Discover how the Tier 4 RECS Program will affect your business in New York City
On October 15, 2020, The State of New York’s Public Service Commission released an order establishing the Tier 4 Renewable Energy Credits (RECs) program in New York City. The Tier 4 Program was created to support the Climate Leadership and Community Protection Act (CLCPA) and The New York State Clean Energy Standard goals.
The Tier 4 Program allows for purchasing RECs produced or delivered in New York City Zone J to offset building emissions under Local Law 97. As part of this program, Tier 4 was also designed to increase the availability of clean energy resources to Zone J through new renewable energy projects.
So far, two programs have been approved for Tier 4 status, along with a large-scale purchase of renewable resources to support it. Below, we explain the program’s impact on clean energy goals and dive deeper into the approved programs.
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How the Program Meets Clean Energy Standards
The Clean Energy Standards established by New York’s Public Service Commission set a target of 70% renewable electricity by 2030 and 100% carbon-free electricity by 2040. These build on the Renewable Portfolio Standards, which expired in 2015. Four different renewable energy tiers exist to meet these goals. Tier 1 includes new renewable resources introduced after January 1, 2015, Tier 2 includes existing resources, and ZEC (formerly Tier 3) factors in nuclear facilities. The latest Tier 4 addition pertains specifically to new resources serving New York City.
Any Tier 4 RECs must be located in New York City or be delivered to it by new transmission lines created after October 15, 2020. This will develop greater renewable energy infrastructure within the city while also generating jobs. In April 2022, Governor Kathy Hochul approved the first two projects to take part in the Tier 4 program through the State Public Service Commission.
Projects to Come for New York City
Clean Path NY, developed in a joint venture with energyRe LLC and Invenergy LLC, will deliver 7.5 million MWh of renewable energy per year through a 175-mile underground HVDC transmission line interconnecting at the Rainey Substation in Queens. The underground HVDC power line will connect new and existing wind and solar projects in Western and Upstate New York to New York City, ensuring the power is eligible for the Tier 4 RECs. CPNY will be completed in 2027 with an initial 25-year contract with NYSERDA, and the investment will provide the ability to serve New York City for 75 years.
The Champlain Hudson Power Express project will deliver 10.4 TWh of existing wind and hydropower from the Hydro-Quebec Grid underneath Lake Champlain through a 339-mile buried transmission line to a converter station in Astoria, Queens. In addition, the project has battery storage capabilities utilizing Hydro-Quebec’s reservoir system, which can hold long-term renewable energy for later delivery to New York City. The project will begin construction in 2022 and will be completed by 2025, with the ability to provide renewable energy to New York City for 60 years.
In addition to those two projects, in April 2021, Mayor Bill De Blasio announced a joint purchase with NYSERDA of large-scale renewable resource electricity, which includes Canadian hydropower. As it is designed to increase the amount of renewable energy delivered to the city, this purchase falls in line with the Tier 4 program and could be expected to make use of the Champlain Hudson Power Express Project as well.
Effects on Business Owners
These projects will reduce New York City’s reliance on fossil fuels, which currently power 77% (some estimates as high as 90% with the Indian Point Nuclear Plant shut down) of the NYC grid. In aggregate, CPNY and CHPE will provide 18 MWh of clean energy eligible for the Tier 4 RECs. Furthermore, it is expected that these projects will fundamentally change the makeup of the downstate grid and will exceed New York State’s 70×30 goals.
And though the cost to build the new transmission lines will generate increased energy bills initially, these projects will allow business owners to have clean energy supply options and purchase Tier 4 RECS under Local Law 97. In the long run, the availability of clean energy will reduce overhead costs and create greater redundancy for the city’s power grid.
In June 2022, Clean Path released some information for purchasing RECs, but the NYC Department of Buildings is still ironing out the rules. Environ is one of the most trusted renewable energy consulting firms in the New York City area, and we’ll be there to guide you through the process of identifying the ideal Tier 4 programs to meet Local Law 97 standards. Using our proprietary methodology of resiliency, sustainability, procurement, and efficiency, we will create a plan customized to the unique needs of your business.
The expected average cost of the Tier 4 REC program is $28.29 per megawatt hour, and once the projects begin to operate, the average bill impact for customers will be around 2%, or around $2 per month. Because it was set up with an index REC structure, when electricity processes rise, the Tier 4 program costs will go down to protect consumers from energy price spikes.
If you are ready to make the leap to a more sustainable energy solution, call (800) 375-1457 or fill out our contact form to get in touch with us. We would love to collaborate with you!