Can New York successfully boost land-based wind?

Part 2 of SEA’s New York REMO Clean Energy Standard Biennial Blog Series

Publish Date: November 26, 2024

Written by: Eric Pinsker-Smith, Senior Analyst; and Po-Yu Yuen, Director

Estimated Reading Time: 10 Minutes

New York’s progress towards its Clean Energy Standard and CLCPA goals has been dominated in recent years by solar deployment. Land-based wind (LBW) development activity – initially the major driver behind New York’s Renewable Portfolio Standard-driven renewables expansion – has lagged behind due to challenges like development risk, saturation of developable locations, public acceptance, and cost competitiveness (relative to solar). Since 2021, only 1.4 GW of LBW has entered NYISO’s interconnection queue, compared to 5.4 GW of utility-scale solar. However, LBW provides unique advantages that could play a critical role in achieving the state’s 70% renewable energy target. LBW provides a critical complement to solar resources, enhancing production diversity while enhancing grid reliability, especially as New York shifts to a winter-peaking system.  As New York continues its pursuit of its renewable energy targets, however, the viability – and need – for LBW projects is reaching an inflection point. Can New York boost LBW development and deployment, and do so cost-effectively?

What is the Cost-Effectiveness of Boosting LBW Awards in Tier 1 RFPs?

The CES Biennial Review recommended several options for boosting the quantity of LBW bids and awards in future New York State Energy Research and Development Authority (NYSERDA) Tier 1 large-scale renewable (LSR) solicitations, including carveouts, standalone LBW solicitations, and bonus evaluation scoring for LBW in head-to-head procurement competition. In our October CES Biennial Review Topical Webinar, we explored both the impact and cost needed to boost LBW presence in future Tier 1 LSR RFPs by modeling the additional payment NYSERDA might need to commit (a “tilt”) to secure incremental LBW in a given solicitation.

Using data from our July New York Renewable Energy Market Outlook (NY REMO) analysis, we simulated procurement outcomes for the 2024 and 2027 Tier 1 LSR solicitations, assuming 5,600 GWh award volumes for each. In Figure 2, comparing the Levelized Net REC Cost (LNRC) supply curves for the modeled bid cohorts in the 2024 and 2027 RFPs for all supply (i.e., head-to-head competition, see ‘All-Tech’ curves) against the ‘Wind Only’ cohort illustrates the level of tilt that may be needed to capture more LBW at any given procurement volume. For the 2024 RFP, capturing 25-50% of available LBW supply in the bid cohort requires no tilt as some LBW projects – with sufficient size to leverage economy of scale – are expected to be cost-competitive head-to-head against solar. To capture 75% of the available LBW supply, however, a modest tilt of $1.30/MWh would be needed. By 2027, as the most cost-effective prime LBW sites get deployed and commodity input costs (e.g., steel and aluminum) exert upward pressure on LBW installed (more so than solar), the required tilt increase substantially. All LBW in the modeled 2027 bid cohort would require an additional payment in order to be awarded. Capturing 25%, 50%, and 75% of the available LBW supply in 2027 would require additional tilt of $9.5/MWh, $15.5/MWh, and $25.50/MWh. Our analysis shows that a procurement design like bonus scoring or isolated evaluation for LBW (via carveout or standalone solicitations) could effectively get more LBW projects awarded and deployed. Moreover, not all LBW projects need the same level of support. In the near-term, some projects could likely compete head-to-head, but LBW’s cost competitiveness is expected to diminish over time as development cost pressure mounts, underscoring the value of targeted and calibrated policy support.

Conclusion

 LBW is an increasingly crucial resource in meeting New York’s renewable energy goals as the system approaches saturation of solar and offshore wind faces substantial political uncertainty. Its success in Tier 1 LSR procurement and deployment in the mid-term (two to three years) will depend heavily on New York’s willingness to pay at the margin to award incremental LBW supply, stimulate at-risk developer spending, and implement other evaluation criteria that prioritize LBW resource. Equally important, addressing siting and permitting barriers, particularly public acceptance challenges, will be key to unlocking LBW’s potential in advancing New York’s clean energy transition.