The expected costs associated with the Climate Leadership & Community Protection Act (Climate Act) for the net zero transition plan are poorly documented. This article describes costs associated with offshore wind transmission requirements as part of my on-going effort to consolidate cost estimates in one place.
My original plan to track Climate Act costs was to provide expected additional costs to ratepayers for various implementation programs. That information is not provided or is hidden so well that I could not find it for most programs. In order to address other cost considerations, I am tracking costs in different categories: Typical Residential Customer Costs, Direct Climate Act Subsidies, Indirect Climate Act Subsidies, Climate Act Cost Overruns, and Climate Act Integration Analysis Assumed Costs and Updated Costs Differences. This article describes the cost to export power generated by offshore wind facilities from Long Island to the rest of the State which is an indirect cost subsidy that will be paid for by all New Yorkers.
Everyone wants to do right by the environment to the extent that they can afford to and not be unduly burdened by the effects of environmental policies. I submitted comments on the Climate Act implementation plan and have written over 300 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good. Every indication is that the costs will be astronomical as well. 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.
The implementation plan for New York’s Climate Act “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 is underway. At the end of 2022 the Climate Action Council completed a Scoping Plan that recommends strategies to meet the targets. The Hochul Administration is developing regulations and proposing legislation to respond to those recommendations in 2023.
Unfortunately, the Scoping Plan is just a conglomeration of control strategies that are projected to provide the emission reductions required. The inadequate analysis and documentation do not demonstrate the feasibility of the recommended strategies. Furthermore the costs of the program and potential costs to individual New Yorkers are hidden in a shell game con for hiding the true costs. In the Scoping Plan, costs are compared to a Reference Case that includes already “incremented programs”. As a result, the costs that are presented do not include all the costs of the net-zero transition.
Long Island Offshore Wind
The Department of Public Service has an Order for Public Policy Transmission Need (PPTN) (Case 20-E-0497) regarding Climate Act requirements related to offshore wind that drive the need to expand the number of transmission facilities between Long Island and the rest of the State. Climate Act goals include the development of 9,000 MW of offshore wind generation by 2035, with perhaps 6,000 MW connected into New York City. The Public Service Commission has concluded that offshore wind generation connected to Long Island is identified as “high” risk and would be curtailed unless something is done. Transmission expansion that increases the transfer capability from Long Island to the rest of New York is expected to significantly reduce the potential for offshore wind curtailment.
The New York Independent System Operator (NYISO) Electric System Planning Working Group (March 24, 2023 and April 3, 2023) is addressing independent cost estimates developed by NYISO’s consultant for proposed projects to address this issue. This is all preliminary work so the cost estimates are subject to change but they give an idea of what is needed to get the offshore wind generated to where it is needed. The cost estimates considered required material and labor cost by equipment, engineering and design work, permitting, site acquisition, procurement and construction work, and commissioning. The analysis found that the primary cost drivers were terrestrial and submarine cable length, HVDC converter systems and PARs, and the scope of the project (i.e., number/size of transmission facilities).
Cost estimates for sixteen projects were evaluated as shown in the following table. The average total cost estimate was $7.1 billion, the maximum was $16.9 billion and the minimum was $2.1 billion.
The draft NYISO Long Island Public Policy Transmission Need (PPTN) report predicts that the transmission upgrades will provide savings to the system:
The Long Island PPTN project simulations all show improvements in the export capability of Long Island by adding tie lines between Long Island and the lower Hudson Valley. This added transfer capacity and upgrades to the internal Long Island system reduce the amount of curtailment from offshore wind resources. The energy produced through reduced curtailment of offshore wind resources can then be used to offset more expensive generation to meet New York’s energy demand and, therefore, produce a production cost savings. Production cost savings are also created by offsetting high-cost energy imports from neighboring regions with lower cost New York-based generation that was previously inaccessible due to transmission congestion.
In general, all of the proposed projects produce savings by unbottling offshore wind resources in Long Island and reducing the amount of imports from neighboring regions. The figure below shows the estimated production cost savings for each project over a 20-year period in 2022 real million dollars.
The baseline scenario estimated 20-year production cost savings (2022 $M) average $99 million, the maximum is $110 million, and the minimum is $39 million. The policy case scenario savings average $347 million, the maximum is $458 million, and the minimum is $291 million. (I don’t have the costs for the Policy + B-VS scenario so I do not discuss that scenario.) The difference between the total estimated cost and the production cost savings is the amount that must be subsidized indirectly to the ratepayers. The annual subsidies over 20 years range from $823 million to $90 million and average $339 million.
I am not impressed. Without this connection upgrade as much as 92% of the 3000 MW of off-shore wind which costs $15 billion would not be deliverable. However, it comes at an annual average subsidy of $339 million.
Unfortunately, the indirect subsidy costs described are not the only costs. These costs are only for the new transmission and do not include additional costs associated with the impacts on the existing transmission and distribution systems on Long Island. In addition, this is the cost associated with 3,000 MW of offshore wind. The Climate Act goal is for 9,000 MW and the Scoping Plan Integration Analysis projects that 12,675 MW of offshore wind will be needed by 2040 in the Strategic Use of Low-Carbon Fuels mitigation scenario. If the transmission costs are proportional that would mean that this indirect subsidy alone would be at least $1,356 million a year for the Integration Analysis.
There are a couple of other things to keep in mind. The Integration Analysis cost documentation is inadequate so I cannot be sure but I am confident that none of these costs were included in the Integration Analysis. This further weakens any claim that the net zero transition will provide cost-effective emission reductions. The other thing is that the only cost number associated with the cap and invest program proposed by the Hochul Administration is for a universal Climate Action Rebate that is “expected to drive more than $1 billion in annual cap-and-invest proceeds to New Yorkers.” In other words, the State will make a big deal about giving New Yorkers a rebate at the same time there will be indirect cost subsidies that are approximately the same. This is yet another example of shell game scams with the Climate Act costs.
There are two reasons that the Hochul Administration has not provided comprehensive cost estimates. The first is that they don’t know the all-in costs because those numbers can only be developed on the basis of detailed analyses like this proceeding. The second is that they don’t want to know and they certainly don’t want the voters to know the mind-numbing costs.
This example of one aspect of the transition plan shows that the capital costs for getting the offshore wind to where it can be used most effectively are enormous, and the savings are miniscule which means enormous subsidies to be paid for by all New Yorkers. New York GHG emissions are less than one half of one percent of global emissions and global emissions have been increasing on average by more than one half of one percent per year since 1990. This does not necessarily mean that we should not do something, but it does mean that we have time do something that we can afford. Until such time that detailed analyses like the kind of analysis described here are completed this process should be paused.