How will latest changes to Volcker Rule affect non-US banks?
Kathleen A. Scott discusses the final Volcker Rule, focusing on some of the issues raised by non-US banks in their comments.
The New York State Energy Research and Development Authority (NYSERDA) and the New York Power Authority (NYPA) each issued requests for proposals (RFPs) for New York State renewable energy projects on June 2nd.
The NYSERDA RFP is to purchase renewable energy credits (RECs) from renewable energy projects under contracts of up to 20 years. Project owners have until July 13 at 5 pm to submit initial applications to NYSERDA. Read the NYSERDA RFP.
The NYPA RFP is to purchase a combination of energy, capacity and RECs from renewable energy projects under contracts of up to 20 years. Project owners have until September 1, 2017 at 4 pm to submit proposals to NYPA. Read the NYPA RFP. (Note that registration is required.)
This is the first REC procurement under New York State’s Clean Energy Standard, which requires that 50 percent of New York State’s electricity come from renewable energy sources such as solar and wind by 2030.
Initial applications will serve to determine project eligibility and do not require a bidder to propose a purchase price for RECs.
REC Only Procurement. To implement the Clean Energy Standard, on August 1, 2016 the New York State Public Service Commission issued an order adopting an approach of centralized procurement of RECs by NYSERDA under long-term contracts.
This approach contrasts with approaches taken in other states such as California, where utilities serving retail customers procure RECs directly from generators using “bundled” purchase agreements for both RECs and energy.
Bidders selected under the NYSERDA RFP will need to sell their energy output using other approaches. One option is to sell output on a merchant basis into the NYISO markets and then enter into a commodity hedge to help to provide added revenue certainty. In contrast, NYPA is seeking proposals both for bundled purchases and REC only purchases (see below).
Eligible Projects. Many types of renewable energy projects potentially qualify to bid into the NYSERDA RFP, including wind, solar photovoltaic, hydroelectric, fuel cells, biogas, biomass, liquid biofuel and tidal/ocean projects. All eligible projects must start operations after January 1, 2015 or produce new, incremental energy and RECs. All eligible projects also must generate or deliver electricity in New York State that is ultimately sold to New York retail customers.
Out-of-state projects in adjacent markets potentially can qualify without actually transmitting their output into New York State, as long as they deliver energy on an hourly basis from their market into the NYISO market in amounts equal to their actual output.
Distributed generation projects, including projects that use a net-metering regime, also potentially qualify.
Before submitting an initial application to NYSERDA, bidders must submit a request to NYGATS to confirm project eligibility before 5 pm on Wednesday June 28, 2017.
Greenfield Projects. Both operating and greenfield projects can submit bids to NYSERDA. Greenfield projects must start operations by November 30, 2019. Extensions are possible under the terms of the RES standard form agreement with NYSERDA.
As part of their initial applications, greenfield projects must submit information regarding project status demonstrating minimum eligibility requirements in a number of areas, including site control, interconnection, permitting, project development experience, project financing, resource assessment and schedule.
Energy Storage. Bidders including energy storage in their projects must say so in their initial application. To be eligible, energy storage systems generally must be behind the meter and must store energy produced by the relevant generation facility only, and may not charge from the grid.
Bid Deposits. To submit an application, projects must pay a bid deposit that ranges from $5,000 (for projects of less than 5 MW) to $100,000 (for projects of 50 MW or more). Bid deposits are returned if a bidder is ineligible or does not submit a second round application.
After initial applications are submitted by July 13th, NYSERDA plans to invite eligible bidders to submit second round applications on August 22nd. Second round applications are expected to be due on September 28, 2017.
The NYSERDA RFP includes a detailed description of second round application requirements. Second round applications will be evaluated based on bid price (70%), incremental economic benefits (10%), project viability (10%) and operational flexibility and peak coincidence (10%).
NYSERDA plans to notify winning bidders in November 2017.
Eligible Projects. Solar photovoltaic, wind, hydroelectric and biomass projects are eligible under the NYPA RFP, as long as they are not interconnected behind a customer’s meter.
Projects of any type that physically interconnect in New York City (NYISO Zone J) must be at least 5 MW in size.
Solar photovoltaic and biomass projects that do not physically interconnect in New York City must be at least 10 MW in size.
Wind and hydroelectric projects that do not physically interconnect in New York City must be at least 20 MW in size.
New In-State Generation. Projects in New York State must be new facilities or expansions of existing facilities with an in-service date of on or after January 2018 but prior to December 31, 2022.
New Imports into New York State. New imports into New York State, including from current operating projects, also are eligible.
Products Sought. NYPA is seeking proposals for three product bundles: energy, capacity and RECs; energy and RECs only; and RECs only. Bidders are encouraged, but not required, to submit proposals for sales of all three product bundles.
Term. All bidders must offer terms of 15 years and 20 years as options to NYPA. Bidders also may propose terms of 5 years, 10 years or a hybrid of 5 years for the sale of energy and 20 years for the sale of RECs.
Initial Delivery Date. Bidders can propose initial delivery dates that range from January 1, 2018 through December 31, 2022.
New York City Delivery. NYPA is seeking significant renewables for delivery into New York City (NYISO Zone J). Interconnection options include a direct interconnection into Zone J or a combination of physical connection elsewhere in NYISO and a transmission congestion contract to provide transmission service into Zone J. Congestion costs associated with delivery into Zone J will be applied by NYPA and should not be included in pricing proposed by bidders.
Prepaid PPA Options. NYPA has encouraged bidders with in-state solar and wind projects to propose the use of non-traditional financing structures. In the RFP, NYPA highlights pre-paid PPAs as options, under which NYPA would pay upfront for a portion of products at the start of commercial operations. NYPA would require a first lien on project assets under a pre-paid PPA.
The RFP also includes detailed proposed term sheets that must be accepted or commented on as part of a bid submission.
NYPA plans to provide bidders with a status update on proposals on October 31, 2017 and aims to negotiate and execute all agreements between November 2017 and April 2018.
NYSERDA and NYPA issued the RFPs in a coordinated fashion and expect some bidders to submit proposals for the same project under both RFPs.
Products from the same project cannot be divided between the RFPs. However, it is possible to submit proposals to sell energy and RECs to NYPA and RECs only to NYSERDA.
Bidders that are determined to be eligible under both RFPs will have the option to withdraw from the NYSERDA RFP on or before November 3, 2017. If the option is not exercised, and the bidder is then selected under the NYSERDA RFP, then it will not continue to be eligible under the NYPA RFP.
OFAC published a final rule that modifies the Cuban Assets Control Regulations to revoke the so-called "U-turn" authorization.