- Trends in Energy
- Empire State of Demand
Empire State of Demand
This Week's Trend In Brief:
New York Independent System Operator’s (NYISO) new reliability assessment shows a deficit in reliability for the New York City area starting in 2025 due to increased demand forecasts for New York City, coupled with the recent or scheduled deactivation of more than 1,500 MW of peaker power plants as a result of the state’s “Peaker Regulation” and several high profile permit denials by the state.
Adding more pressure to the grid are state and city pushes to electrify everything by restricting natural gas usage and shifting transportation vehicles to zero emissions.
That means hopes for future energy reliability hinge on Canadian hydropower, which faces opposition from a number of environmental groups, as well as proposed or contemplated wind and solar projects that are years away from completion.
New York’s Empire State of Demand provides an important lesson for what many states and regions across the country may face as climate-minded officials and advocates push for more electrification even as they force reductions in the grid’s reliance on fossil fuels before sufficient alternatives are approved, let alone constructed.
The result is another climate conundrum that leaves energy firms under pressure both for failing to push the energy transition fast enough and for not meeting their communities’ power needs.
Last month, NYISO announced its quarterly assessment of reliability found a deficit in reliability margins for the New York City area starting in 2025, as projected electricity demand goes up and fossil fuel powered peaker plants come offline. On July 14, NYISO published its quarterly assessment of reliability, “which found a deficit in reliability margins for the New York City area beginning in summer 2025,” by as much as 446 MW. The reliability shortfall comes as a result of projected electricity demand increases, coupled with peaker power plants rapidly coming offline. Indeed, as a result of the state’s so called “Peaker Rule,” which was adopted in 2020 in order to reduce nitrogen oxide emissions from peaker power plants, 1,027 MW of affected peaker plants have deactivated as of May 1, 2023, with another 590 MW of peakers expected to become unavailable beginning May 1, 2025. Further, New York has even denied permits for gas peaker plants that have submitted proposals to come into compliance with the rule.
New York’s projected increase in electricity demand comes as the state rushes to broadly electrify its economy, including buildings and transportation. On July 18, 2019, New York’s Climate Leadership and Community Protection Act (CLCPA) was signed into law, requiring ambitious decarbonization targets. In the years since, New York policymakers have rushed to electrify, including passing the nation’s first state-wide gas ban in new buildings, (coupled with New York City’s own gas ban from 2021.) Simultaneously, the state has advanced ambitious electric vehicles targets, adopting California’s standard, and requiring 35% of new vehicles sold in the state to be zero emission by 2025, and 100% by 2035.
New York’s hopes of future reliability hinge on a transmission project to bring Canadian hydropower to New York City, which has been opposed by a number of environmental groups, and yet-to-be-built renewable projects. In its press release announcing the near term reliability assessment, NYISO noted, “Beyond 2025, the STAR report found that New York City’s reliability margin would improve when the Champlain Hudson Power Express (CHPE) transmission line from Quebec to New York City is completed. CHPE is expected to enter service in the spring of 2026.” The report also noted delays in CPHE’s delivery of hydropower to New York could result in “additional transmission security concerns.” Yet while Governor Hochul has contended that the project will bring “clean energy” in the form of Canadian hydroelectricity into the state, a broad coalition of environmental activists and stakeholders have come out against the “destructive project.” Adding to the risk of overreliance on Canadian hydropower are “new concerns that Canada’s hydro supply isn’t as bottomless as it once seemed.” The state also hopes to replace some of its fossil fuel generating power with renewables, including yet-to-be-built offshore wind projects, requiring controversial transmission projects.
New York is not alone in its future reliability risks, and should serve as a cautionary tale to policymakers rushing the energy transition, and for energy firms who are caught in the middle of demands to both electrify and provide grid security. Most of the United States faces risks of reliability shortfalls in the coming years, according to NERC. According to John Moura, NERC’s director of reliability assessment and performance analysis, this is largely attributable to the “pace” of the energy transition. As grid operators, regulators, and policymakers navigate how to manage the energy transition, New York, and broad swaths of the country, should serve as a cautionary tale. Simultaneously, as energy firms across the country work with their regulators, policymakers, and stakeholders, they need to clearly communicate the risk of a too-rushed energy transition, or else they could be caught between untenable demands for energy transition and energy reliability.
Trends in Energy is your weekly look at key trends affecting the energy industry, brought to you by the competitive intelligence experts at Delve. As the political and regulatory landscape continues to shift, reach out to learn how our insights can help you navigate these challenges.