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April 29, 2019 Via E-Filing on NY DMM Honorable Kathleen H. Burgess Secretary to the Commission New York State Public Service Commission Three Empire State Plaza Albany, NY 12223-1350 Re: CASE 19-E-0079: In the Matter of the Continuation of Standby Rate Exemptions Dear Secretary Burgess: Bloom Energy Corporation (“Bloom Energy”) hereby respectfully submits its comments in response to the February 12, 2019 Notice in Case 19-E-0079 issued by the Commission requesting comments from interested entities related to extension of the previously established temporary exemption from standby rates for certain forms of distributed generation (“DG”).1 Bloom Energy is a provider of solid oxide fuel cell (“SOFC”) technology that produces reliable on- site power using an efficient and environmentally superior non-combustion process that significantly reduces carbon dioxide emissions while virtually eliminating criteria pollutants and water usage. The result is a new option for energy infrastructure that combines increased electrical reliability and improved energy security with significantly lower environmental impact. Bloom Energy fuel cells are a proven technology with over 350 MWs of commercially deployed projects currently operating in the United States. 1 “Notice Initiating Proceedings and Soliciting Comments, In the Matter of the Continuation of Standby Rate Exemptions” CASE 19-E-0079, February 12, 2019. 4353 N 1st Street, San Jose, California 95134 – www.bloomenergy.com Appendix A The current exemption from stand-by charges for “designated technologies,” including solar, fuel cells, and other renewables, is scheduled to expire on May 31, 2019. This exemption has been in place since the current standby rate design was initially adopted and forms a bedrock assumption in every BTM DER model in New York state. The project development cycle often involves a long lead time and projects that are in development now are necessarily assuming the exemption will be extended by the Commission. Without an extension of the standy by charge exemption it is highly likely that a broad range of DG projects will be rendered un-economic. Indeed, the Commission itself has noted that "[t]he existence of standby tariffs may discourage many customers from even exploring a distributed generation project."2 Bloom Energy is in support of the continuation of the standby rate exemption because the need for rate certainty remains as the Distributed Energy Resource (“DER”) market continues to develop, especially with regard to resilient, behind the meter (“BTM”) generation for which the REV-related proceedings have yet to establish any value streams.3 In fact, as outlined below, the need for maintence of the standby charge exemption for BTM DERs has never been greater as a significant number of value streams for these necessary technologies have been discontinued over the last three years. For example, the August 1, 2016 Order Adopting a Clean Energy Standard excluded BTM generation from participating in the program, preventing BTM resources that had historically been eligible for the RPS from competing in the CES.4 Second, the same Order precluded 2 “Proceeding on Motion of the Commission in Regard to Reforming the Energy Vision”, DPS Staff Report and Proposal, Case 14-M-0101, April 24, 2014, page 32. 3 The April 24, 2014 Staff Report and Proposal in the Reforming The Energy Vision proceeding indicates that the issue of establishing fair pricing systems that adequately address the systemic and social value of these resources will be a topic for consideration within the REV proceeding itself. In the meantime, the most important thing that the Commission can do to advance the objectives of REV is to provide the greatest level of certainty possible for investments in distributed generation. To achieve this end, the Commission should simply extend the existing stand by charge exemption for designated technologies for five (5) years or until the issue is otherwised addressed in a final decision within the REV proceeding that provides “market signals” for the full range of system benefits provided by reliable behind the meter generation. 4 “Order Adopting A Clean Energy Standard, Proceeding on Motion of the Commission to Implement a Large-Scale Renewable Program and a Clean Energy Standard”, CASE 15-E-0302, August 1, 2016. Page 2 Appendix A behind the meter distributed generation from obtaining any value from the creation of renewable energy credits (“RECs”), a value stream that can make or break project economic models. Third, the customer sited tier program funding only extends through the present year putting it at risk of being terminated before any replacement programs establishing market signals have been developed or implemented.5 Fourth, the value streams established in theMarch 9, 2017 Order On Net Energy Metering Transition, Phase One Of Value Of Distributed Energy Resources, And Related Matters have not been extended to BTM resources.6 The REV program was expected to replace these traditional incentive programs with “market signals” reflecting the actual costs and benefits of DERs. Instead, the traditional incentive programs are being unwound before the REV/VDER market signals were extended to behind the meter resources. Given that the move toward a long distance large scale renewables by wire strategy creates new risks, especially with transportation and building sector loads converting to electricity, NYS should be supporting resilient BTM projects more, not less. In light of the above, the last thing behind the meter projects need in New York is more uncertainty and costs. The state should keep the standby rate exemption in place until VDER is complete for BTM projects. Bloom Energy is in support of increased renewables penetration, yet, Bloom Energy is also very aware of how electricity dependant society has become.7 This energy dependence counsels strongly toward propagation of local, BTM DERs as a reliability backstop to the otherwise grid-connected imported renewables model. Such a model ensures that society will be the benefactor of as much renewable energy as possible even as our communities and 5 “Clean Energy Fund Investment Plan: On-Site Power Chapter, In the Matter of the Clean Energy Fund Investment Plan” Matter Number 16-00681, November 1, 2017. 6 “Order On Net Energy Metering Transition, Phase One Of Value Of Distributed Energy Resources, And Related Matters, In the Matter of the Value of Distributed Energy Resources”, CASE 15-E-0751, March 9, 2017. 7 See, increasing blackout risks; The Eaton Blackout Tracker showing a 60% increase in outages of the electric grid over the last ten years. Eaton Power Business Worldwide, Blackout and Power Outage Tracker, http://powerquality.eaton.com/blackouttracker/default.asp See also, Rand Group study showing that 98% of organizations say a single hour of downtime costs over $100,000, 81% of respondents indicated that 60 minutes of downtime costs their business over $300,000, and 33% of those enterprises reported that one hour of downtime costs their firms $1-5 millionHow Much Does 1 Hour of Downtime Cost the Average Business?, https://www.randgroup.com/insights/cost-of-business-downtime/, Rand Group. Page 3 Appendix A economy are hardened against the public safety and security threats posed by loss of reliability at critical resources.8 In Appendix A below, Bloom Energy outlines the series of benefits that our technology provides both to our customers and the grid at large in support of our position that extension of the standby charge exemption is warranted at least until such time as the Commission otherwise addresses the value of BTM generation in the REV proceeding. Given the undeniable value that BTM DERs provide in bolstering grid security, reliability, and system stability, Bloom Energy reiterates that the most important thing that the Commission can do to advance the objectives of REV is to provide the greatest level of certainty possible for investments in DG. To achieve this end, the Commission should simply extend the existing standby charge exemption for designated technologies for five (5) years through May 30, 2024 or until the BTM issue is otherwised addressed in a final decision within the REV proceeding. Very truly yours, /S/ Karen M. White Manager, Policy & Business Development Bloom Energy Corporation [email protected] www.bloomenergy.com 8 Bloom Energy’s solid oxide fuel cells have maintained reliabile operation through large and small reliability events. Bloom Energy’s installations in the event impact zone operated through Hurricane Sandy, through a 6.0 magnitude earth quake in South Napa, CA, through the Napa Fire, through the Japanese Super-Typhoon, and through instances of major physical dmage being sustained by surrounding units when a backhoe fell on an installation. This does not account for the countless times where our systems, daily ride through grid transient events and short-term power interruptions. Page 4 Appendix A Solid Oxide Fuel Cell Benefit Summary Benefit Description Summary of Methodology for Calculating Value Distribution System Benefits Avoided or Deferred • SOFCs provide continuous • Deferred distribution investments can be calculated Distribution generation located close to based upon the actual cost of equipment upgrades that Investments and customer loads, potentially would have been required if not for the fuel cell Upgrades freeing up capacity on the investment. The extent to which upgrades would have distribution system and allowing been required