Massive upstate-downstate transmission projects are not the answer

originally appears in Crains New York

Edward Krapels | January 19, 2018

There is tension in New York energy circles. In urban areas downstate, which use a lot of power, development of power generation has been slow. That has driven calls for transmission projects to bring energy, especially renewable energy, from upstate. How much more of this transmission will be needed over the next 20 years? The answer isn’t obvious.

New York has a complex electricity situation. Federal regulators have considerable influence over the state, electric utilities have their own needs, and localities want to control their own destinies. As a result, it isn’t easy for the state to march in one direction on electricity affairs.

Here’s one way to figure out where New York goes from here.

First, in spite of the complexity, the major players—Albany, the New York ISO, the utilities, and the companies that own generation and transmission assets—keep the lights on 99% of the time. And the cost is reasonable because a lot of equipment has been amortized (including hydro and nuclear plants), and because natural gas, the dominant fuel that makes electricity, remains cheap.

Second, there are some major changes on the horizon. Some generators are reaching the end of their useful lives. Technology is pushing down the price of energy efficiency, solar energy, and wind to competitive levels, which means the mix of resources used in the power sector is changing. Perhaps most important, the citizenry demands that the power sector reduce emissions. Everyone wants “clean energy.” The market structure built over the years provides some of the right incentives to get clean, and where and when it doesn’t, the Cuomo administration can augment market forces with carefully designed procurements and incentives.

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