The latest round of funding awarded $204 million to eight large renewable energy projects - three of them wind projects (see map).
The round is part of the state's unique Renewables Portfolio Standard (RPS) law. More than half of US states have RPS laws, intended to increase the amount of electricity derived from renewable energy sources in those states. Most accomplish this by requiring electric utilities to either procure power contracts for renewables or to build and own their own clean generation.
New York's approach is very different. Through an occasional bidding process, it selects certain qualifying renewable energy projects to receive renewable energy credit (REC) payments on a per-megawatt-hour-of-production basis for 10 years. Renewables projects can still sell their power to New York's wholesale market, but the REC payments act as a bonus to bring costlier renewable power on par with traditional generation.
This year, the average price was $21.17/MWh, up from $19.76 in October 2009, $14.75 in November 2007 and $15.52 in December 2006. However, reading the numbers tells only a limited story: the prices are blended averages, including cheaper hydropower and biomass power, so the actual prices paid to wind generators are typically higher. The figure is also affected by the proportional mix of varying generation sources. New York does not disclose the exact price paid to developers.
Nevertheless, the price trend is clearly rising, says Carol Murphy, executive director of the Alliance for Clean Energy New York. "Prices were tempered by the amount of biomass and hydro in there, but it's still significantly higher than the last couple of rounds," she says.
"Also, looking back at some of those earlier auction prices, some of those projects did not get built, so that tells you something. People can't get the project built at that price, so this latest one is more in line with what they think is a realistic approach to get a project built."
With historically low natural gas prices in today's economy, wind developers are also looking at the prospect of getting paid less on the New York wholesale power market so they have to make up for it in higher REC payments through the RPS programme. Wind turbines may be more available these days, but prices have generally risen since the first RPS funding round in 2005.
Wind developers also want to see some regularity to New York's RPS programme. The bidding process and funding rounds have been sporadic, with one last October but a two year gap before that. New York attorney David Flynn, partner at Phillips Lytle LLP, says: "Right now it's more of a random process where the funds get used up, more is added, and it's back on. The push now is to make it more of a planned process."
Murphy says that since the programme began and funding has been authorised to 2015, it is now likely that the bidding and funding rounds will move to a more regular and predictable schedule, which will allow developers to create strategies and allocate scarce capital for wind projects. "This," she says, "would make things a lot easier than trying to guess when the next round might come out."
It will also make it easier for developers to know when to invest in New York state or turn their efforts to other states. "The ultimate goal of the RPS," says Flynn, "is to try and enhance the economic viability of a renewable energy project so that it can be cost competitive but also make money for the developer."