New York Renewable Portfolio Standard Program Evaluation Report - 2009

NY%2520Renewable%2520Portfolio%2520Standard%2520Program%2520Evaluation%2520Report%2520%282009%2520Review%29-FINAL.pdf

From Page 32:

Unfortunately, the current financial crisis has had negative impacts on the renewable energy market nationwide and the New York RPS Program. Citing financial difficulties, Noble Environmental Power cancelled two (2) projects: the 100.5 MW Noble Allegany Windpark in Allegany County, and the 19.5 MW Noble Chateaugay II Windpark in Franklin County. In addition to the Noble cancellations, First Wind cancelled its 54 MW Windfarm Prattsburgh project, also citing financial difficulties. (54)

As a result of these recent project cancellations, program progress as measured by the maximum contracted annual energy deliveries, will be reduced by approximately 360,000 MWh. Approximately $47.8 million that had been budgeted or encumbered for expected contract payments on these cancelled projects is now available for future Main Tier activities (subject to authorization by the Commission). Also, the financial security forfeiture provisions in the RPS Program contracts have resulted in additional revenue of approximately $1 million. (55) These funds are available for future Main Tier activities as well, subject to the Commission’s authorization.

Performance-Related Contract Adjustments

Renewable resources such as wind and hydroelectric are intermittent in nature and it is difficult to estimate annual and long term electricity production. Therefore, each Main Tier and Maintenance Tier RPS contract includes a maximum annual payment which, depending on actual production, may not be realized. Pursuant to this contract design feature, any monies not paid out for deliveries of RPS Attributes in any given year are disencumbered and made available for future Main Tier activities. As a result, $12.4 million has been disencumbered from contracts under RFP 916 for 2006 and 2007 and an additional $5 million may be disencumbered as a result of under production in 2008. (56)

Also, to ensure that program goals are met and other projects are afforded opportunities for funding, NYSERDA contractually requires that each project deliver at least a minimum percentage of its bid-based contract quantity obligation each year. If this percentage is not met for a defined number of consecutive years, the annual quantity of RPS Attributes that NYSERDA is obligated to purchase is reduced for the remaining years of the contract. (57) For example, the Maple Ridge Wind Farm will not meet its obligation to deliver the required 85% of its contracted bid quantity for three consecutive years (2006, 2007, and 2008). As a consequence, this facility’s contracted bid quantity will be reduced for the seven remaining years on the contract. While this adjustment represents a loss of approximately 176,000 MWh per year toward program targets, it will also free more than $28.2 million for future Main Tier activities.

54 This project had contracted under RFP 1037 for 10% of its output, and then under RFP 1168 for an additional 30%.
55 Project developers forfeit up to 100% of their financial security to NYSERDA should they elect to terminate a contract by a predefined date or if they fail to enter commercial operation.
56 Due to a lag in invoicing cycles, NYSERDA has yet to calculate actual deliveries for 2008 and formally disencumber funds associated with under deliveries.
57 Percentages and number of years vary by RFP and facility type (wind, hydro, etc.).