EPRI Electrification Scenarios for New York’s Energy Future

In the summer of 2019 Governor Cuomo and the New York State Legislature passed the Climate Leadership and Community Protection Act (CLCPA) which was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation. The Electric Power Research Institute (EPRI) recently released an “assessment of the potential role of electric technologies to meet energy needs and resulting impacts on end-use energy efficiency, electricity supply, and economy-wide emissions through 2050” for New York.  This post looks at the results of this analysis relative to the CLCPA and is another in a series of posts on this legislation.

I am following the implementation of the CLCPA closely because its implementation affects my future as a New Yorker, specifically can I afford to continue to live here in retirement.  Given the results for other jurisdictions that have implemented renewable energy resources at far lower levels, I am convinced that the costs will be enormous and my analyses have supported that concern.  The opinions expressed in this post 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.

Background

The politicians who passed the CLCPA mandated a reduction of New York’s GHG emissions to 60 percent of 1990 emissions levels in 2030 and that emissions from electricity production would be zero by 2040.  However, they just assumed that their targets could be met and only mandated that two years of the effective date of the legislation the climate action council would prepare and approve a scoping plan outlining the recommendations for attaining the statewide greenhouse gas emissions limits in accordance with the schedule.  In other words, this is a classic cart before the horse legislation example.

In the absence of a state plan I welcome any analysis of New York’s future energy system so I was happy to see this document.  The Executive Summary describes the report and notes the important caveat that it does not address the CLCPA requirements:

The analysis finds that electrification outcomes in New York, including the extent and timing of adoption, infrastructure and investment needs, and associated economy-wide emission reductions, will vary depending on a range of policy, economic, and technology factors. This study was conducted before the enactment of the state’s Climate Leadership and Community Protection Act and does not make policy recommendations or identify specific pathways to achieving the state’s greenhouse gas (GHG) targets. Instead, it illustrates that a portfolio of electric technologies could play a significant role in reaching the state’s energy goals. Furthermore, this initial assessment helps identify the areas in which legislators, regulators, utilities, grid operators, customers, and other stakeholders can work together on the next chapter of New York’s clean energy future.

Study Summary

The report describes the study methodology, assumptions, and limitations first.  Then it describes how NYS consumers use energy today. The study examines the evolution of electric technology adoption and the impact on the NYS energy system for four scenarios using EPRI’s NY-REGEN energy-economy

model.  The fourth section provides “an in-depth look at a variety of electric technologies, analyzes consumer costs and use cases, and identifies areas in which customer outreach and education may be needed in the future” .This approach is straight-forward and consistent with what anyone who is trying to project what may happen in the future would do.  There is one caveat I will mention though.  The NY-REGEN energy-economy model is simply a fancy packaging of what the model developers think will happen so it is only as good as the input assumptions.

For this type of analysis, the results have to be considered relatively.  Four scenarios were analyzed.

1. 1. 1. The Baseline scenario reflects moderate improvement in technology costs and performance based on anticipated trends and EPRI research, and the attainment of pre-2019 NYS clean energy targets. Assumptions of economic growth, fuel prices, and service demand are drawn from the U.S. Energy Information Administration.
      2. The Carbon Price scenario maintains Baseline assumptions on technology improvements and cost decline. Under these conditions it explores the impact of hypothetical economy-wide carbon policy in which carbon dioxide (CO2) is illustratively valued at $50/ton CO2 starting in 20202 and escalating to $216/ ton CO2 in 2050.
      3. The Mandates scenario explores the impact of possible regulatory interventions for electric end uses and additional energy efficiency. The policies this scenario examines would require electric technologies for all installations of building heating equipment and new vehicle purchases in 2030 onwards. In addition to the Baseline assumptions, heating equipment performance improvements are accelerated by 15 years, but cold-weather breakthroughs are not assumed.
      4. The Transformation scenario combines the above Mandates with a hypothetical economy-wide carbon price of CO2 illustratively valued at $100/ton CO2 beginning in 2020 (escalating to $432/ton CO2 in 2050) with elements of the expanded clean energy targets in the state’s Climate Leadership and Community Protection Act.

Findings Summary

The report lists the following key findings with my italicized clarification comments

The results of this study are based on a suite of detailed assumptions and should be interpreted as directional in nature, helping to frame priorities for further study as New York State advances its energy goals. As noted previously the study developed a scenario for a baseline and then did three possible scenarios for the future.  Results should be considered by comparing the baseline results to the results of each of the scenarios.

• • • The NYS energy system has large potential for electrification, which, in conjunction with low-carbon electricity, can achieve substantial CO2 reductions. Electricity’s role in the state economy will continue to grow over the next 30 years—the pace and extent of that growth will depend on policy decisions, technology improvement, market readiness, and economic conditions. Across the study’s four scenarios, electricity’s share in final energy use ranges from roughly 25% to 70% in 2050, up from around 20% today. If they had done an evaluation of the CLCPA then electricity’s share of final energy use would be even higher.
    • Energy efficiency is a key factor in reducing energy use, limiting CO2 emissions, and managing infrastructure needs. Even before accounting for electrification, the study finds that robust energy efficiency cuts total final energy use in NYS by 35% of what it otherwise would be in 2050; additional efficiency gains from electrification range from 9% to 21%. Energy efficiency gains are realized by both electric and direct fuel alternatives, with annual improvement rates ranging from 0.5% to 4% depending on the end-use technology.
    • After energy efficiency, electrifying transportation while decarbonizing the grid with renewable energy offers the greatest potential to cost-effectively reduce CO2 emissions in NYS. Electric vehicles (EVs) and plugin hybrid electric vehicles (PHEVs) are projected to become lower cost alternatives to conventional vehicles for most drivers within the next decade, even without additional economic incentives. Almost 30% of New York passenger vehicle miles are projected to be fueled by electricity by 2030 in the Baseline scenario, increasing to roughly 75% by 2050. EV charging infrastructure is an essential component to achieving a highly electrified transportation fleet in NYS. (According to Figure 2-6, there were 12,116,00 light-duty vehicles and 41,000 were electric in 2015 for 0.34%.)
    • New York’s winter climate and building stock call for advanced technologies and targeted approaches to heating electrification when compared to other areas of the United States (EPRI, 2018). While air-source heat pumps (ASHPs) are more efficient and cost-effective than oil-based heating, which continues to warm about one in four homes in New York, natural gas furnaces are currently more economic in NYS on an annualized capital and operating cost metric. Nevertheless, potential breakthroughs in cold-climate heat pumps—including ground-source heat pumps—have the potential to alter these cost and performance projections. Further study could assess the benefits, costs, and feasibility of these advanced technologies in conjunction with building envelope efficiency improvements. (Retrofitting ground source heat pumps is problematic so the more likely retrofit option is air source heat pumps.)
    • The adoption of electric end-use technologies will depend on individual customer decisions—market readiness, technology maturity, vendor-to-customer education, and appropriate incentives will be crucial to advancing electrification. While technology progress and carbon policy help to shift the market from fossil fuels toward electrified end uses, accelerating this transition may well require collaborative market interventions by policymakers, regulators, and utilities, with consideration of the needs of a diverse range of consumer situations—including low-income housing, older or landmarked buildings, and rural settings. (Collaborative market interventions could be construed as ramming what they want down the consumer’s throats.)
    • In all scenarios, New York’s statewide peak demand shifts from summer to winter and, if unmanaged, could increase substantially. Peak demands are expected to shift toward the early mornings of the coldest winter days, primarily due to increased EV charging needs in low temperatures plus electric heat pump adoption, while summer electricity usage drops as air conditioning efficiency improvements outpace growth in service demand. In the Mandates and Transformation scenarios, where customers electrify nearly all space heating and transportation but do not manage the timing of demand on the grid, peak winter demand in 2050 could be more than twice as high as today’s system peak. This highlights a key opportunity for New York’s electricity system stakeholders to develop and implement solution approaches such as cost-reflective time-of-use pricing, active load management of smart vehicle charging and other flexible loads such as space conditioning, behind-the-meter storage, and advanced cold-weather heating systems.
    • Flexible resources arising from a portfolio of advanced technologies and additional transmission will be critical to decarbonizing electricity generation. As more renewables are added to the generation mix to meet New York’s clean energy goals, dispatchable technologies will be needed to maintain reliability and balance variable generation, especially after 2030. Broadening the state’s portfolio of low-carbon, flexible generation assets can help reduce reliance on the gas generation fleet. EPRI’s new Low-Carbon Resources Initiative may provide important insights in this area. (The CLCPA likely remove the low-carbon resources initiative option from consideration.)
    • Customer adoption trends and electricity grid impacts are projected to vary across the state. Limited residential EV curbside charging, split tenant/landlord incentives, and variety across household characteristics and building types influence implementation in downstate urban areas, while affordability of converting to electric technologies may be a factor to consider in other parts of the state.
    • Electrification of specialized applications such as off-road vehicles (for example, forklifts), ground equipment at ports and airports, and industrial end uses may offer substantial benefits. Potential benefits include energy efficiency and reductions in emissions, noise, maintenance, and costs compared to the direct fuel alternative.

Motivated reasoning

There is a prevailing bias in this study that I believe motivates the reasoning and ultimately the results.  According to the document EPRI “brings together its scientists and engineers as well as experts from academia and industry to help address challenges in electricity, including reliability, efficiency, affordability, health, safety and the environment”.  There is no charge to EPRI from its funding organizations to consider all energy sources and determine the most affordable solutions for the future.  Consequently, they are all in for electrification.

This study was funded by the New York Power Authority (NYPA) and Consolidated Edison (Con Ed).  Both organizations have a vested interest in electrification and publicly supporting the CLCPA.  Increased electrification enhances their empires for lack of a better word so the more the better.  The Power Authority is an agency controlled by Governor Cuomo.  I can assure you that they cannot publicly question any action by any agency and certainly cannot raise questions about the viability of the Governor’s signature climate legislation.  Consolidated Edison is a corporation whose profits are dependent upon revenues determined by the Department of Public Services again controlled by Governor Cuomo.  Consequently, they too are reluctant to question the viability of the CLCPA.

According to the report “The study did not explicitly model recently adopted laws in New York City and New York State, such as New York City’s Local Law 97 or the State’s CLCPA. The study is not intended to identify explicit pathways to achieving the state’s GHG reduction targets. The scenarios presented here have been designed to illustrate the role of advanced technology alongside policy and regulatory drivers in reaching NYS’s clean energy requirements.”  I am confident that this language was vetted at the highest levels of NYPA and Con Ed to provide as much distance as possible from anything that could be construed as derogatory to CLCPA implementation.

One would think that a primary result from this analysis would be a comparison of the total costs for the four scenarios.  I did not read every word in the entire document but I did search for the word “cost” and the symbol “$”.  There are costs for options discussed in the electrification technology case studies but the total costs are not listed.  For example, the cost of air source heat pumps relative to natural and oil-fired furnaces are listed and it is shown that air source heat pumps are more cost-effective than oil-fired furnaces.  However, the study did not combine the number of fossil-fired furnaces that have to be converted and the cost of air source heat pumps to come up with a statewide cost. The absence of that obvious information certainly could be construed as a hiding a result inconvenient to the CLCPA.

Magical solutions

In my opinion, the findings include some results that are only possible if there are magical solutions.  In this category are technologies that are not currently available but are assumed to appear as needed in the future.  Also included are policies that have not succeeded as hoped so far but are also assumed to work as needed to meet the electrification scenario requirements.

In the electrifying transportation findings summary above I noted that in New York only 0.34% of the vehicles registered in 2015 were electric vehicles but the Baseline scenario assumes that almost 30% of New York passenger vehicle miles are projected to be fueled by electricity by 2030.  The latest NYSERDA electric vehicle registrations show that by October 2019 the number of electric vehicles was up to 64,588.  If we assume that the number of electric vehicles is proportional to the electric of vehicle miles traveled, then by 2030 there need to be 12,116,00*30% or 3,634,800 light duty vehicles so 3,570,212 electric vehicles have to be purchased in the next ten years.  The magical solution: “Even in the Baseline scenario, declining battery costs combined with lower fuel and maintenance costs make light-duty electric vehicles the economic choice for many households. The upfront cost premium relative to conventional vehicles is more than offset by lower total ownership costs of fueling and maintenance, driving economic adoption for many households and businesses.”  All this does is ignore the very real concerns of people who depend on their vehicles to provide transportation whenever they need it whatever the temperature to go wherever they need to go.  It also assumes that batteries will necessarily get cheaper.

In order to meet the CLCPA emission reduction goals electrification of home heating has to be increased.  EPRI points out that air-source heat pumps are more efficient and cost-effective than oil-based heating.  The problem is that below 20°F the “baseline ASHP system modeled for installation in 2020 provides full heating needs above 20°F only; at lower temperatures, supplemental heating by electric resistance, gas furnace, or oil-based heating equipment is required”.  Of course, all of New York has to have supplemental heating equipment because temperatures below 20°F are to be expected and that makes air-source heat pumps less attractive.  The magical solution: “potential breakthroughs in cold-climate heat pumps—including ground-source heat pumps—have the potential to alter cost and performance projections” that makes more widespread adoption the preferred approach.  This ignores the fact that heat pumps work by transferring energy from one place to another and that there just isn’t that much energy when the temperature is below 20°F.  The potential to alter cost and performance by much is not very likely absent repeals of the laws of physics.

The key findings note that “in all scenarios, New York’s statewide peak demand shifts from summer to winter and, if unmanaged, could increase substantially. Peak demands are expected to shift toward the early mornings of the coldest winter days, primarily due to increased EV charging needs in low temperatures plus electric heat pump adoption”. One of the promises of the future smart grid is that peak loads will be smoothed out so this is a problem.  The magical solution: EPRI claims there is a “key opportunity for New York’s electricity system stakeholders to develop and implement solution approaches such as cost-reflective time-of-use pricing, active load management of smart vehicle charging and other flexible loads such as space conditioning, behind-the-meter storage, and advanced cold-weather heating systems”.  Here is a news flash to EPRI – when residents are in the middle of a polar vortex cold snap that lasts several days, they will have to use whatever energy is needed to stay warm.  All of the solutions proposed will result in regressive costs hurting those who can afford it the least the most.

Conclusions

There are aspects of this report that have implications to CLCPA implementation that deserve more attention than I can include in this introductory post.  For example, the future scenarios specify values of the Social Cost of Carbon that increase over time.  I believe that is a necessary aspect for that kind of carbon pricing to work but this is the first instance where I have seen projections made for New York.  The problem I want to address is the fact that the Social Cost of Carbon is supposed to put a number on future damages from CO2 emitted today and the values they included exceed the published thresholds.  If the costs exceed the expected damages it doesn’t make sense. You wouldn’t spend more than a dollar to save a dollar.

As noted, these electrification scenarios do not “make policy recommendations or identify specific pathways to achieving the state’s greenhouse gas (GHG) targets”.  While this report has a vested interest in electrification, there also is a problem that they had to dance around or incur the wrath of the politicians that passed the CLCPA.  One of the findings noted “Flexible resources arising from a portfolio of advanced technologies and additional transmission will be critical to decarbonizing electricity generation.  As more renewables are added to the generation mix to meet New York’s clean energy goals, dispatchable technologies will be needed to maintain reliability and balance variable generation, especially after 2030”.  The most appropriate dispatchable technology (natural gas fired turbines) is a Voldemort technology which must not be named because it is evil.  Problem is when the wind is calm at night the only alternative to keep the lights on is energy storage which is horrifically expensive.  EPRI, NYPA, and Con Ed know this but could not say it, hence the obfuscatory language.

The bottom line for any of these electrification scenarios is that intermittent energy, i.e., wind and solar, cannot fuel our society on its own.  The whole concept of the CLCPA net-zero energy future is flawed.   There is currently no alternative to fossil fuels for efficient cost-effective transport and the only near-zero-carbon fuel which can meet electrical generation needs is nuclear, which New York state policy is explicitly rejecting.