Renewable projects are slow to develop amid New York's climate goals

ALBANY, N.Y. — New York is striving toward ambitious goals for renewable energy and has inked contracts for new wind and solar projects. But few have been built, and now concern is growing about the pace of construction.

Not even half of the new wind, solar and energy storage projects — 27 out of 57 — that embarked on a 22-month process have opted to pay the costs to connect to New York’s electric system and move toward construction.

Additionally, only eight of the 120 large-scale projects, including onshore renewables and offshore wind, awarded since 2017 are operational in the state’s effort to make 70 percent of its energy come from renewables by 2030.

“We do need to get these projects built. It's our top priority,” said NYSERDA president and CEO Doreen Harris. “We have this rhythm of procurements that brings projects forward, and now we need to turn those projects into electrons.”

New York is not alone in its slow development: Other states that want to move to renewables, as well as the federal government, are grappling with a backlog of projects that is affecting the nation’s climate goals.

In New York, though, the state’s renewable build-out plans are particularly aggressive. The state is mandated by law to reach 70 percent renewable electricity by 2030, up from the current roughly 27 percent. That’s clashing with hurdles in the process that includes the need for detailed design information from developers, coordination with utilities and limited staffing at the grid operator to deal with a growing number of projects.

When all of that concludes, some developers still won’t be ready to put up the funding needed — potentially millions of dollars without state subsidies — while others will need more time to secure permits or they decide the costs are too high.

As a result, the state’s independent grid operator is evaluating how it can improve the process and smooth the way for the thousands of megawatts of new renewables that will be needed if New York hopes to to hit its ambitious climate goals.

There is newfound hope, however, for getting steel in the ground for the projects sooner. The pace of permit approvals has dramatically accelerated with the creation of a new siting office in 2020.

The focus for developers and policymakers is turning to another challenge to transitioning New York’s fossil fuel-dependent grid to renewable energy: The upgrades to the electric grid needed to hook up renewables under an interconnection process managed by the New York Independent System Operator.

“The driver of the schedule has actually shifted from the permitting process to the interconnection process,” Harris said. “These projects are spending over five years in the interconnection process. … It is definitely an area for improvement.”

With more and more renewables seeking to hook up, grid operators across the country are struggling to keep up. A backlog of new renewables facing lengthy interconnection queues, the list of projects waiting to deliver electricity to the grid, has drawn the attention of federal regulators.

The Federal Energy Regulatory Commission is considering sweeping changes to the way that interconnection processes are handled to speed up the pace of new resources coming online as states raise concerns about meeting their climate goals.

Ensuring reliability

The challenges are myriad. A renewable developer — for wind, solar, storage or any other generation — can’t hook up to the state’s electric system without a review by the NYISO and an agreement to pay for upgrades that the nonprofit determines are necessary. The costs can be millions of dollars, leading some developers to opt not to proceed.

The interconnection process evaluating the impacts of new projects on the grid is an essential step as part of the transition to renewables, said NYISO president and CEO Rich Dewey.

“It's really about making sure that as we make these additions, as we make these changes, we can maintain reliability in the existing system,” he said. “And do so in the most cost-effective means possible. And that takes engineering study and time, but it's a necessary step that needs to happen to make sure that we can preserve the reliable operation of the grid.”

Renewables in New York are being built primarily upstate, including in remote rural areas where there have not been conventional power plants. Hooking them up to the grid can mean a new substation is needed or require upgrades to an existing transmission line so it doesn’t get overloaded when the new renewables are putting electricity on the grid.

The utilities that manage the local distribution system and own transmission lines also play a role in studying projects and determining what upgrades they might trigger. The NYISO is seeking to improve coordination with the utilities, along with other efforts to improve the interconnection process.

With more and more projects being proposed — and studies showing even more will be needed to meet growing electricity demand as the state attempts to transition off fossil fuels and electrify nearly everything — the workload facing NYISO has increased. The number of active projects in the queue has tripled in the past three years, according to the NYISO.

There are more than 500 projects in the NYISO’s interconnection queue totaling more than 100,000 megawatts of capacity.

Those projects are largely renewables and storage, and there’s no expectation that all of them will be completed. Most still need to secure permits, contracts and move through the studies required by NYISO.

The workload in the class year process has also increased. The “class year” studies all of the projects seeking to hook up to the grid at once to understand how they’d impact the system.

There were just 27 projects that entered the 2017 process. In 2019, there were 85 projects seeking approval, and 24 moved forward at the end of the 18-month process.

“Just by volume, the amount of work to do — I think that's where … NYISO is falling behind,” said Mike Farrell, senior director of development at AES Clean Energy, a renewable developer with several projects in New York. “There's just so many projects. I think if New York is going to achieve its goals, it's going to have to pick up the time and the pace.”

Delicate balance for renewable projects

To build renewables in New York — or anywhere in the country — for-profit developers typically look to get long-term contracts to secure financing. NYSERDA runs annual procurements offering those contracts to subsidize new renewables, with costs passed on to ratepayers once the projects begin generating electricity.

Developers need to balance securing the NYSERDA contract, which typically has required dates for a project to come online, with getting a permit and hooking up to the grid. And the timing doesn’t always align.

“All three of these are proceeding simultaneously … and if there’s a delay anywhere it can throw a monkey wrench in the schedule, and what we end up doing is managing these monkey wrenches,” said Keith Silliman, director of regulatory compliance with Cypress Creek Renewables, which has several New York projects, including one large-scale solar project in Niagara County.

AES had six large-scale solar projects in development that entered NYISO’s “class year” process in 2021.

At the end of the process, developers are informed of their share of the costs needed to upgrade the system, and then can opt to drop out. When projects decide not to accept the costs, NYISO does the study again with the remaining projects — and developers get another chance to decide whether to move forward. That repeats until all of the remaining projects either accept their costs or drop out. Many plan to enter a future class year.

AES opted not to accept the costs for any of its projects that entered the class year, primarily because none of them had NYSERDA contracts.

“It's really kind of tough to put money at risk without having a view on what the results of that contract is going to be,” Farrell said. He said the lack of timing alignment between NYSERDA’s procurement and NYISO’s class year posed a challenge for developers.

Except for four energy storage proposals in New York City, all of the projects with interconnection costs over $1 million that agreed to move forward at the end of NYISO’s 2021 process had NYSERDA contracts — for offshore wind, battery storage, a new large-scale renewable project or transmission into New York City.

NYISO eyes changes

Another key step for developers is to secure permits. NYISO requires projects that accept their class year costs to show progress on permitting within about six months. There’s some additional flexibility if a project has a NYSERDA contract.

For EDP Renewables, the requirement to have an application deemed complete by the state’s siting office within that time frame led them to look toward the next class year for the 133 megawatt Alabama Solar project in Genesee County.

“It's a real balancing act trying to make sure that all those things line up on time,” said EDP Renewables’ Thomas LoTurco, an executive vice president.

LoTurco said it can be challenging given the unpredictable timing of the class year process to decide how much to invest — sometimes from $8 million to $10 million — on permitting studies in New York, which has rigorous requirements. A longer time frame would provide more time for developers to complete those studies after they know what the interconnection costs for the project are, he said.

Leaders at the NYISO, a nonprofit with a $170 million budget and about 600 employees, are sensitive to accusations that they’re a barrier to meeting New York’s renewable energy goals.

The NYISO has made changes in an effort to speed up projects. That includes eliminating some study requirements that were duplicative, allowing some projects needing additional study to do so outside the class year process so as not to slow down other developments and lowering permitting requirements.

More changes are under discussion with market participants, and the NYISO added more staff focused on interconnection this year. That includes two positions to assist project developers seeking to hook up and two project managers handling interconnection studies. An improved online portal with better workflow and information — including what the NYISO needs from developers — is being developed.

“When a developer comes to us with the initial request, there's a certain obligation of homework that they have done already,” the NYISO’s Dewey said. “To the extent that information from the developer is incomplete or not accurate or because of supply chain or design changes over time, then they've got the obligation and the responsibility, really, to get that information to us.”

Developers were largely complimentary of NYISO’s efforts on interconnection improvements while acknowledging a desire for more speed. They also recognize the flexibility NYISO offers in its process.

“I think they already do a pretty good job. It’s not the fastest interconnect process in the country — to the extent that they could speed it up, that could help the developer universe do our job to help the state hit their goals, which are quite aggressive,” said Harrison Luna, senior development manager at Hecate, which has several large New York proposals including the 500 MW Cider Solar project in Genesee County.

NYISO allows developers to make changes or explore multiple options during the interconnection process in ways other grid operators often do not allow. Dewey said the organization recognizes that may contribute to longer timelines and wants to discuss whether that needs to change.

“That comes at a cost of time, because it means a whole lot of rework,” he said. “So if we only focus on doing it faster, one of the levers that's going to have to be explored is whether that degree of flexibility is still as valuable or even possible.”