REGULATION

N.Y. clean power plan adds teeth to Cuomo strategy

Correction appended.

New York state's Public Service Commission is expected to give formal approval today to key parts of Gov. Andrew Cuomo's bold clean energy plan, committing the state to a rapid expansion of wind and solar power so that half its electric power will come from renewable sources by 2030.

But while the Democratic governor has the backing of state energy regulators for his transformational Reforming the Energy Vision utility strategy and his renewable energy goal, he faces new friction with the state's electricity grid and power market manager, the New York Independent System Operator (NYISO).

The NYISO last month urged the PSC to hold up final regulatory approval of the "50 by 30" clean power standard until planners can map out how much new transmission lines will be needed to move large volumes of new renewable energy from the thinly settled upstate counties to customers in metropolitan New York City. As much as 1,000 miles of additional high-voltage circuits may be required, the NYISO said.

The PSC is also expected to take up a staff proposal to subsidize operations of as many as four upstate nuclear units, to hold onto their zero-carbon electricity production.

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Cuomo's energy chief, Richard Kauffman, responded last month with a blistering attack on the NYISO, calling its transmission line projections and go-slow recommendation "misleading, incomplete, and grossly inaccurate."

He went on to impugn the grid operator's independence. "It is apparent from the filing and subsequent information, that the NYISO is held captive by your stakeholders, the majority of whom represent the status quo interests that are threatened by the renewable future that New Yorkers want and deserve," Kauffman wrote July 15.

"It is, therefore, hardly surprising that in recent press reports, the Independent Power Producers, an industry advocacy group that represents the interests of fossil fuel producers, has been so quick to endorse the views of the NYISO when it appears that its interests are so well served," Kauffman said.

Judy Chang, a principal with the Brattle Group consulting firm, says Kauffman is correct in noting New York's opportunities to reduce the long-term growth in electricity demand. New grid technologies and incentives to consumers to conserve power and switch demand to lower-cost, off-peak times of the day are planned to do just that. But even with these improvements in efficiency, the 50 by 30 goal will require more renewable power investment and transmission, she added.

"Both sides have good reasons for their views," said Chang, who has co-authored several studies on transmission and energy supply issues in New York and the nation. "It will take a careful study to understand the transmission needs to support the 50 percent by 2030 goal."

She added that investing in the right transmission infrastructure could cut the cost of achieving 50 percent reductions by 2030. "But it will take some new planning approaches to get to the right transmission portfolio with the least-cost renewable or clean energy portfolio," she told EnergyWire.

"If NYISO's expectation of having to integrate approximately 17,000 megawatts of renewable resources in upstate New York is accurate, this will require a substantial amount of transmission upgrades in the state," she said. That is clear from the experiences of other grid sectors in the United States and Europe.

"I read NYISO's comments to be targeted at alerting policymakers that there will be significant investments in transmission and operational upgrades," she added.

A Brattle study has estimated that U.S. grid companies and their customers will have to invest $300 billion in new transmission lines in the United States over the next two decades to replace aged equipment and align the grid with new electricity sources that replace coal plants.

Chang and other Brattle analysts have urged grid planners to start building new transmission projects that anticipate future needs, not simply react to current demands. Traditionally, transmission projects have been built to solve a specific problem in a certain part of the grid, most often relieving congestion of existing overloaded power lines. Brattle argues that with the grid entering an unsettled transition period that may last decades, states and regions need power networks that have plenty of capacity to create flexible solutions as conditions change.

How big of a grid?

The New York dispute is a new front in a persisting debate about climate policy, industry experts say. Can the construction of new power lines keep up with plans to build new renewable power generation that is often far from its urban customers?

The Obama administration's Clean Power Plan, which the Supreme Court stayed until courts respond to legal challenges, the Cuomo plan and other state renewable energy standards all set targets for carbon-free electricity production, the policy response to climate change.

But the much older policies of the NYISO and other system operators that control how and where power lines are built aren't easy to change, and they reflect the interests of current electric power providers, grid experts say.

"ISOs [independent system operators] make the integration of renewables into the grid very difficult," said one industry executive, who spoke not for attribution. "They are very conservative organizations, and they tend not to be innovators because they are not incentivized to innovate. If anything goes wrong [with the grid], they know they're going to get blamed."

A clear example of the Kauffman-NYISO divide goes back to the PSC's January white paper on the clean energy goals, advocating fixed, long-term contracts that utilities would sign with wind and solar power developers as the best means of accelerating a renewable power build-out. Credits for the projects' zero-carbon emissions would be bundled with other costs.

"[A] bundled long-term power purchase agreement between a developer and a creditworthy counter party is the least expensive way to develop new renewable resources in the near-term," the PSC said.

Not so, said the NYISO. Bundled long-term renewable projects could saddle consumers with unnecessarily high costs for new power and transmission costs, it said. New renewable projects should compete for business in New York's existing electric power markets, the NYISO said in an April policy statement. The long-term renewable power contracts pose direct competition for independent power producers in New York that must bid every day to be chosen to bring energy to the state, based on their costs.

The implications for New York of the Kauffman-NYISO exchange concern some industry observers, who note that the PSC and the system operator must work hand in hand to produce new transmission projects that will be crucial to the state's clean energy goals.

To comply with the Federal Energy Regulatory Commission's Order 1000 mandate, the PSC has adopted a process to identify new transmission requirements that are needed to meet the state's policy objectives, including the 50 by 30 renewable power goal.

Alternatively, the PSC can determine that other strategies, such as energy efficiency measures, peak load reduction or behind-the-meter customer-owned power, are preferable to a new power line.

Once the PSC highlights the needs, such as moving electricity from new upstate wind farms down to New York City, then the "solutions" responsibility falls to the NYISO to include the policy priority in its planning agenda. The NYISO solicits bids from transmission developers and approves those that meet its requirements.

Cuomo's ambitious plan to remake his state's electric power infrastructure will require the governor, Kauffman and other state policymakers to own the entire project, including costs of new transmission. Chang said, "I would expect and hope that the responses from the policymakers would be a green light for the NYISO to put in the necessary efforts on an accelerated basis."

Correction: The original story incorrectly stated that New York’s new policy mandating a 50 percent renewable energy standard by 2030 includes generation from nuclear power. It does not. The story has been updated.

Twitter: @PeteBehrEENewsEmail: pbehr@eenews.net

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