A recently issued request for proposals from the New York Power Authority that is part of a new initiative under which New York state will make an investment of up to $1.5 billion in major renewable energy projects seeks a variety of products, financing structures and terms to reflect the different needs of NYPA's customers and their objectives for renewable power.
The RFP, which was issued in early June, solicits proposals for various products including renewable energy credits, or RECs, and energy and capacity from large-scale renewable energy projects.
New York Gov. Andrew Cuomo on June 2 unveiled details on a new initiative under which New York state will make an investment of up to $1.5 billion in major renewable energy projects, including wind and solar, and significantly expand energy efficiency and solar installations at public buildings. The NYPA will play a central role in the initiative.
The investment will result in an additional 2.5 million megawatt-hours of electricity a year, representing the largest clean energy procurement by a state in U.S. history, Cuomo's office said in a June 2 news release.
Procurements will be done by NYPA and the New York State Energy Research and Development Authority.
Cuomo's office said that the NYSERDA solicitation will procure 1.5 million MWh of electricity from renewable energy sources and the NYPA solicitation will procure an additional 1 million MWh.
The renewable energy generation will help to meet Cuomo's Clean Energy Standard goal of 50 percent of the state's electricity sourced from renewables by 2030. In the RFP, NYPA noted that it expects to continue to drive toward this goal in the coming years with an additional solicitation or solicitations to meet the full 2030 goal.
Currently, renewables account for more than 26 percent of New York's electricity mix.
NYPA RFP seeks variety of products, financing structures and terms
A variety of products, financing structures and terms are being sought in the NYPA RFP to reflect the different needs of NYPA's customers and their objectives for renewable power, the RFP noted.
"NYPA serves a range of customers from state facilities to municipalities to large industrial businesses; accordingly its customers have different renewable energy needs, ranging from meeting self-set goals of 100% renewable energy over the long-term to shorter-term renewable energy solutions. This RFP is designed with NYPA customers' needs in mind," the Authority said in the solicitation.
NYPA urges innovative financing
The solicitation notes that NYPA has a long history supporting the development of the state's power infrastructure, including the development of large-scale renewable projects. "In this RFP, the Authority is seeking proposals that provide low-cost renewable energy to New York State," NYPA said.
To further reduce the overall cost of energy, the Authority is strongly encouraging bidders to consider and propose innovative financing under a prepayment structure that is detailed in the RFP. "Projects that capitalize on both the attractive federal tax incentives for renewable energy, and on NYPA's access to low-cost financing, are likely to be the most attractive projects on an all-in cost basis," the RFP noted.
The RFP details types of eligible projects.
Eligible in-state projects include:
- New renewable generating facilities that have an in-service date on or after Jan. 1, 2018 but prior to Dec. 31, 2022;
- Expansions of existing renewable generating facilities that propose to add megawatts with an in-service date on or after Jan. 1, 2018 but prior to Dec. 31, 2022.
Eligible out-of-state projects include new or existing renewable generating facilities that:
- Provide new imports into the state of New York; and
- Demonstrate delivery of the products proposed into the New York Control Area.
Eligible technologies are solar photovoltaic (excluding concentrated solar technology), wind, hydroelectric and biomass. Projects cannot be interconnected behind the customer meter.
Minimum project size parameters are as follows:
- 5 MW minimum: Projects physically interconnected to New York Independent System Operator Zone J - all eligible technologies;
- 10 MW minimum: Solar PV and biomass instate projects that are physically interconnected to NYISO Zones A-I and K or out-of-state projects that deliver to Zones A-K;
- 20 MW minimum: Wind and hydroelectric instate projects that are physically interconnected to NYISO Zones A-I and K or out-of-state projects that deliver to Zones A-K.
Three product bundles sought under RFP
The solicitation seeks three product bundles. Proposers are being encouraged to submit proposals for all three product bundles, but proposals for all three are not required.
"Please note however, that NYPA intends to pursue contracts for all three product bundles, including some contracts for RECs only. For any proposal, terms of 15 and 20 years are required, and other term pricing is strongly suggested, but is not required," NYPA said.
The RFP seeks the following products: 1) energy, capacity and RECs; 2) energy and RECs only; and 3) RECs only.
Terms are as follows:
- Five years (Optional)
- 10 years (Optional)
- 15 years (Required)
- 20 years (Required)
- Hybrid Term (Optional): five-year energy; and 20-year RECs
The initial product delivery date is on or after Jan. 1, 2018 but no later than Dec. 31, 2022.
Respondents to the RFP are encouraged to propose financing plans that can achieve the lowest pricing. Term sheets for power purchase agreements and purchase and sale agreements are detailed in an appendix to the RFP according to technology and products proposed.
The solicitation encourages proposers of eligible in-state wind and solar projects to consider non-traditional financing structures, such as a prepayment PPA detailed in the RFP. "This non-traditional financing structure is not available for all technologies or out-of-state projects," NYPA noted.
For all eligible projects, traditional agreements (non-prepayment PPAs) are also available.
"In an effort to achieve the lowest possible energy costs, proposers are encouraged to consider the NYPA prepayment financing option for in-state wind and solar projects. The prepayment option would allow NYPA to issue tax exempt debt as a source of funds to prepay for a considerable portion of expected long-term project output," the RFP said.
NYPA would consider multiple types of prepayment options, two of which are detailed in the RFP -- a "bundled" prepayment PPA and a "REC only" prepayment.
Coordination with NYSERDA's solicitation
NYPA noted that certain projects will be eligible to bid in the NYPA and NYSERDA solicitations. Other projects may only be eligible to participate in one solicitation.
NYPA urged all respondents to carefully review both solicitations and the guidance included in the NYPA RFP.
"Close coordination between NYSERDA and NYPA has allowed the two opportunities to synchronize as thoroughly as possible. Continued alignment will ensure a seamless solicitation, award and contracting process for eligible proposers," the RFP said.
NYPA conference scheduled for June 15
NYPA will be hosting a conference to discuss its RFP with prospective bidders on June 15 at 2 p.m. EDT, at its administrative office building at 123 Main Street in White Plains, New York. The purpose of the event is to assist developers in preparing their proposals, which will be due Sept. 1.
To access the NYPA RFP, register on NYPA's procurement website.
NYSERDA will host a webinar on its RFP and the application process for potential proposers on June 14, from 2 p.m. to 4 p.m. EDT. Additional details on signing up for the webinar are available here.
NYSERDA will employ a two-step application process with submissions for the first step due on July 13. The NYSERDA RFP can be accessed here.