On February 28, 2019 the New York State of Department of Environmental Conservation (DEC) proposed regulations to lower allowable nitrogen oxide (NOx) emissions from simple cycle and regenerative combustion turbines during the ozone season. On the face of it this should be a relatively simple air quality issue but it is complicated by Governor Cuomo’s clean energy agenda. I am motivated to write this post on air quality regulation and energy policy because the majority of what has been said so far about this regulation fails to discuss the complexities of the issue and misses the point of the regulations.
This post describes an open regulatory issue and I want to emphasize that the following represents my opinion and not the opinion of any of my previous employers or any other company with which I have been associated. Ozone pollution is currently New York State’s most difficult air quality issue and I have been following the particular aspect of these turbines and their effect on ozone for over 20 years. I will try to show in this post the background of the problem and how this regulation is embroiled in energy policy implications that are complicating the issue considerably.
The proposed regulation covers simple cycle and regenerative combustion turbines but I am going to focus on just simple cycle turbines in New York City which make up the majority of the turbines in question. In the early 70’s Consolidated Edison was an integrated utility and responsible for generating and distributing electricity to New York City. Their generation planners developed a fleet of baseload, intermediate and peaking generating plants to provide power for the expected demand. (If you are unfamiliar with this concept I recommend the Generation Planning 101 section at this link).
Keep in mind that New York City requires massive amounts of power and there are geographical limitations as to how much can be imported in so the whole metropolitan area is a load pocket. Moreover there were areas in the City that had their own load issues, i.e. they are in load pockets within the City-wide load pocket. In order to provide peaking power for the City and those areas Con Ed developed four combustion turbine facilities that use simple cycle turbines: Astoria (558 MW current nameplate capacity), Gowanus (640 MW), Narrows (352 MW) and Ravenswood (375.3 MW). According to the NYISO “Gold Book” in 2017 the net energy generated from all four facilities was 212.2 GWh with an overall capacity factor of 1.3% as shown in New York City Simple Cycle Peaking Turbines Summary.
|New York City Simple Cycle Peaking Turbines Summary
||2017 Net Energy
The units at these facilities are known as peaking turbines for a reason. They only run when power is really needed. For New York City this is primarily during the summer when load peaks due to air conditioning load. When Consolidated Edison was responsible for electric system reliability they had a fuel and generating mix that addressed peak load using these relatively cheap to install and operate turbines. Simple cycle turbines are basically jet engines hooked up to an electrical generator. In order for these sources to be profitable they have to recover all their operating and maintenance costs for the year during those peak periods. Part of the reason costs go up so much when energy demand is high is because of this effect.
While appropriate at the time they are ready for replacement. The turbines at these four facilities are approaching 50 years old, they are inefficient inasmuch as they burn more fuel than a new turbine to produce the same amount as power, and they are dirty, that is to say their emission rates are much higher than a modern turbine.
However, New York State de-regulated the electric sector at the turn of the century. As part of that process, Consolidated Edison sold most of their generating facilities and, in order to encourage competition, the in-city fossil generation assets were sold to three different companies. In the simpler time before de-regulation, DEC would have promulgated a phase-out rule and Consolidated Edison would have proposed replacement power generating facilities and received cost recovery from the NYS Department of Public Service in a rate case because of the obvious need. Today’s owners have no such assurances. Instead they have to rely on the market to recover their investment costs. As a result energy policy is a major concern.
Ozone Air Quality Issue
As noted previously, ozone is New York State’s most difficult are quality problem. Despite years of progress ozone stubbornly fluctuates around the current National Ambient Air Quality Standard (NAAQS) limit that protects human health. It is important to keep in mind that the limit has changed over time so there has been progress but reaching the current limit has proven difficult. Ground-level ozone is not directly emitted into the atmosphere. Instead it is created in a complex photo-chemical reaction (it needs sunlight) from oxides of nitrogen (NOX) and volatile organic compounds (VOC). It is difficult to control in New York City because there are two pollutants, the reaction that creates ozone takes time so wind transport is an issue and transport in the complicated wind regimes along the Atlantic and Long Island Sound coastlines is difficult to simulate.
Ozone reaches unhealthy levels on hot sunny days and therein lies the rub. On hot sunny days people want air conditioning and as a result those are the days of peak load. That means that the peaking turbines usually run on those days most conducive to ozone formation. On those days reductions at all sources of NOX and VOC have been considered to control ozone. Because NOX is emitted from all combustion sources and VOCs are emitted from most things that have an odor there are all kinds of sources that affect ozone concentrations. Peaking turbines are one of the last large sources and I believe need to be controlled. As a side note however, I don’t think that when they are controlled that ozone compliance will be attained but it is progress and their time has come.
Electric Sector Energy Policy
If this were only an air quality issue the New York State Department of Environmental Conservation (DEC) would have simply promulgated a rule that requires phase out over time a long time ago. Unfortunately, there are energy policy ramifications, because while they are dirty, they also are necessary to provide power during peak periods. DEC wants to keep the lights on so they have not proposed such a rule until this time. During the development of the regulation the primary concern was how to develop a regulation that would give time for replacement power to be developed.
According to de-regulated utility theory the market will respond to needs when the price is right. In this case, that will be when developers believe the market supports permitting and building replacement power plants. I am not an economist or power plant developer but it is my opinion that you asking a lot of the market to provide an incentive to an investor to commit to developing a power plant anywhere, but (as we shall see) in New York that is doubly true. So what is the peaker market situation in New York? As mentioned before three companies currently own the four primary peaker turbine facilities in New York. One has not done anything. As far as I can tell that simply may because their facility has more site constraints than the other two companies. The other two companies have replacement plans.
According to the NYISO Gold Book, NRG Energy first proposed to re-power its Astoria Gas Turbine facility in the 2009 Gold Book and there is a project proposed in the most recent edition. Their plan is to build “fast-response, high efficiency combined cycle” turbines to replace the existing facility. New York has excruciating permitting requirements for power plants which are a major hurdle for development. The fact that NRG has a permitted project is a big plus. Again, I am no economist or power plant developer, but it appears to me that NRG thought they could make money when they were doing the permitting but has not yet decided to commence construction so they are not sure they can make money re-powering its turbines. Only time will tell whether that economic decision will change when this regulation is implemented.
Eastern Power Generation owns the Gowanus and Narrows turbine facilities. They have proposed to re-power Gowanus and retire Narrows at the formal start of their permitting process so they are navigating the process. In addition to emission reductions, their proposal will reduce the peak amount of power that can be generated. Given that their permitting program is proceeding they must believe they can make money once the facility is built.
To recap, DEC has proposed a regulation to phase out older peaking turbines because of their high emissions that affect ozone concentrations. The phase out is complicated by the need to insure peaking power is available but two owners have expressed interest in developing replacement power plants to meet that need. So on the face of it all looks good. If only it were this simple.
New York State Announcement
The only official announcement of this rule was from the New York State Energy Research and Development Authority (NYSERDA).
Governor Andrew M. Cuomo today announced that the New York State Department of Environmental Conservation released proposed regulations to improve air quality and protect public health with new, stringent requirements on peak-use power plants. The proposal will substantially reduce emissions from the “peaking” power plants operating on the hottest days with the most air pollution. These dirty, inefficient plants, are also major sources of carbon pollution. Transitioning away from them is a critical component of achieving Governor Cuomo’s nation-leading Green New Deal. These regulations will help to reduce greenhouse gas emissions 40 percent by 2030 and shift to 100% clean electricity by 2040.
“Climate change is a frightening reality, and while the federal administration buries its head in the sand, New York is taking action to protect our environment and the health of our residents,” Governor Cuomo said. “These proposed regulations are a critical step toward getting older, dirty power plants off the grid in the state’s most vulnerable areas, and demonstrates New York’s leadership in developing a clean energy economy and healthier communities for generations to come.”
There are several odd things about this announcement. Firstly, it did not come from the agency responsible for the rule. I am not sure why DEC would not have made it. The press release correctly notes that it will substantially reduce emissions from peaking power plants. However it states that these units are “also major source of carbon pollution”. Then it goes on to state that this is a critical component for the greenhouse gas emissions goals. The comment about “getting older, dirty power plants off the grid in the state’s most vulnerable areas” is an apparent sop to the environmental justice community. The bottom line is that we have gone from an air quality issue complicated by de-regulation to a “critical” component of Governor Cuomo’s Green New Deal and all the political pandering that entails. I address these points relative to the real world below.
Cuomo’s announcement says that these sources are a major source of carbon pollution. The four peaking turbine facilities I am focusing on in this post emitted 79,385 tons of CO2 in 2017. Other RGGI affected sources in New York emitted 26,064,607 tons of CO2 in 2017. I do not agree that 0.32% of the electric sector emissions is significant. The claim that these turbines are a major source of carbon pollution is absurd.
Cuomo also claims that this is a critical component of the needed reductions for his goals. The NYSERDA Greenhouse Gas Inventory 1990-2015 contains an inventory of historical greenhouse gas emission data from 1990-2015 for New York State’s energy and non-energy sectors. It shows that in 2015 the electric sector was responsible for 16.3% of the state’s emissions. The percentage of these peaking turbines to total electric sector emissions is only 0.043%. One of the Cuomo goals is to reduce total NYS emissions 80% from 1990 levels. In 1990 CO2 emissions in New York State totaled 185,719,081 tons so the goal will be to get down to 37,143,816 tons. In 2015, CO2 emissions were 164,726,801 tons so the State “only” has to reduce another 127,582,985 tons. If the state is to meet the 2050 goal, then reductions of 3,645,228 tons per year are necessary. In other words the peaking turbines “critical” component (79,385 tons) is 2.2% of the reduction needed for one year which is, again, absurd.
My concern is with the energy policy implications. The announcement also quotes Cuomo as saying “These proposed regulations are a critical step toward getting older, dirty power plants off the grid in the state’s most vulnerable areas”. While these plants are indisputably old and dirty the energy policy question is whether they can be replaced by markedly cleaner fossil. Cuomo was badgered into “committing” to no new natural gas plants in May 2018. In February 2018 the Administration forced the New York Power Authority to do additional studies of the proposed Empire State Plaza Microgrid and Combined Heat and Power Plant project in Albany because the power plant was going to be powered by natural gas in response to local pressure to not use natural gas. I am not sure what the Administration position is on natural gas units for his Green New Deal. Additionally note that the New York City Council Climate Mobilization Act proposed regulation requires the city to complete a study over the next two years on the feasibility of closing all 24 oil- and gas-burning power plants in city limits and replacing them with renewables and batteries. Ultimately the question is whether the environmental agenda for absolutely no more natural gas infrastructure will derail the proposals for new power plants.
The air quality issue is whether these climate related energy agenda policies will affect the schedule for the replacement of these power plants. One last time, I am no economist or power plant development investor but it seems to me that these are not policies that encourage the proposed re-powering projects. On the other hand I have done enough energy research to determine that replacing dispatchable peaking power with renewables and enough energy storage to guarantee power is available for the peak needs given New York City constraints is a technological reach and a money pit. I fear that the politicians are going to delay what I believe what will ultimately be determined as necessary re-powering projects.
While many stories I have read about the proposed regulation to retire these peaking turbines as a component of Cuomo’s clean energy initiatives that is not the case. The New York City peaking turbines need to be replaced as part of the process of ozone attainment. They are dirty and inefficient but most of all they are approaching 50 years old and may fail when needed most. Proposals have been made to replace existing units with modern, efficient and markedly cleaner units. Unfortunately the energy innumerate claim that they can be replaced with renewables but the reality is that that is a technological stretch. The real story is that Cuomo’s energy initiatives will likely delay replacing these units or putting the City at risk of another black out banking on an untried and technologically challenging renewable and storage plan.