A new white paper commissioned by Con Edison and authored by experts from The Brattle Group delves into the potential impact of a utility ownership model on New York’s ambitious renewable energy goals. The study, titled “Utility Ownership of New Renewables in New York State: Potential Benefits and Risks for Customers,” analyzes the pros and cons of allowing regulated utilities to own and develop renewable energy assets, such as onshore wind and solar farms, alongside private developers.
The paper highlights the current state of New York’s renewable energy procurement, which relies heavily on contracts with the New York State Energy Research and Development Authority (NYSERDA) and ownership by the New York Power Authority (NYPA). While this approach has attracted proposals for renewable projects, New York has fallen short of its targets due to supply chain disruptions and other challenges.
The Brattle Group researchers argue that allowing utilities to develop and own renewable assets could help mitigate this shortfall. “New York needs to add a significant amount of renewable resources in the next decade to meet its ambitious decarbonization and renewable generation goals,” says Dr. Metin Celebi, a Brattle Principal and co-author of the report. “Utility ownership, alongside private ownership, could not only expedite the development of new renewable resources but ultimately even save utility customers in the state money, alongside other benefits.”
The report compares two ownership models: (1) utility ownership with cost recovery through regulated cost-of-service rates and (2) private ownership under a fixed-price long-term renewable energy credit (REC)-based power purchase agreement. The authors find that utility ownership could provide up to 14% customer savings compared to private ownership, particularly in scenarios with high wholesale power prices. This model also offers greater flexibility to modify projects and secure future benefits.
“Con Edison has been a champion for renewable energy generation for its customers for decades,” says Raghu Sudhakara, Vice President of Distributed Resource Integration at Con Edison. “We believe that utility ownership of renewable energy will provide New Yorkers with additional renewable generation for the green energy that they need when they need it, and with the highest value.”
However, the paper acknowledges potential downsides of utility ownership. These include a potential shift of cost overrun risks from private owners to electricity customers and the possibility that customer costs could increase over a renewable asset’s lifetime under certain conditions. Despite these risks, the report argues that the potential benefits to customers, particularly the accelerated procurement of new renewables through cost-based rates, could outweigh the drawbacks.
The full white paper can be found on Brattle’s website: https://www.brattle.com/insights-events/publications/utility-ownership-of-new-renewables-in-new-york-state/
About The Brattle Group
The Brattle Group is a global consulting firm specializing in economics, finance, and regulation. Their team of experts provides clear insights and credible solutions to corporations, law firms, and governments worldwide. With over 500 professionals across North America, Europe, and Asia-Pacific, Brattle is committed to delivering high-quality, impactful analysis.
