Energizing New York’s Economy

Most everyone can agree that electricity is the lifeblood of our economy. Without it, nothing runs, nothing gets manufactured, and our health and safety are at risk. 

A quick look across the energy landscape shows we’re in a period of exciting innovation. How people think about and use electricity is changing as quickly as the technology that generates and delivers it. Here in New York, the New York Independent System Operator (NYISO) is at the heart of those changes: meeting consumers’ power needs, addressing public policy goals, and sustaining electricity’s fundamental contributions to economic vitality. 

As great as these recent changes have been, new challenges are emerging. Reliability needs of the electric system are growing increasingly complex. For example, while year-over-year growth in electricity usage is expected to flatten or decline through the next decade, the proliferation of renewables like solar and wind and other distributed energy resources will impact how we run and manage the grid.

This brings to light the reality of the aging transmission facilities that serve as the backbone of the grid. New York needs to invest in new transmission to meet the goals of a cleaner energy future and integrate renewable power from water, wind, and the sun.

New York’s proposed Clean Energy Standard will mandate that half of all electricity consumed in the state by 2030 come from clean and renewable-energy sources. But because New York has a geographic imbalance between where electricity is generated and where it is used, an upgraded and expanded transmission system is needed to efficiently move green power to high-demand regions of the state.

Two-thirds of New York’s electricity is used in Long Island, New York City, and the Lower Hudson Valley. However, most of our power is generated in the northern, central, and western regions of the state. What’s more, New York’s renewable energy opportunities are in those same upstate regions, as well as beyond our borders in Canada.

We estimate that expanding transmission capability by 2,000 megawatts would enable a 50 percent increase in power from wind and water resources. This could reduce annual carbon-dioxide emissions by 8 million tons — the equivalent of taking 1.5 million vehicles off the road annually.

Beyond the potential environmental benefits, New York must upgrade its aging infrastructure to sustain reliability and bolster market efficiency. More than 80 percent of New York’s high-voltage transmission lines went into service before 1980. Of the state’s approximately 11,000 circuit-miles of transmission lines, nearly 4,700 circuit-miles will require replacement within the next 30 years. 

Changing trends in power generation also require our attention. Natural gas is expected to surpass coal as the nation’s primary fuel source for electricity in 2016. In New York, natural gas already fuels the largest portion of our generating fleet, and that share is growing due in large part to low natural-gas prices. Those low fuel costs helped drive New York’s 2015 wholesale electric energy prices to the lowest in the history of New York’s competitive markets. 

While lower costs are good for businesses and consumers, this trend magnifies concerns about resource adequacy and fuel-source diversity. As older fossil fuel and nuclear power plants near retirement or suspension, New York’s set of energy resources becomes less diverse. The emissions-free attributes of nuclear power and the fast-starting capability of gas-fired turbines offer value in the transition to the expansion of cleaner, greener power resources.

Finally, smaller generation technologies, including solar photovoltaics, create both challenges and opportunities. These projects must be properly integrated with the central grid to provide electric-system resilience. On this front, more change is coming. New York’s Reforming the Energy Vision (REV) program is identifying regulatory changes and market developments intended to facilitate a larger role for distributed energy resources in the Empire State.

At the NYISO, we’re working every day to address the challenges and opportunities created by this shifting paradigm. Our competitive markets have a proven track record of helping the power grid adapt to changes in technology, demand, fuel supply economics, and public policy while providing real value to consumers and our economy. 

Since opening in 1999, NYISO markets have saved consumers $7 billion through improved generation efficiency and lower reserve requirements, reduced carbon emissions by an amount equal to taking 4.8 million cars off the road, and integrated enough wind-powered generation to serve half-a-million homes. 

Change is constant — that’s clear. And New York is on the cutting edge of this new energy future. The state is adapting to these changes while achieving its goals of cleaner energy, improved efficiency and economic development. Continuing our commitment to competitive markets will maintain the Empire State’s legacy of leadership in energy.

Bradley C. Jones is president and CEO of the New York Independent System Operator (NYISO), a private, not-for-profit entity that operates New York’s high-voltage power grid and manages competitive wholesale electricity markets.