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.
Thus, to get offshore wind going, the state will see to it that there are competitive procurements for the offshore infrastructure and generators that plug into it. The state also can nudge utilities to behave like good hosts for the profusion of new “clean tech” coming out of Silicon Valley. And in select places like universities and other campus settings, regulators can nudge new, highly efficient and (sometimes) 100% carbon-free microgrids to appear on the landscape.
State energy officials who preside over this activity are mindful about the intended and unintended consequences of major infrastructure decisions. Thus, the question of transmission isn’t whether New York needs more of it, but where. A major transmission line to Quebec will lock the state into decades of dependence on that province’s hydro power, most likely at a rising price. An offshore transmission system will enable the state to harvest large-scale wind, whose price has been falling for 10 years.
At the local level, an incentive to build high-tech efficiency into New York’s public housing is likely to be more cost-effective compared with generating or importing power than it was even just five years ago, because building technology is getting better and better. Moreover, reliance on distributed energy resources—like super-efficient building retrofits, solar panels and batteries in buildings—is locationally much more efficient than bringing in power from “away.”
New York’s energy officials are well aware that the state’s efforts to harness the locational value of new distributed resources reduces the need for new upstate‐to‐downstate transmission. That is probably why the transmission initiatives discussed at the beginning of Gov. Andrew Cuomo’s first term have proceeded more slowly than many in the industry expected.
The emphasis on how to power downstate New York is well-placed. There is a lot of excitement about offshore wind, as there should be. European experience now shows that when offshore infrastructure and transmission is well-designed, wind generators no longer need subsidies. For the generators, it is often the transmission cost that makes the wind so expensive.
Moreover, the intermittent nature of offshore wind—often cited as a big problem for the grid operator—can be managed more effectively if there is battery storage throughout the city. In essence, power from batteries can “firm up” power from offshore wind. A long transmission line to upstate or to Quebec isn’t essential. With the right nudges from the state regulators, the ideal clean-energy kit for New York City and Long Island, it turns out, is nearby.
– Edward N. Krapels is the CEO of Anbaric, a Massachusetts-based company that develops transmission and microgrid projects, including in New York.