Date
09/24/2024
In a new white paper prepared for Con Edison, experts from The Brattle Group explore the role a utility ownership model could play in accelerating New York's renewable energy development and discuss the potential impacts on electric customers. The authors find that supplementing the private ownership model currently used to bring new renewables online in New York could accelerate the build-out of renewables and could provide customers with cost savings in certain scenarios.
The white paper, "Utility Ownership of New Renewables in New York State: Potential Benefits and Risks for Customers," outlines – from a customer's perspective – the pros and cons of allowing regulated utilities to own and develop renewable assets, such as onshore wind and solar, alongside private developers. Currently, the state's procurement of new renewables is achieved through New York State Energy Research and Development Authority (NYSERDA) contracts and New York Power Authority (NYPA) ownership. While this approach has attracted offers for renewable development, New York has fallen behind in its procurement targets due to supply chain interruptions and other challenges. This shortfall could potentially be mitigated by allowing utilities to develop and own renewable assets.
"New York greatly needs to add large amounts of renewable resources in the next decade if it is going to meet the state's ambitious decarbonization and renewable generation goals," said Dr. Metin Celebi, a Brattle Principal and report coauthor. "Utility ownership of renewables alongside private ownership of assets could not only help expedite the development of new renewable resources but ultimately even save utility customers in the state money, alongside other benefits."
The authors use illustrative new solar PV and onshore wind generation projects to compare future costs for customers under two ownership models: (1) utility ownership and cost recovery under regulated cost-of-service rates and (2) private ownership under a fixed-price long-term renewable energy credit (REC)-based power purchase agreement. They find that the utility ownership option could provide up to 14% customer savings relative to the private ownership option, particularly in scenarios with high wholesale power prices, and offer greater flexibility to modify projects and retain future benefits.
"Con Edison has been the champion for renewable energy generation for its customers for decades," said Raghu Sudhakara, Vice President of Distributed Resource Integration at Con Edison. "We believe that utility ownership of renewable energy will provide New Yorkers with additional renewable generation for the green energy that they need when they need it, and with the highest value."
Potential downsides of utility ownership of renewables include a likely shift of cost overrun risks from private owners to electricity customers, as well as the possibility that customer costs could increase over a renewable asset's lifetime under certain conditions. However, the benefits to customers that regulated utilities could offer – specifically, accelerated procurement of new renewables through cost-based rates – could outweigh such drawbacks.
"Utility Ownership of New Renewables in New York State: Potential Benefits and Risks for Customers" is coauthored by Dr. Celebi, Principal Dr. Sanem Sergici, Manager Joe DeLosa III, Senior Associate Josh Figueroa, Energy Associate Ragini Sreenath, and Senior Energy Analyst Ethan Snyder. The full white paper can be found on Brattle's website.