1.10.22 - New York grid operator sends rules to support renewables to FERC
' The state’s independent grid operator has filed for federal approval of rules aimed to better accommodate the development of more renewables and align the electric market with New York’s climate law.
The New York Independent System Operator filed the new market rules, which have backing from state policymakers, with the Federal Energy Regulatory Commission last week. The package approved by NYISO market participants and other stakeholders includes exempting renewables and other resources that support state goals from potential price floors that limit revenues.
Why it matters: The package of changes to the state’s capacity market come after major concerns were raised by state policymakers, renewable and storage developers, and environmental groups that the current rules threaten cost-effective achievement of the state’s zero-emissions electricity by 2040 mandate.
“The market rule changes proposed by the NYISO will remove significant impediments to the development of renewable resources that can be added to New York’s statewide power grid,” said Justin E. Driscoll, interim president and CEO of the New York Power Authority in a statement.
Details: The new rules got 82 percent backing from NYISO stakeholders.
They include a broad exemption to “buyer side mitigation,” a rule that would have limited the participation of subsidized resources in the capacity market, slashing revenue and raising costs to develop new storage and renewables. The exemption will apply to offshore wind, storage, onshore renewables and transmission lines bringing in Canadian hydropower — anything recognized by the state as supporting its climate goals.
The package received support from state agencies and fossil fuel plant owners but did not get support from some consumer groups and renewable developers. That’s because there’s concern another piece of the package could reduce revenues for renewables, storage and other assets in the future.
That component sets up a pathway for the NYISO, with input from stakeholders, to set up an annual process to calculate the capacity value of different resources — wind, solar, storage, fossil fuel plants and others — based on what marginal value additional amounts of that resource would have for reliability.
This would send better signals to what the best resource mix would be to keep the lights on while keeping consumer costs low, according to some analyses. But it also injects some uncertainty for developers of those projects.
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