New York Power Trends Report

Recently the New York Independent System Operator (NYISO) released the latest edition of Power Trends 2024.  This is the NYISO’s annual analysis of factors influencing New York State’s power grid and wholesale electricity markets.  This post highlights some of the key points made.

I have followed the Climate Leadership & Community Protection Act (Climate Act)since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 400 articles about New York’s net-zero transition.  The opinions expressed in this article do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Overview

The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050.  It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council (CAC) was responsible for preparing the Scoping Plan that outlined how to “achieve the State’s bold clean energy and climate agenda.” The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies.  That material was used to develop the Draft Scoping Plan outline of strategies.  After a year-long review, the Scoping Plan was finalized at the end of 2022.  Since then, State agencies and the legislature have been attempting to implement the plans.

Power Trends includes a letter from the NYISO CEO Rich Dewey.  He highlights concerns about the Climate Act and grid:

New York’s public policies are increasingly prioritizing clean energy production and a rapid transition away from fossil fuels. It is imperative that during this time of rapid change we maintain adequate supply necessary to meet growing consumer demand for electricity. Power Trends shows that achieving this balance will be the central industry challenge over the next decade.

The NYISO power assessment information includes: Power Trends Resources is the landing page for documentation, Power Trends 2024 is the report itself, and there is a Power Trends Fact Sheet.  The report notes:

The shift from fossil fuel-based generation to clean energy resources is advancing with a quickening pace. At the same time, consumer demand for electricity is increasing as state policies decarbonize the building and transportation sectors and attract large economic development projects to New York. The successful transition of the electric grid depends on the careful balance of reliable energy supply with the forecasted increase in demand.

NYISO planning must address public policies intended to drive rapid change in the electric system in the state, impacting how electricity is produced, transmitted, and consumed.  There are two Climate Act direct drivers for the electric system.  In addition to the requirement that all electricity generated be “zero-emissions” by 2040 there is a mandate that the electric grid be 70% renewable energy by 2030. 

This article highlights the following challenges raised in the report: status of the system, electrification challenges, Climate Act schedule, the interconnection process, the technology required, and the electric market.

Status

Power Trends included a discussion of the present status of the electric systems.  It concludes that “electricity supplies are adequate to meet expected summer demand under normal conditions, but extreme weather and other factors pose reliability risks.”  In a recent post about the June heatwave I quoted the following from the Summer 2024 reliability outlook:

For summer 2024, the NYISO expects 34,913 MW of resources available to meet 31,541 MW of forecasted demand under normal conditions. Under extreme summer weather conditions, however, forecasted reliability margins could potentially be deficient without reliance on emergency operating procedures. For example, if the state experiences a heatwave with an average daily temperature of 95 degrees lasting three or more days, demand is forecasted to rise to 33,301 MW, while predicted supply levels are reduced to 34,502 MW. When accounting for the required 2,620 MW of operating reserves that must be maintained, this scenario results in a forecasted reliability margin of -1,419 MW. That reliability margin declines further to -3,093 MW under an extreme heatwave with an average daily temperature of 98 degrees. Under these more extreme summer weather conditions, the NYISO forecasts an available supply of 34,317 MW to meet the required 2,620 MW of operating reserve requirements, plus a forecasted demand of 34,790 MW.

The Climate Act strategy to reduce building emissions through electrification will eventually shift the peak loads to winter.  In the meantime, there are potential issues.  The report notes that “On the coldest days, the availability of natural gas for power generation may be limited and significant interruptions to natural gas supply can disrupt reliable operations.”  In addition, electric planners across the country as well as New York are dealing with “evolving challenges and considerations for ensuring power system reliability under extreme winter conditions.” The increased reliance on natural gas is a problem when there is intense cold weather because it stresses gas networks and electricity grids across the nation.  An unintended consequence of the shift from coal to natural gas is the loss of electricity generated by facilities with on-site storage.  Now there is reliance on the gas network and something else that can go wrong.  New York addresses this with dual-fueled units that can burn oil stored on-site.

The last Power Trends status issue is declining reliability margins as illustrated in the following figure.  As noted, this is mostly because fossil units are retiring faster than the zero emissions replacements are coming on-line.  In addition, the New York Department of Environmental Conservation (DEC) is pressuring existing power plants to reduce emissions or shut down and they have rejected several applications to replace existing old generators with modern new facilities because of the Climate Act.  Unfortunately, there is no direct link between the proposed facilities and a particular reliability issue.  As a result, the permit decisions were considered in isolation and the permits were rejected exacerbating the declining reliability margin.

Electrification Control Strategy

The Power Trends report addresses the trend for higher electric loads.  The primary Climate Act emissions reduction strategy is to electrify everything possible using zero-emissions electricity.   In addition, economic development initiatives are driving projected demand higher. The following graphic describes the proposed energy-intensive projects.  Not included is the potential for new data centers needed to power the artificial intelligence applications coming out.

As shown below, the New York statewide grid is projected to become a winter-peaking system in the 2030s, primarily driven by electrification of space heating and transportation.  This means that the focus on future generating sources will have to change.  In particular, the value of solar resources is lower during the shorter days of winter and reduced solar intensity due to lower sun angles.  Moreover, there is the potential for even more reductions if solar panels are covered in snow.

Schedule

The Climate Act was promulgated without consideration of feasibility.  Nowhere is this more impactful than with respect to the schedule.  A rational New York energy plan would implement the zero-emission resources before retiring existing generating resources.  New York is not rational.  Despite the obvious delays in construction of new supply and transmission due to a whole host is issues the Hochul Administration has not broached the possibility of postponing any Climate Act targets.

The Power Trends report includes a description of their reliability planning process.  Four reports are included:

• Short-Term Assessment of Reliability (STAR): Conducted every quarter to assess reliability needs within a five-year horizon to determine whether the grid will be able to supply enough power to meet demand.
• Reliability Needs Assessment (RNA): Evaluates the reliability of the New York bulk electric system considering forecasts of peak power demand, planned upgrades to the transmission system, and changes to the generation mix over the next ten years.
• Comprehensive Reliability Plan (CRP): integrates STAR reports and the most recent RNA, resolves any identified reliability needs and develops a ten-year reliability plan.
• System and Resource Outlook (Outlook): The Outlook will provide a comprehensive overview of system resources and transmission constraints throughout New York, highlighting opportunities for transmission investment driven by economics and public policy over a 20 year period.

Implementing the resources necessary to meet the Climate Act is not just a matter of building as many zero-emissions resources as possible as soon as possible. These reliability planning reports indirectly affect the implementation schedule.  The process identifies specific issues which triggers a procedure to address them.  All that takes time.  The bigger issue is NYISO’s interconnection process.  Before any generator can be added to the electric grid NYISO has to evaluate its impact.  This process is so important that it was highlighted.

Improving the interconnection process

The Power Trends report notes that “NYISO’s interconnection processes continue to evolve to balance developer flexibility with the need to manage the process to more stringent timeframes.”  NYISO is trying to speed up the turnaround time and make the process more efficient while protecting grid reliability.  The report notes:

Driven by state and federal policies, an unprecedented number of renewable and clean energy projects are entering our interconnection queue. In 2019, there were 275 projects in the queue. Today, more than 500 projects are under consideration. Recent enhancements to our processes, interconnection team, and technology have led to measurable improvements.

There is another complication.  Wind and solar project electric out has different characteristics than fossil-fired units.  The Federal Energy Regulatory Commission’s Order 2023 addresses those differences and NYISO is incorporating that order into their processes.  They hope that “Those reforms will further shorten the total study period while maintaining a focus on system reliability.”

Despite these improvements it takes years from the time a company starts to develop a wind or solar project until it gets online.

DEFR

The Power Trends report describes a major technological issue:

Renewable energy generation, subject to sudden changes in weather, also provides new challenges to grid operators that must balance supply and demand in real time. These variables highlight the need for new generation technologies that can fill in when weather-dependent resources are unavailable. Such new technologies, collectively referred to as Dispatchable Emission Free Resources (DEFRs), must be dispatchable, emissions free, and able to respond quickly to changing grid conditions. Such technologies do not exist yet on a commercial scale.

The NYISO described this resource in the last System and Resource Outlook:

DEFRs are a classification of emission- free resources that provide the reliability attributes of synchronous generation and can be dispatched to provide both energy and capacity over long durations. DEFRs must be developed and added to the system at scale to reliably serve demand when intermittent generation is unavailable. The lead time necessary for research, development, permitting, and construction of DEFR supply will require action well in advance of 2040 if state policy mandates under the CLCPA are to be achieved.

Both descriptions closed with the caveat that these resources do not exist.  I described other DEFR issues raised at a Department of Public Service technical conference last December.  The report statement that research and development are required before permitting and construction can begin underscores the scheduling challenge that this resource entails.

Markets

When the New York electric system was de-regulated the NYISO was formed to operate the electric system.  To transition the electric markets to meet the Climate Act mandates the NYISO must attract necessary investments.  The report explains:

Managing wholesale electric markets is a core responsibility for the NYISO. We are committed to administering and overseeing the competitive electricity markets as the most cost-effective way to attract and retain new resources to meet our reliability needs as we transition to a decarbonized grid.

For 25 years, competitive electricity markets have provided New Yorkers with reliable, least- cost power. Since 2000, the carbon dioxide emissions rate in the power sector decreased by 45%.  Competitive markets produce real-time price signals that allow power suppliers to respond to the grid’s changing needs. With ever-increasing intermittency, extreme weather, and demand from electrification and economic development, the balancing force of markets is essential.

Our market design team is hard at work developing new tools and programs to encourage investment in resources that are fast-ramping, flexible, dispatchable, and emissions-free ― resource characteristics that are becoming increasingly important for grid reliability.

It is not surprising that NYISO places great faith in markets given that they are the reason for its existence.  However, even market advocates must admit that developing the market for DEFR and all the other components of the grid needed for the transition adds another layer of complexity.  It is not only that a new resource has to be developed but now the NYISO has to develop some sort of market mechanism to ensure that it is available when it is needed.  Given the likely high costs for this new technology and the expected low utilization rate that is a serious challenge.

Discussion

The Power Trends report explains that Climate Act mandates on the electric system will drive electric system planning and development efforts through 2040.  It notes that “The successful transition of the electric grid depends on the careful balance of reliable energy supply with the forecasted increase in demand.”  The NYISO reliability planning analyses are based on decades of experience with dispatchable resources.  Balancing demand with weather-dependent resources is an extraordinary test for the Climate Act schedule.

In its review of the status of the system NYISO notes important reliability caveats.  An extended heatwave or limits on natural gas in winter could cause problems today and New York energy policies are reducing options to address those concerns.  New York energy policy eliminated coal-fired generation and environmental requirements have reduced the number of facilities that provide peaking power.  State policy has also restricted the development of more natural gas pipelines that directly contributes to increasing risk for the problems noted.

The report also describes potential scheduling issues but does not explicitly compare the real scheduling issues with the aspirational schedule.  Other NYISO reports have projected that the number of new resources needed to meet the Climate Act mandates is unprecedented.  Despite obvious delays in deployments today for reasons (e.g., supply chain issues, lack of trade personnel, and inflation) that show no sign of abating, the NYISO has not broached the idea that delays should be considered.  This report describes interconnection issues and the requirement for a new resource that must be developed from scratch that exacerbate the problem.

Finally, market mechanisms must be developed to encourage the investments necessary to deploy all these resources.  Despite the optimism of NYISO I suspect that investors are going to be reluctant to jump into the New York market without guarantees.  All that uncertainty adds to potential costs and time to deploy resources.

There is an overarching issue unrecognized by the State and not addressed in this report.  The NYISO resource adequacy planning process is based on decades of experience with independently operating generators.  Probabilistic estimates of their performance are used to evaluate reliability standards.  There is no expectation that many of the facilities will not be available at the same time.  The proposed Climate Act transition to wind and solar resources changes that paradigm.  Weather-dependent resources are highly correlated in space and time, and this is the reason DEFR is needed.  The unresolved issue is that the worst-case wind and solar resource lull is very rare.  Deploying sufficient DEFR to provide adequate resources based on the historical worst-case is likely impractical.  However, if society does not develop those resources, then when those weather conditions inevitably reoccur in the future, there will be a catastrophic blackout.

Conclusion

The Power Trends 2024 report provides an excellent overview of New York State’s power grid and wholesale electricity markets.  Unfortunately, NYISO does not consolidate all the warning signs about Climate Act implementation, nor does it call out state policies that are exacerbating problems.

Ultimately the problem is that New York has no comprehensive energy plan.  The Scoping Plan is just a list of technologies that describe an electric system that is zero-emissions.  However, there is no feasibility study that shows how it will work nor has the Hochul Administration reconciled the differences between the Integration Analysis and NYISO resource outlooks.  As it stands now the apparent Administration plan is to build as many wind and solar facilities as possible and hope someone works out how they are supposed to be integrated into the electric system.  When that does not work, I predict the NYISO will be fall guy.

The only way to ensure the safety of New Yorkers is to do a demonstration project that proves that an electric system that relies on wind and solar will work.  A poor second choice would be a comprehensive feasibility analysis that reconciles the Integration Analysis and NYISO analyses.  Failing to do either is planning to fail.