STATE of NEW YORK PUBLIC SERVICE COMMISSION in The
Total Page：16
File Type：pdf, Size：1020Kb
STATE OF NEW YORK PUBLIC SERVICE COMMISSION In the Matter of Implementing a Large Scale Renewable Case 15-E-0302 Program and a Clean Energy Standard COMMENTS OF NUCOR STEEL AUBURN, INC. INTRODUCTION On June 18, 2020, the Department Staff and NYSERDA issued for public comment a White Paper on Clean Energy Standard Procurements to Implement New York’s Climate Leadership and Community Protection Act (“CES White Paper” or “Whitepaper”). 1 Nucor Steel Auburn, Inc. (“Nucor”) offers the following limited comments on the matters raised in the Whitepaper. I. About Nucor Nucor operates an electric arc furnace (“EAF”) based steel recycling and manufacturing facility in Auburn, New York (located in NYISO Zone C). In effect, Nucor electrified steelmaking decades ago by melting recycled scrap steel in an EAF and converting the molten steel into new products. While very electricity-intensive, Nucor’s EAF-based operation is easily the most energy efficient and lowest emitting way to make steel.2 Also, because the electric generation produced Upstate that powers Nucor’s Auburn operation is nearly 90% carbon free, Nucor’s facility likely has the lowest indirect carbon footprint of any steelmaking facility in the world.3 Last year, Nucor 1 The Climate Leadership and Community Protection Act was enacted in 2019; Chapter 106 of the laws of 2019. 2 The EAF process uses less than half the energy and produces less than half of the carbon emissions associated with traditional iron ore and coke blast furnaces that dominate steel production in China and elsewhere. 3 Upstate New York has the lowest CO2 emissions rate from generation of any NERC sub-region in the United States. See eGRID2014 v.2 Summary Tables, Table 1 (Feb. 27, 2017), available at https://www.epa.gov/sites/production/files/2017-02/documents/egrid2014_summarytables_v2.pdf. 1 Steel Auburn recycled more than one billion pounds of scrap steel, employing the most efficient technology and using electricity from the lowest emitting electric network. Further, the around-the-clock nature of Nucor’s operation makes it a uniquely valuable Upstate load by utilizing energy produced by the growing number of intermittent renewable energy projects being constructed in Upstate New York in response to the Commission’s Clean Energy Standard (“CES”) solicitations. Realistically, the vast majority of land-based wind, large scale solar, and other renewable technologies targeted by CES procurements will be located Upstate. As noted in the CES Whitepaper and discussed below, clusters of renewable projects begin competing for limited transmission capacity available to deliver energy to more distant urban loads and create a number of deleterious “interactive effects” (e.g., negative energy prices, forced curtailment of other renewable sources, and localized transmission constraints).4 Large, electricity-intensive loads operating during low load periods absorb the uncontrolled energy being produced by many renewable sources and can sharply mitigate those adverse effects. Finally, Nucor Steel Auburn is the central cog in an extensive upstream and downstream network of vendors and steel fabricators operating throughout the State. Nucor will be actively participating in the Energy Intensive, Trade Exposed Industries group that will be advising the Climate Action Council. Controlling the overall costs of energy to New York consumers and businesses while implementing the CES procurements required by the CLCPA so that New York remains economically competitive was always important, and it is a key concern of Nucor. However, the significant COVID-19 induced economic recovery issues facing New York5 require 4 Case 15-E-0302, et al., Proceeding on Motion of the Commission to Implement a Large- Scale Renewable Program and a Clean Energy Standard, White Paper on Clean Energy Standard Procurements to Implement New York’s Climate Leadership and Community Protection Act at 32 (June 18, 2020) (“CES Whitepaper”) 5 According to the U.S. Department of Labor Report of August 8, 2020, New York’s 15.4% unemployment rate is the fifth highest of the fifty states and District of Columbia. 2 that the CES procurement issues posed in the Whitepaper be addressed from the necessarily broader perspective of how New York can get the greatest bang from ratepayer dollars to achieve its CLCPA objectives and stimulate sustainable economic growth. II. Background The CLCPA requires aggressive actions to reduce carbon emissions economy-wide in New York with the aim of lowering global carbon emissions.6 The statute looks to ensure that New York emission reductions are not accomplished by counterproductive measures that merely shift emissions to other jurisdictions (i.e., “leakage”).7 It hopes to establish a model approach to decarbonization for other jurisdictions to emulate8 and to position the State’s economy to thrive in a reduced carbon environment.9 The Whitepaper explains that its purpose is to “identify a proposed regulatory structure to address the CLCPA requirements for a renewable energy program.”10 In brief, building upon the renewable procurement and cost recovery structure that the Commission established in its 2016 Clean Energy Standard Order,11 the CES Whitepaper proposes an expanded but more flexible annual procurement process for Tier 1 (new or incremental) renewable projects, offshore wind and energy storage targets, and the creation of a new “Tier 4” procurement for renewable projects that can deliver energy into New York City. The Whitepaper also solicits comments concerning 6 Chapter 106 of the laws of 2019. 7 ECL §75-0109(3)(e). 8 S. 6599, CLCPA Legislative Finding 3. 9 S. 6599, CLCPA Legislative Finding 12. 10 CES Whitepaper at p.2. 11 Case 15-E-0302, et al., Proceeding on Motion of the Commission to Implement a Large- Scale Renewable Program and a Clean Energy Standard, Order Adopting a Clean Energy Standard (issued Aug. 1, 2016) (“2016 CES Order”). 3 NYSERDA’s proposed competitive Tier 2 program for existing renewable projects and the appropriate role of the New York Power Authority with respect to that tier. In addition to the CLCPA, earlier this year New York enacted the Accelerated Renewable Growth and Community Benefit Act to streamline and expedite the siting of qualified renewable energy projects, as well as other related requirements.12 A fundamental overarching goal of this legislation is to ensure that “renewable energy can be efficiently and cost-effectively injected into the state’s distribution and transmission system for delivery to regions of the state where it is needed.”13 The Commission has been directed to develop a state bulk transmission investment plan consistent with those studies, provide that plan to NYISO for its use in transmission planning, and employ the Public Policy Requirements (“PPR”) process for selecting projects necessary to implement that plan.14 Finally, the “Tale of Two Grids” disparity between Upstate and Downstate power system circumstances referenced in the Whitepaper and regularly discussed by NYISO in its Power Trends Reports15 describes an Upstate grid with abundant clean energy, a moribund economy, and new coming waves of renewable resources. Upstate New York desperately needs jobs-producing load, both from an economic recovery perspective and to absorb the massive intermittent renewable energy that will be added to the Upstate network in the next decade. Downstate needs are clearly different. It will require a combination of offshore wind, transmission upgrades, and imaginative local solutions (e.g., distributed resources, storage, load management, etc.) to achieve 12 Chapter 58, Part JJJ of the laws of 2020 (hereafter “Accelerated Renewable Growth Act”). 13 Id. Legislative finding § 2(b). 14 Accelerated Renewable Growth Act § 7(4). 15 Id. See also NYISO Power Trends Reports for the years 2017-2020, available at https://www.nyiso.com/documents/20142/2223020/2020-Power-Trends-Report.pdf/dd91ce25-11fe-a14f-52c8- f1a9bd9085c2. 4 the CLCPA goals. Policymakers should keep these very distinct needs and challenges in mind as they move forward. III. Comments A. Tier 1 Evaluations Should Incorporate the Proposed Expanded Risk Factors. The Whitepaper recognizes the likelihood for deleterious “interactive effects” in Upstate zones as increasing amounts of renewable output are added to the system well removed from load centers.16 It proposes to address the expected interactive effects among renewable producers by permitting NYSERDA to propose additional risk factors in the selection process to mitigate geographic and technology concentrations, network upgrade costs, renewable curtailment potential, and transmission development in general. Nucor supports the proposal to allow consideration of broadened risk factors and urges NYSERDA to identify such risk factors to be considered before serious local network conditions develop. These added factors should be proposed well in advance of forthcoming auctions and clearly communicated to all stakeholders. The Whitepaper seeks comments on additional measures that may be warranted, including whether NYSERDA should acquire RECs without compensation when local conditions produce negative real-time energy prices.17 Nucor supports the latter recommendation because such dysfunctional system conditions should not be incentivized. B. Incremental REC Costs Associated with the Proposed Tier 4 Should Not Be Allocated Upstate. The Whitepaper acknowledges the fundamental challenge posed by the CLCPA in getting renewable energy reliably delivered to urban loads that today rely on local fossil generation, and it proposes to establish a distinct Tier 4 auction for eligible renewable energy that can be delivered 16 CES Whitepaper at 32. 17 Id. at p. 34. 5 to Zone J. An eligible project must demonstrate additionality above an established baseline, deliverability (i.e., be located in Zone J or demonstrate its energy is deliverable based on a new transmission connection), and the auction is limited to a total of 3,000 MW (presumably nameplate rating or ICAP).18 The Whitepaper suggests that, for projects that do not bear the cost of transmission, Tier 4 REC prices should be capped based on a benchmark to prevailing Tier 1 prices.