Understanding the True Impacts of Champlain Hudson Power Express

UNDERSTANDING THE TRUE IMPACTS OF CHAMPLAIN HUDSON POWER EXPRESS Prepared by: Energyzt Advisors, LLC Prepared for: Independent Power Producers of New York January 2020 TABLE OF CONTENTS EXECUTIVE SUMMARY ................................................................................................... ES-1 1. OVERVIEW OF CHPE ............................................................................................................. 1 1.1. Evolution of CHPE ....................................................................................................... 3 1.2. 2017 Assessment of Carbon Reductions – Grossly Overstates Benefits ................... 4 1.3. 2019 Climate Mobilization Act – CHPE does not help New York State goals ......... 6 2. SOURCE OF CHPE ENERGY SUPPLY ................................................................................ 11 2.1 Quebec is short capacity and long on energy........................................................... 11 2.2 Hydro-Québec’s excess energy available for exports is limited ............................. 14 2.3 Hydro-Québec firm energy is very expensive ......................................................... 18 3. HYDRO-QUÉBEC WOULD DIVERT ENERGY TO SUPPLY CHPE ................................. 22 3.1. Quebec is interconnected with multiple markets .................................................... 23 3.2. Hydro-Québec has enough transmission capacity to sell its excess energy .......... 26 3.3. Hydro-Québec is motivated to maximize profits .................................................... 26 3.4. Hydro-Québec would supply CHPE energy by redirecting or diverting it .......... 28 3.5. Analysis confirms that CHPE energy would come from New York ...................... 35 3.6. There is no guarantee that energy through CHPE would be incremental ............. 38 4. ADVERSE IMPACT ON NEW YORK IN-STATE RENEWABLES .................................... 39 5. IMPLICATIONS FOR CARBON EMISSIONS ..................................................................... 42 6. CONCLUSION ....................................................................................................................... 44 APPENDIX A: Bibliography APPENDIX B: Technical Description of Modeled Flows Understanding the True Impacts of CHPE TABLE OF FIGURES Figure 1: Proposed CHPE Project ............................................................................................................. 2 Figure 2: Variability in Water Flows at the City of Québec .................................................................. 15 Figure 3: Hydro-Québec Excess Energy Projected to be Available for Export .................................... 16 Figure 4: Hydro-Québec Firm Energy Contract Price in Massachusetts ............................................. 20 Figure 5: Transfer Capacity of Quebec Interties .................................................................................... 23 Figure 6: Map of Quebec and Interties ................................................................................................... 24 Figure 7: Graphical Representation of Relative Export Transmission Capacity ................................. 25 Figure 8: Comparison of Transmission Capacity to Maximum Export Levels (TWh) ....................... 26 Figure 9: Hydro-Québec Export Revenues (US Dollars) ....................................................................... 27 Figure 10: Hydro-Québec Historical Exports and Imports ................................................................... 32 Figure 11: Change in Intertie Flows due to CHPE (with and without NECEC) ................................. 36 Figure 12: In-state Renewables in the NYISO Queue by Operation Date............................................ 40 Figure 13: In-state Renewables in the NYISO Queue by Zone ............................................................. 41 EXECUTIVE SUMMARY UNDERSTANDING THE TRUE IMPACTS OF CHAMPLAIN HUDSON POWER EXPRESS Champlain Hudson Power Express (“CHPE”) is a 1,000 MW 330-mile transmission line, proposed by Transmission Developers Inc. (“TDI”), to deliver energy into New York City, plus an additional 250 MW bi-directional line to deliver energy into and out of New York to Canada. Energy flows across the 1,000 MW line into New York City could total up to 8.3 TWh (i.e., million MWh) of energy, which would be purchased under one or more long- term contracts. Potential purchasers of energy through CHPE include New York City and New York City building owners; the generation attributes or credits required to claim that the energy is hydroelectricity could be purchased by the energy off-taker or a third party. TDI is actively marketing CHPE as a conduit to deliver hydroelectricity from Hydro-Québec to give building owners an additional option they might use to comply with New York City Local Law 97, which established stringent emissions requirements for buildings. Local Law 97 provides owners with an option to purchase renewable energy, carbon offsets, or hydroelectricity delivered directly into New York City, as an alternative to making investments in building efficiency improvements. The results of our analysis show that CHPE will not result in reduced global emissions of carbon dioxide (referred to as “carbon” in this report) – and may even increase overall carbon emissions. Any long-term contracts associated with CHPE would, therefore, fail to meet the spirit and underlying goals of Local Law 97, that is, greenhouse gas emission reductions. Assessment of available data shows that Hydro-Québec has enough transmission capacity to be able to sell all of the energy from its existing hydroelectric facilities across existing lines and is not planning on building any additional hydro facilities in the foreseeable future in order to meet CHPE obligations if the project were to proceed. Without new power generation, the purchase of electricity over CHPE would result in no measurable reduction in carbon emissions. The only way Hydro-Québec could export 8.3 TWh to New York City via CHPE would be to redirect energy sales from other parts of New York, divert energy sales from existing export markets, and/or increase imports into Quebec from other markets, which would then be sold at above-market prices via CHPE. Importantly, the New York system in place to track electricity attributes cannot be used to measure the impact CHPE would have on emissions and would not, in and of itself, confirm that the energy is not, in effect, being Understanding the True Impacts of CHPE Page ES-2 sourced from other markets. In fact, New York City Local Law 97 does not require the use of any tracking system. In order to supply CHPE, it is likely that Hydro-Québec would reduce its export volumes into New York in order to provide that same energy to New York City at a higher price. Additionally, contracts with CHPE would delay and decrease investments for in-state renewables and building efficiency improvements and make it more difficult and more expensive to achieve New York’s Climate Leadership and Community Protection Act (“CLCPA”) goals, which require that 70 percent of energy consumed in New York State by 2030 be produced by renewable resources and that the power sector be emissions free by 2040. Carbon emissions reduction credits to New York City would be offset by reduced imports into upstate and western New York and increased carbon emissions in other markets. New York City does not benefit from, and is adversely impacted by, CHPE. New York City would pay billions of dollars for energy that otherwise would flow into upstate New York and other markets. And what does New York City get in return? • No Net Carbon Emissions Reduction: Purchasing Hydro-Québec energy through CHPE does not reduce carbon emissions regionally on a net basis, and, by squeezing out investments in energy efficiency and in-state renewables that do reduce carbon, results in higher emissions than otherwise would occur. Redirection of energy from one part of New York to another would have negligible impacts on state dispatch, simply shuffling energy around and failing to reduce carbon emissions within the state. • Higher Ratepayer Costs: A large portion of the energy from Hydro-Québec does not help New Yorkers meet the renewable energy requirements set by the State because Hydro-Québec energy imports that would be diverted from other parts of New York already are included in the base used by state agencies to estimate how much incremental renewable energy is required to meet state targets. Hydro- Québec energy is not eligible by the State of New York to generate Tier 1 RECs under the Clean Energy Standard (“CES”) (see CES Appendix A). New York City consumers, along with the rest of New Yorkers, would be burdened with even greater costs because they would have to make up the energy that is redirected into CHPE to achieve New York’s renewable energy goals by 2030 and 2040. • Expensive Energy: The price for energy delivered over CHPE is likely to be above Understanding the True Impacts of CHPE Page ES-3 market. Although Hydro-Québec has some flexibility with respect to its supply price, the Canadian government-owned company is unlikely to bid a long-term contracted price below what it receives by selling to provincial load or is projected to earn through sales into non-firm energy markets. Transmission costs also would be higher than a comparable contract for delivery into New England – via the New England Clean Energy Connect (“NECEC”) transmission line -- given the more

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