ELECTRICITY

Con Ed's plan for surging Brooklyn-Queens grid may lead the way to N.Y.'s 'Restructuring 2.0'

NEW YORK -- It's no secret New Yorkers have turned to Queens and Brooklyn in search of cheaper rents and a less hectic lifestyle than Manhattan. What is less well understood is how that shift will rapidly boost electricity demand and strain the power grid in an area that might best be described as a tangled cross-section of this city's growing outer boroughs.

Yet Consolidated Edison Company of New York Inc., which has 3 million power, gas and steam customers in and around the city, has an innovative plan for coping with all those hipsters and young families flooding edgier haunts. Rather than follow the old-style electric utility playbook -- i.e., building a $1 billion substation along the Queens-Brooklyn border -- Con Ed has proposed cobbling together 52 megawatts of "customer-side" and "utility-side" demand solutions by 2018.

By then, Con Ed expects these upwardly sprawling neighborhoods, which include Williamsburg, Greenpoint and Crown Heights in Brooklyn and Howard Beach and Ozone Park in Queens, to exceed capacity available in the area. That means additional burden for a system that is already among the most volatile in the United States when a heat wave or storm system hits.

In regulatory speak, what Con Ed has proposed is exactly the kind of approach envisioned by the New York Public Service Commission's "Reforming Energy Vision" (REV) rulemaking, which is meant to bring a kind of "Restructuring 2.0" to the densely populated state. Con Ed has effectively decided to get out in front of REV and show what a utility can do when executives stop falling back on building new supply access to solve peak power demand somewhere in the future.

REV envisions just that kind of future to head off demand growth in New York as well as the likely loss of thousands of megawatts when and if the Indian Point nuclear power station closes, not to mention the ongoing retirement of coal-fired generation. The REV approach is expected to be ratified next year, to ease demand-side fixes as well as the transition to localized distributed generation, but Con Ed decided that waiting for that process to play out might be a bad idea.

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The Con Ed white paper on the area describes "an economic boom" in the two boroughs that are already New York City's most populated sections. A walk down Franklin Avenue, the main thoroughfare in Crown Heights, proves the point: What was once a tough crossroads for lower-income African Americans and Orthodox Jews has become a target neighborhood for new restaurants, bars and young professionals.

"For the first time in more than half a century, the areas are among those showing increases in residents, jobs and mass transit usage," the paper said.

Reducing demand in a growing residential area

Patrick McHugh, vice president of engineering and planning at Con Ed, said the utility had a simple choice that had to be made within the next two years: Either build the substation, which likely would not be used much except during peak periods, or try something new. The company has opted to spend $200 million on its Brooklyn/Queens demand management program and sought out public advice in search of ideas for the area, receiving 77 responses back so far.

McHugh explained that the old playbook would have seen Con Ed initially switching residents to an adjacent substation at first when they reach capacity, then building the new substation and supporting power lines when the utility "runs out of those options."

"What we're doing this time is we have reached out to the public and have asked for information and ideas from them on how they may be able to support us, to reduce energy consumption during those peak days," he said.

The challenge in this particular part of New York City is that it is heavily residential, which means Con Ed's options are limited. In a space with large industrial and commercial buildings, "you can do something like ask them to change their lighting," McHugh said, while in a more residential zone, the customers are less likely to engage.

"It's a lot of individual customers when you're dealing with more residential areas," he said. "You've got to deal with 100 times the amount [of customers] of a large commercial area."

Among the options Con Ed expects to pursue are: more efficient lighting, air conditioning and appliances; more roofs painted white; battery-based energy storage; distributed generation like solar where feasible; and introducing microgrids into the system.

All of those things have been done before, but McHugh said attaining 52 MW in such a short time is "unprecedented in magnitude and scale" for the company's demand management program.

McHugh said he thinks it will work because the timing means Con Ed's approach "ties into New York state's REV process," which is essentially trying to engage ratepayers on issues they tend to ignore until the lights go out and set up a less centralized approach.

"How do you engage customers to start realizing their energy consumption? How do you communicate that their actions affect their needs for energy on a day-to-day basis?" McHugh said. "This is what we're seeking to answer."

He added: "I think it's working together with the state. We see and understand their future vision. We see this as an example of how this new vision of solving problems can be used."

The white paper from Con Ed has set out the goals. At the very least, this approach might delay the construction of a new substation "for at least seven years until 2024, and potentially beyond," the paper said. The company estimates about 75 percent of the 52 MW will come from the customer side, with 25 percent from the utility end.

Avoiding the 'death spiral'

At least one environmental group, Environmental Defense Fund, has applauded the effort. In a recent blog post, EDF attorney Elizabeth Brooke Stein said Con Ed "is breaking with tradition" and could help the state's REV process "to evaluate potential distributed energy resources based on cost and impact to the environment and community."

"This effort gives third-party distributed energy providers an opportunity to receive full compensation for the value they contribute to the grid, not just to particular customers," she wrote. "Similarly, it may also compensate customers for delivering benefits to the system, such as through demand response."

Rory Christian, New York director for clean energy at EDF, said he hopes this one example will help show other states how to structure rates and rules so that utilities can be rewarded for not generating more power or building more infrastructure, as they have in the past.

"The old way is a utility death spiral," he said. "This gives utilities new opportunities and new ways to be compensated for those opportunities."

Christian added that Central Maine Power is another example of a leading utility in the space, where the company has been incentivized to back up its system with energy storage. As for Con Ed, he said, "This is investing more intelligently rather than oversizing the system for the worst possible scenario. It's $200 million versus $1 billion."

Asked if it helps that the state has set up rates to reward Con Ed for saving energy, McHugh acknowledged that is a factor.

"We do expect to be made whole," he said.

Click here for the Public Service Commission's REV rulemaking Web page.

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