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New York buys more offshore wind. New York seeks for more offshore wind to decarbonize its electricity supply. On July 27th, The New York State Energy Research and Development Authority (NYSERDA) launched third offshore wind solicitation, aiming for at least 2,000 MW of new generation and offshore renewable energy certificates (ORECs) that comes with it. Only project which already have the lease for federal waters off the coast of New York and neighboring states can propose an offer. Proposals must offer capacity of at least 1,000 MW or the highest possible capacity in the lease area. Furthermore, proposals must also show the ability to feed electricity into zones associated with New York or Long Island on the grid supervised by NYISO. Participants should add an investment plan that would show how to help state to establish the infrastructure like ports, manufacturing and other of offshore wind supply chain parts. State funds of $300 mn is proposed to the developers for plans which aim to localize blade or turbine nacelle manufacturing or up to $150 mn for projects without these features. Application process for participating in the solicitation ends on December 1st . Deadline for delivering the proposals – 22nd December. NYSERDA intends to choose the winners by Q1 2023 and execute the contracts by Q2 2023. New York is striving to reach 9,000 MW by 2035 which would be enough to cover around 30% of electricity needs. More than 4,300 MW of offshore capacity is already contracted.
New York approves the largest solar project. The New York State Office of Renewable Energy Siting (ORES) approved the 500MW Cider Solar Farm which is being developed by Hecate Energy on 3,000 acres in Genesee County, New York. Developer aims to begin the construction next year and start commercial operations by December 31st, 2023. Farm is expected to generate 920,000MWh/yr which is equivalent to 120,000 homes’ electricity needs. Currently, that is the state’s largest solar farm.
New Jersey’s draft for Environmental Justice rules. The Department is proposing new rules to implement the provisions of New Jersey’s Environmental Justice Law and “establish the requirements for applicants seeking permits for certain pollution-generating facilities located, or proposed to be located, in overburdened communities, including the analysis of relevant environmental and public health stressors as well as requirements intended to ensure applicants’ meaningful engagement with members of host overburdened communities, and community members’ participation in the Department’s decision-making process” (proposal). DEP has proposed a 90-day comment period for the proposed EJ rules. Comments submission page - here . End of public comment period – September 4th, 2022. DEP aims to adopt the rule by December 31st, 2022 (overview - ppt).
New Jersey solar capacity growth. After a slowdown in May (10.9MW), The New Jersey Clean Energy Program reported on 21 July that the state added 18.6MW in the photovoltaic capacity in June. However, it is still significantly less than the 41MW initially reported in April. One third of June capacity, around 6.5MW, went to ADI initiative, the fixed-price portion of the state's new SREC-II incentive program. The remaining 12.1 MW of the new capacity fed in the state's transition incentive program, which issues transition renewable energy certificates (TRECs) at a base price of $152/MWh for a 15-year period and requires the state's four electricity distributors to buy the credits. No capacity went towards legacy solar renewable energy certificate (SREC) program. From January to June, New Jersey on average reported 28.4 MW/month which is 3.3% higher than the 27.5 MW/month average in 2020-2021, but way below the state’s record of 37.8MW/month reached in 2019.
Increase in PJM generation of wind and solar. PJM issued the highest number of RECs through the Q1 & Q2 2022 compared to the same period in the last five years which was mainly upheld by the wind and solar projects. 50.2 mn RECs were created during the first six months of 2022. That is 4.4 - 9 mn credit more than any other first six months in the years of 2017 – 2021. In June 2022, wind credits reached 20.7 mn resulting in ~17% increase compared to the same period in 2021. Solar credits reached 9.3 mn to date which was ~16% more than during the first 6 months of 2021. However, only 9,000 RECs were generated from the geothermal projects. Moreover, there was a drop of 809,000 credits in hydropower generation compared to the average of 2017 – 2021. Result of 6.6mn RECs during the first-half of the year is the lowest since 2018. On average ~16.5% drop is seen. Landfill gas RECs drop by ~19% to 1.3 mn credits in January – June 2022 compared to same period of 2021.
Next RGGI allowance auction. Auction 57 will take place from 9:00 AM until 12:00 PM ET1 on Wednesday, September 7, 2022. States participating in the auction - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia. All of the 15,682,878 Cost Containment Reserve (CCR) allowances are available in the auction. The CCR Trigger price – $13.91/allowance. Furthermore, all of the 15,033,499 Emissions Containment Reserve (ECR) allowances are eligible to be withheld in the auction. The ECR Trigger price – $6.42/allowance. Allowance transfer and confirmation will occur on Thursday, September 22, 2022.
RGGI lack of focus on disparity of pollutant burden. The Regional Greenhouse Gas Initiative (RGGI) has helped to reduce power plants’ emission in all participating states. However, program’s benefits were not distributed equally, and some believe that regulators should take actions in order to address environmental justice effects of the initiative. The research was conducted with electric generating units in 10 RGGI states which were in the program during the period of 1995 – 2015. The results indicated that communities with a higher level of poverty and higher percentage of non-white residents were more likely to live close to one or more power plants. 43% of environmental justice communities live at least next to two power plants and only 29% in wealthier, whiter neighborhoods. Research also indicates that the portion of gas-fired plants rose faster in environmental justice areas compared to others after RGGI accelerated the transition away from coal. On the other hand, general downward trends in CO2, SO2, and NOx power plant emissions were detected among all the areas – environmental justice and wealthier ones. However, many would argue that focus on aggregate emission reduction should shift to address problems of pollutant burden disparity.
RGGI stalls the program review. RGGI states delay program review by almost a year. Currently, the third program review is expected to be finished by December next year, with regulation draft by autumn 2023. Public meetings to discuss relevant topics are planned to be hosted in autumn this year and potential revisions to program overviewed in spring 2023. RGGI has been requesting public comment on different parts of the regulation including the cap trajectory, usage of the offsets and environmental justice concerns. The last RGGI program review in 2017 lead to the significant changes in the market such as lowering the CO2 cap that declines by 30% over 10 years. The delayed review brings uncertainty as it is not clear which states will take place in RGGI going forward.
Q2 records higher RGGI CO2 emissions in eastern US. Eastern US power plants covered under the RGGI emitted 3.6% more than a year earlier in Q2. Emissions were up by 830,000 short tons and resulted in 24.1 MN st of CO2 in Q2 2022. Due to the energy demand increase as US recovers from pandemic, emissions in RGGI states increased by 24% in Q2 2022 compared to the Q2 2020 (Virginia excluded). The surge was driven by higher natural gas-fired plants activity in New Jersey (emissions up by 28%) and New York (emissions up by 12%). Virginia opposed this trend with emissions dropping by 824,000 set (down 14%). It is possible that the data will change as some of the states have not yet reported for biomass and heat-and-power unit emissions that have been subtracted before. Report is also missing information from two electric generating units at the Brandon Shores coal-fired plant in Maryland. Its emissions were equal to 675,000 set in Q1 2022. Future quarters can bring changes to the emissions covered by RGGI as multiple states’ membership status are under review. Virginia governor aims to retract the state from RGGI by Q3 2022. Furthermore, Pennsylvania’s participation is not clear yet.
North Carolina might join RGGI in 2024. The state is preparing to launch a rulemaking that could encourage joining RGGI from January 2024. However, published regulation would significantly differ from how other program members participate in this cap-and-trade program. Firstly, North Carolina anticipate involving not only coal and natural gas-fired electric generating units but also biomass and industrial facilities, regardless of grid connectivity. Furthermore, all CO2 emissions would be treated the same. Nevertheless, electric generating would still be the largest emission source with around 40 mn short tons of CO2 in 2020, compared with 4.5 MN st from all other facilities like pulp or paper mills. What is more, North Carolina would apply stricter cap trajectory to meet its ambitions to reduce power sector CO2 emissions by 70% from 2005 to 2030. Currently, 4.7% fall per year is considered which would allow state to drop the emission from 38.6 mn st in 2022 to 24.3 mn st in 2030. Other RGGI states are currently using 3% decline rate. North Carolina also plans to use consignment approach to allocate allowances. Regulated facilities would receive free allocations which would than be put up for sale at the auction and keep the revenue. Same parties would also have to buy allowances to cover their emissions, consequently, making compliance cost-neutral. Furthermore, offsets would not be a suitable compliance tool. New regulation analysis should be finalized by November. It will be followed by the public comments period December 2022 – February 2023, regulatory commissions’ approval in May-June 2023 and formal participation starting on 1 January 2024.
Pennsylvania court reinstated RGGI injunction. On July 25th, the Commonwealth Court of Pennsylvania resurrected an injunction that prevents Pennsylvania from participating in RGGI. The court suspended implementation of the rule as Republican lawmakers and coal-related groups had raised questions about the regulation’s legality. The Department of Environmental Protection’s (DEP) appealed and succeeded to temporarily lift the injunction until the recent Court’s decision. Republican lawmakers pushed to reinstate the injunction, saying that the coming September auction and the chance that DEP will enforce and collect an “illegal tax” requires the Court to act fast. Current situation further complicates DEP’s efforts to participate in RGGI. DEP can address the Supreme Court to reverse judge Michael Wojcik’s decision. However, despite the multiple asks from DEP, the utility Constellation Energy, and a coalition of environmental group, the state’s highest court – which is controlled by Democrats – does not seem to have addressed the requests. The Commonwealth Court will hold an argument session regarding the regulation’s legality in September – November.
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