New York Main Tier RPS Impact & Process Evaluation Prepared for: The New York State Energy Research and Development Authority, Albany, New York Carole Nemore, Project Manager Project Team: KEMA Inc. Liz Hicks, Rick Fioravanti, Josh Kessler, and Nellie Tong Agreement Number 10429 March 2009 Experience you can trust. Copyright © 2009, KEMA, Inc. This report was prepared by KEMA, Inc. in the course of performing work contracted for and sponsored by the New York State Energy Research and Development Authority (hereafter "NYSERDA"). The opinions expressed in this report do not necessarily reflect those of NYSERDA or the State of New York, and reference to any specific product, service, process, or method does not constitute an implied or expressed recommendation or endorsement of it. Further, NYSERDA, the State of New York, and the contractor make no warranties or representations, expressed or implied, as to the fitness for particular purpose or merchantability of any product, apparatus, or service, or the usefulness, completeness, or accuracy of any processes, methods, or other information contained, described, disclosed, or referred to in this report. NYSERDA, the State of New York, and the contractor make no representation that the use of any product, apparatus, process, method, or other information will not infringe privately owned rights and will assume no liability for any loss, injury, or damage resulting from, or occurring in connection with, the use of information contained, described, disclosed, or referred to in this report. Experience you can trust. ABSTRACT New York’s Renewable Portfolio Standard (RPS) program, designed to increase the State’s retail electricity mix from a baseline of 19% to 25% by 2013, has been in effect since 2004. NYSERDA is required to present the New York Public Service Commission an evaluation report of the program results through the end of 2008. The report is to be issued for public comment by March 31, 2009. In support of this evaluation effort, KEMA Consulting performed impact and process evaluation studies to help understand the program’s progress toward RPS policy goals and to assess program delivery. This comprehensive report presents findings pertaining to these evaluation studies. This report focused most heavily on the Main Tier component of New York’s RPS, and program support and policy conditions for large-scale renewable energy in New York. This report summarizes data gathered on current program progress, projected program needs, economic benefits, policy and administrative efficacy. Where applicable, elements of the Customer Sited Tier of the RPS were included in this assessment, especially related to progress toward goals and briefly on program delivery. Results presented in the report are based on analysis of program data, findings from in-depth interviews with a wide range of market participants, as well as a review of primary and secondary data sources. The assessment finds that on balance, the program is delivering considerable benefits to New York for its investment in renewable energy technologies. The Main Tier RPS program is highly cost-effective with a benefit-cost ratio exceeding 6 to 1. The program is being delivered according to policy and cost- effectively. Areas where the program could be most improved concerns actions—both administrative and policy measures— that the State could take to effectively reduce market uncertainty for long-term renewable energy investment in New York. While New York is generally tracking toward towards meeting the RPS goal under the original load forecast stated in the 2004 Order; three of the four program elements are not meeting their annual targets. One exception is the Customer-Sited Tier for which updated targets based on authorized funding levels have enabled NYSERDA to achieve 119% of its 2009 target by the end of 2008. The overall goal of 25% by 2013, however, cannot be met without considerable additional renewable energy procurement through the RPS Main Tier program. NYSERDA iii Table of Contents Abstract ........................................................................................................................................................................iii List Of Tables ......................................................................................................................................................vi List Of Figures....................................................................................................................................................vii Section 1 Executive Summary....................................................................................................................................1-1 Scope And Purpose...............................................................................................................................................1 Key Findings.........................................................................................................................................................1 Section 2 Introduction ................................................................................................................................................2-1 Policy Goals And Objectives ................................................................................................................................1 Scope And Purpose Of 2009 Review....................................................................................................................3 Current Policy Context .........................................................................................................................................4 Section 3 Approach ....................................................................................................................................................3-1 Indicators For Evaluation......................................................................................................................................1 RPS Impact Analysis.................................................................................................................................1 Data Sources .........................................................................................................................................................3 Stakeholder Interviews ..............................................................................................................................3 Secondary Sources.....................................................................................................................................4 Section 4 Progress Toward Targets And 25% By 2013 Goal.....................................................................................4-1 Background ..........................................................................................................................................................1 Targets ..........................................................................................................................................................2 Main Tier...................................................................................................................................................6 Customer-Sited Tier ..................................................................................................................................7 Other Policy Elements...............................................................................................................................9 Potential Increase In RPS Goal...........................................................................................................................11 Section 5 RPS Economic Impacts, Benefits & Costs ...............................................................................................5-1 Summary Of Direct And Total Macroeconomic Impacts From Three NYSERDA Procurements.......................2 RPS Scenarios ...........................................................................................................................................3 Benefits Specification..............................................................................................................................15 Program Implementation Costs ...............................................................................................................18 Estimation And Discussion Of Benefit-Cost Ratio Estimate ..................................................................18 Reliability Impacts ..................................................................................................................................21 Demand Impacts......................................................................................................................................28 Environmental Impacts............................................................................................................................30 NYSERDA v Table of Contents Section 6 Program Structure’s Relationship To Policy Objectives (Process Evaluation) ..........................................6-1 Introduction ..........................................................................................................................................................1 Main Tier ..........................................................................................................................................................2 Eligibility Criteria......................................................................................................................................4