New York includes subsidies for nukes, long-term contracts for renewables in its Clean Energy Standard

29. January 2016 | Financial & Legal Affairs, Markets & Trends | By:  Christian Roselund

While nuclear power will not be counted towards CES targets, the state’s new Clean Energy Standard will include subsidies to keep some of the world’s oldest nuclear reactors operating for years to come.

NIRS warns of a "blank check" for the nuclear industry.

The New York Department of Public Service (DPS) released additional information on what the state’s Clean Energy Standard will look like on Monday, which shows promise for renewable energy but also subsidies for its nuclear industry.

A DPS White Paper calls for a Zero Emission Credit (ZEC) system for the electricity produced by “upstate” nuclear power plants, along with Renewable Energy Credits (RECs) for renewable generation. But unlike RECs whose value is determined by a combination of floor prices and trading volumes, the price of ZECs will be set by the amount that it takes these nuclear power plants profitable.


New York state is home to some of the oldest nuclear power plants in the world, including the 46 year-old Robert Emmett Ginna Nuclear Power Plant, which Nuclear Information and Resource Service (NIRS) says is the 7th-oldest commercial reactor operating globally. Currently there are no commercial nuclear reactors in operation older than 50 years.

New York Governor Cuomo has long stressed the importance of keeping these plants operating as a means to avoid a spike in emissions when they shut down, and last fall state government had announced that there would be a financial mechanism to support Ginna and other aging reactors in the state.

DPS argues that this mechanism is necessary due to market competition from low-cost natural gas, however, NIRS says that the larger concern is that maintenance and repair costs increase for older nuclear reactors.

NIRS describes this as a “bathtub curve”, wherein the greatest costs for nuclear plants are at the beginning and towards the end of their operating lives. “What you see nationwide is that the last, over a decade, is that the nuclear power costs are going up,” notes NIRS Executive Director Tim Judson. “It is a pronounced trend, and it hasn’t been debated in anyway.”

DPS says that alternative compliance payments will serve as a cost cap for both RECs and ZECs, however Judson describes the mechanism as a “blank check” to the nuclear industry.

Furthermore, some of the older nuclear power plants which have been closing over the last few years, such as Entergy’s Vermont Yankee plant in Vermont, have seen breakdowns and malfunctions with environmental and potential human health impacts. And as the mechanism which appears to have caused Entergy to shut Vermont Yankee is economic, DPS could be potentially keeping dangerous reactors online with the ZEC mechanism.

NIRS says that either way this move is short-sighted. “It’s all well and good for the state to be thinking about how it is going to reduce its carbon emissions,” stated Judson “The problem is, what are you going to do to get there? Sooner or later these plants are going to shut down.”

The ZEC mechanism will only apply to plants that came online before 2015, so this would not be a mechanism to support new nuclear power plants - none of which are planned in New York. “Nobody is investing in building new nuclear in merchant markets,” notes Judson.

DPS’ White Paper includes a number of other program details in addition to the ZEC mechanism. According to the document, the 50% by 2030 renewable energy mandate will apply to all load serving electric retail entities, including two utilities outside of the New York Public Service Commission’s jurisdiction, Long Island Power Authority and New York Power Authority, and all competitive Energy Service Companies.

Additionally, the document proposes long-term contracts bundled with RECs for renewable energy generators, which it says will help to keep financing costs and rates stable, and a limit to utility ownership of renewable energy generation.

The White Paper outlines a plan to set a clear set of renewable energy targets through 2020, with targets to 2030 to come later.


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