Leveraging State Funds for Clean Energy: Lessons from New York State

Source: rlmartin

On September 10, New York State Energy Research and Development Authority (NYSERDA) Chairman Richard L. Kauffman co-released an op-ed that discusses how states can leverage limited resources to maximize the impact of public funding in a post-COVID environment. The article references NYSERDA’s efforts to orient its funding programs to help ensure success, and the successes and lessons learned from its development or reorientation of new and/or existing programs to meet the state’s energy needs.

The article identifies four principles that state energy offices can use to orient its programs that leverage limited state clean energy funding: harnessing the power of markets wherever possible; focusing on reducing soft costs; sparingly using subsidies; and promoting environmental justice. NYSERDA used these principles to develop four new clean energy programs in New York. Those programs included establishing an offshore wind market, aggregating demand for multifamily housing energy efficiency, addressing market gaps in commercial building energy efficiency, and using public funds to encourage self-sustaining solar markets. The state saw significant results from these programs, including over 1,700 MW of offshore wind contracted, 5,000 multifamily homes retrofitted with efficiency upgrades, over 500 commercial buildings retrofitted in a pilot program, and dramatic growth in the state’s solar market.

However, the article also notes that several challenges still remain to unlocking the potential of leveraging public dollars to develop markets. First, information asymmetry and lack of unbiased data both hinder evaluations of these types of programs. Second, the current utility business model in most states remains focused on regulatory compliance and not on developing new business or service models that help to advance a stated goal. Finally, inter-state coordination is needed to most effectively develop nascent markets for DERs like offshore wind.

While there are certainly challenges to reorienting state funding programs, state innovation combined with Federal leadership can help overcome these challenges and enable programs that can effectively address New York’s four principles for future funding success.