commissioners cited rising customer utility bills as a concern. The average statewide bill impact will be approximately 3%, or $3/month, according to the governor's office.

Commissioner Diane Burman said during the meeting that the costs of these projects would largely be borne by ratepayers while the state is already spending billions on climate action "that is unsustainable."

"I'm deeply concerned about the impact these multi-billion-dollar investments will have on rates," Burman, one of the two opposition votes, said.

Commissioner John Howard, the other opposition vote, said this was the most difficult case to vote on since being at the commission. There are "far less expensive ways to reduce emissions" and upstate ratepayers will pay more while project benefits will mostly accrue in the city, Howard said.

Though ultimately voting in favor, commissioner David Valesky said he shared his colleagues' concerns on costs.

Additional reactions

"We are disappointed with the outcome," Gavin Donohue, president, and CEO of trade group IPPNY, said in a phone call.

"The commissioners raised legitimate concerns with the CHPE project that could have justified voting against it, Donohue said, adding the decision will hurt ratepayers across the state, he is not sure it will lead to accomplishing the state's climate goals and it could end up being cost prohibitive for building additional in-state renewables.

The Sierra Club, which opposed CHPE in public comments, was cautiously supportive of the PSC decision.

"We hope the new contracts will help New York City reduce its dependence on fossil fuels and improve air quality for communities living in proximity to the city's existing fleet of dirty peaking plants," Allison Considine, senior campaign representative at Sierra Club, said in an email.

"We call on Hydro-Québec to respect the CLCPA's climate mandates by not backfilling its deliveries to New York City with electricity from new impoundments," Considine said.

The project owners applauded the decision.

"New Yorkers have chosen Québec's clean hydropower to supply 20% of the electricity needs of America's largest city," Sophie Brochu, president, and CEO of Hydro-Québec, said in a statement.

"Today's decision is a key milestone and critical step forward in the fight for New York's clean energy future, and the Clean Path NY team is ready to move ahead with this major clean energy project for the benefit of all New Yorkers," said Clean Path NY leaders Michael Polsky of Invenergy, Jeff Blau of energyRe, and Justin Driscoll of the New York Power Authority.