Industry pushes for inclusion in renewable energy incentives
By Zachary Matson
New York hydroelectric producers are calling on energy regulators to give their industry equal footing with solar and wind, as the state attempts to transition to renewable power and carbon-free power generation.
Hydropower producers in recent years have increased exports to neighboring states or struggled to stay open, reducing the amount of hydropower utilized in the state just as it seeks to draw all of its electricity from renewable sources.
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A petition filed with the Public Service Commission last week argued the commission should expand access to a financial incentive available to so-called “distributed energy resources,” like community solar and other projects that directly engage customers, so that hydropower projects built before 2015 can also benefit.
The program shuts out the legacy hydropower producers that have long contributed the lion’s share of renewable energy produced in the state, according to the petition, worsening unsustainable economic conditions at many facilities. Sixteen hydropower companies, including many operators of dams and generation sites that draw power from Adirondack rivers, signed the petition.
“The fact is that maintaining existing zero-carbon resources is the lowest-carbon solution for meeting New York’s portfolio goals,” petitioners wrote. “In terms of net emissions, the fact that these resources already exist makes them more valuable, not less.”
The petition argues the commission should repurpose funding for a separate, sparsely-used program to incentivize existing hydropower facilities to become distributed energy providers, working to sign up customers to purchase electricity credits directly.
Dams have long been central to Adirondack communities, but the important infrastructure, which holds up much of the region’s physical and social landscape, is aging and faces growing storm threats due to climate change.
The petition argues that incentivizing legacy hydropower producers to become distributed energy resources would encourage residents to support long-term investments in local dams. Under the proposed plan, hydropower producers that pursued a customer-based business model — as opposed to selling directly to large utilities or on the wholesale energy market — would be paid for the environmental benefit of not generating new emissions. The environmental payment at current rates is worth about 3 cents per kilowatt-hour generated.
The plan would “[empower] New Yorkers to make a consumer choice that delivers much-needed value to local renewable power producers, investing in their community and local ecology as well as the global climate,” the petition states.
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New York’s 2019 climate law committed to eliminating all emissions creating by electricity generation by 2040 and reaching 70% emissions-free electricity by 2030. Still, less than 30% of the state’s electricity was emissions free as of 2020, according to a state report, less than a 3% increase from the 2014 baseline.
Emmett Smith, who operates the Azure Mountain Power dam in St. Regis Falls, was the petition’s lead signatory. Smith said it’s unfair of the state to count legacy hydropower toward its renewable targets without offering a financial incentive like it does to new solar and wind developments.
“We are still counted to the state’s renewable energy mix, but we are not paid for being renewable,” Smith said.
The petition outlines how some hydropower producers in recent years have exported power to neighboring states with better renewable incentives. Some facilities have curtailed generation or shut down as wholesale energy rates have declined in recent years, reaching unsustainable levels for many hydropower generators.
Legacy renewable generators between 2016 and 2019 increased exports by 50%, raising concerns among state officials that the growth in exports could threaten the state’s ability to hit emissions targets.
“It’s pretty simple math, the numbers are in, and it’s clear that a lot of generators have either shut down, reduced production or are exporting,” Smith said.
A pair of earlier credits incentivized some hydropower producers to enter the distributed energy program, but that has slowed since those credits expired. Smith, who founded Northern Power & Light as a way to connect hydropower generation with local customers, said he thinks other hydropower producers would move into the program if the state paid for the environmental benefit.
In 2020, the New York State Energy Research and Development Authority offered to subsidize legacy hydropower generators by purchasing their renewable energy, but the state only awarded a handful of contracts under the first bid solicitation and none under the second. Smith said the state did not offer a high enough purchase price to entice producers.
The petition proposed repurposing funding from that program to fund the environmental benefit for hydropower producers who enter the distributed energy program.
Kelly Sackheim, owner and operator of the Sandy Hollow Power Company and dam on the Indian River in Philadelphia, said margins are tight operating a dam and any help from the state would make her operation more stable. The dam she operates was first constructed in 1850 and requires costly ongoing upgrades and maintenance. She said keeping hydropower facilities operating supports the goal of cleaning up the state’s energy grid.
“It’s a question of do you want to preserve the environment by getting electricity in a clean manner and making that economically viable,” Sackheim said.
The petition estimated that about a quarter of eligible producers would enter the program, representing about 210 gigawatt hours of hydropower each year, enough to serve around 34,000 residential customers. The overall cost of funding those environmental payments is estimated to cost about $6 million annually.
If the commission agrees to consider the petition, the proposal would be opened for public comments, Smith said.
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