Reports & Analysis

Electricity Outlook

Electricity Outlook 2017: Powering New York City's Future


A Changing Electricity Market


An important element in the forecast, particularly for New York State overall, is the ramp up in both public policy initiatives and the emergence of technologies aimed at encouraging and enabling the use of alternative generating sources, primarily wind and solar.

 

Public Policy Initiatives

Governor Cuomo's comprehensive energy strategy for New York, Reforming the Energy Vision (REV), launched in 2014, sets forth a range of policy objectives and "a new business model" to modernize the sources of supply for electricity. The new business model envisions a future "in which a distributed energy resource (DER) becomes a primary tool in the planning and operation of electricity systems. Utilities would be encouraged to invest in DER that mitigate or lessen the need for traditional distribution system investments." DER includes solar, micro-grids, and combined heat and power (CHP, also known as "Co-Gen"). This would require changes in existing tariffs, and, according to NYISO's Power Trends report, "The wholesale electricity markets will need to adjust to address the challenges of DER. . . ."

 

In 2015, 23 percent of all New York State electricity was produced by renewables, primarily from hydropower, but including 3 percent from wind power installations and an even smaller percentage from solar.

 

In August 2016, Governor Cuomo announced the Clean Energy Standard (CES), which requires that "utilities and other energy providers . . . procure and phase in new renewable power resources," with the goal of renewable power resources supplying 30 percent of the state's total electricity load by 2021 and 50 percent of total load by 2030.6 These goals would be achieved by utilities and other energy providers obtaining a targeted amount of Renewable Energy Credits (RECs) each year. These credits would be paid to developers of renewable energy to finance their new investments.

New York City has proposed its own aggressive goals for carbon reduction and adoption of new technologies for energy generation and for local distribution. These proposed goals began with Mayor Bloomberg's PlaNYC report in 2007, and continued through to Mayor de Blasio's OneNYC plan. In September 2016, the Mayor's Office of Sustainability released New York City's Roadmap to 80x50, a plan to achieve an 80 percent reduction in greenhouse gas emissions by 2050. One strategy in meeting this goal is "electrification", which involves removing customers from gas heat and onto electric heat, while meeting that increased electricity demand with renewables. The Roadmap sets out long-term targets for achieving significant emissions reductions for the city's buildings, transportation, and waste management through scaled up DER "at both the building and community levels," that are "contingent upon a transition towards a renewable energy-based electric grid."

For the city to benefit from the Upstate New York investments in alternative energies, and as the NYISO notes in their Power Trends report of 2016, "Upgraded transmission capacity is vital to efficiently moving power to address regional power needs."

 

Renewables and Emerging Technology

In 2015, 23 percent of all New York State electricity was produced by renewables, primarily from hydropower, but including 3 percent from wind power installations and an even smaller percentage from solar. Most of these renewable sources are and will continue to be located in Upstate and Western New York.

Brooklyn Navy Yard Solar Installation, Courtesy of Con Edison

 

Wind Power

There are presently no large-scale wind facilities in New York City, nor are any expected within the forecast period to 2027.

However, the CES plan requires NYSERDA, New York State's agency for energy research, to prepare a blueprint for developing offshore wind projects in the New York Bight. NYSERDA expects to complete its Master Plan for offshore wind in 2017.

In January 2017, the Long Island Power Authority (LIPA) approved a 20-year power purchase agreement with Deepwater Wind for the output from its proposed 90 MW South Fork offshore wind farm, to be located approximately 30 miles east of Montauk. The project, which must seek permitting approval from state and federal agencies, would provide enough power for 50,000 homes in the Hamptons when it is anticipated to be completed at the end of 2022.

In a new measure of long-term planning for offshore wind, the Norwegian firm Statoil pledged $42 million in a federal auction held in mid-December 2016 for the development of 79,000 acres of off-shore wind in the New York Bight south of Long Island.7

 

Distributed Energy Resources (DER)

In this emerging new world of energy production and delivery, DER includes an array of technologies such as solar PV, CHP or Co-Gen systems, back-up generators, wind turbines, micro grids, fuel cells, and storage systems.

These new technologies require a new regulatory environment, which is still evolving, to handle behind-the-meter production (BTM) as well as two-way connections to the grid.

In October 2016, the New York State Department of Public Service (NYS PSC) recommended "a more accurate, market-based approach to compensate consumers for the value of their distributed clean energy investments . . . by compensating homeowners, energy developers and utilities for the full and accurate value of these resources to the power grid."8

In February 2017, NYISO released a roadmap to integrate DER into the state's wholesale markets by improving data measurements for accurate load forecasts encompassing DER as well as developing incentives and compensation for DER resources.9

New York City's stated goal of pursuing community-level self-sufficiency in electricity supply and distribution could involve most or all these technologies within a city neighborhood, but would also require major changes in regulations.

 

Combined Heat and Power (CHP) in New York City

Within New York City, there are several existing CHP plants, including at the Brooklyn Navy Yard and at New York University's main Manhattan campus. Several other major CHP plants with generating capacity as large as 13 MW per plant are now under construction in the city. Con Edison expects that, by 2026, 135 MW of CHP capacity could come online, and together with approximately 130 MW of CHP that is already connected to the electric distribution system, will add almost 2 percent to New York's overall capacity for summer peak demand. New York City anticipates that CHP can play "an important role in establishing district heating and cooling networks" for community-based energy systems.10

One important issue that has emerged with the increased number of large CHP projects is that of "stand-by charges," which are paid to the utilities to remain connected to the electricity distribution system. NYISO's proposed tariff changes would "help promote distributed generation and provide developers with the opportunity to gain additional revenue through the sale of extra energy and capacity."11

 

Con Edison's Energy Efficiency Investments

Con Edison has made or has underway several REV-related investments. The Brooklyn Queens Demand Management program (BQDM) has used a series of energy efficiency demand response and distributed energy resources, sufficient to save enough power to defer an otherwise $1 billion investment in a substation.

Con Edison is currently deploying Advanced Metering Infrastructure (AMI) throughout its service territory to enable more accurate monitoring of customer load. As part of AMI, Con Edison will be implementing Conservation Voltage Optimization (CVO), which will allow the company to operate the grid at optimum voltage levels. The company will roll out CVO in a phased deployment across its territory and anticipates that CVO will reduce customer energy consumption by approximately 1.5 percent when the project is completed in 2022.

 

Storage

One of the remaining challenges in providing electricity from intermittent sources, such as solar or wind, is the issue of storage, which allows power to be made available during off-hours. To date, there is minimal storage capacity (less than 1 MW) available in New York City. While the price of batteries for fuel cells at the household level has been falling significantly in recent years, it is only recently that the applications of major technological breakthroughs in large-scale storage have been introduced in several new projects, primarily in California.

These include a 30 MW energy storage facility by the AES Corporation, which opened in Escondido, California in February 2017. This installation of lithium ion battery-based energy storage is capable of powering 20,000 homes for four peak evening hours. AES had previously opened a 7.5 MW battery storage facility in El Cajon, southern California.

Tesla's 20 MW Mira Loma installation of 19,000 lithium ion battery modules made by Samsung came online January 30, 2017.12 Tesla's smaller battery storage facility, built in conjunction with SolarCity's 15,000 solar panels in Norwich, Connecticut, which can power 5,000 homes in the evening peak, was due for completion in the first quarter of 2017.

AltaGas built a 20 MW battery storage project in Pomona, California for Southern California Edison, which came online in December 2016.

6 Office of Governor Andrew M. Cuomo, Pressroom. (Aug. 1, 2016). Governor Cuomo Announces Establishment of Clean Energy Standard That Mandates 50 Percent Renewables by 2030 [Press release].

7 Diane Cardwell, "Now Testing the Waters: Wind Power," New York Times, Jan. 22, 2017.

8 New York State Department of Public Service. (Oct. 28, 2016). Report Recommends New Approaches to Determine the Full Value of Renewable Power & Money-Saving Technologies [Press release].

9 NYISO. (Feb. 2, 2017). NYISO Charts Course for an Integrated Grid [Press release].

10 NYC Mayor's Office of Sustainability, Roadmap to 80x50, pp. 41 and 44.

11 NYISO, Power Trends 2016, pp. 52-58.

12 Diane Cardwell, "Moving Beyond Cars, Tesla Uses Batteries to Bolster Power Grid," New York Times, Jan. 31, 2017, New York Edition, Business sec.

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