.by Roger Caiazza
The excellent series of posts on energy planning by Planning Engineer and Rud Istavan, a similar series at the Science of Doom and a recent post by Peter Lang all outline the difficulties implementing renewable energy and other components of the so-called energy system of the future.
This post describes a potential collision of this renewable energy future with the reality of today’s often competing interests. Specifically, this post will describe a looming issue with New York State energy policy and environmental regulations that will bear watching in the next few years.
New York State is proposing to change how electricity is generated, distributed, managed and consumed in its Reforming the Energy Initiative (REV). According to the website summary:
“New York is actively spurring clean energy innovation, bringing new investments into the State and improving consumer choice and affordability. The REV initiative will lead to regulatory changes that promote more efficient use of energy, deeper penetration of renewable energy resources such as wind and solar, wider deployment of “distributed” energy resources, such as micro grids, roof-top solar and other on-site power supplies, and storage. It will also promote markets to achieve greater use of advanced energy management products to enhance demand elasticity and efficiencies. These changes, in turn, will empower customers by allowing them more choice in how they manage and consume electric energy.” Recently Governor Cuomo directed the Department of Public Service to start implementing a Clean Energy Standard to meet “the State’s long term goal to provide 50% of its electricity from renewable resources by 2030. In other words this is pretty much the approach that renewable advocates have been proposing.
An interview with New York’s ‘energy czar’ Richard Kauffman [link] provides further context:
“We recognized that business as usual is bad public policy,” explains Richard Kauffman, who is leading the effort as the chairman of energy and finance for New York State.
New York saw REV as an opportunity to make the most of clean energy’s economic and environmental potential. Without some big changes, the power industry was headed for trouble in the form of rising utility bills and growing customer dissatisfaction. Policymakers feared the emergence of a socially unjust clean energy economy, one made up of haves-and-have-nots.
“It requires a change in culture and business model for the whole system,” Kauffman says.
REV moves the electric industry away from a monopoly, top-down and incentive driven system to one that is governed by the market and emphasizes distributed energy.
One of the most interesting changes is a new job created for utilities. They will run a distributed system platform, a kind of market exchange, where microgrids, solar, energy efficiency and other distributed energy resources will compete to serve the grid.
“The polices being undertaken are pro-consumer, pro-innovation, markets-based. And they have as an effect, a system which over time will become more affordable and resilient and more valuable to customers. And it will also be cleaner,” Kauffman says.
Under REV, utilities won’t own distributed energy (except under rare circumstances.) They will instead achieve their capital efficiencies – and earn profit — in the management of the distributed system platform. The utilities might, for example, achieve capital efficiencies by encouraging more distributed energy, demand response or energy efficiency in areas where the grid is congested.
My particular expertise is the regulatory interface of environmental regulations on the operation of electric generating units. I believe that implementing new EPA initiatives to control ozone will bring some shortcomings of these energy initiatives to a head in unanticipated ways sooner than many expect.
In particular, the control of Nitrogen Oxides (NOx) to reduce ozone pollution is going to require changes to the electric generating sector that are at odds with implementation of the energy policies. On October 1, 2015, EPA lowered the National Ambient Air Quality Standards (NAAQS) for ground-level ozone to 70 parts per billion (ppb) from 75 ppb. On November 16, 2015, EPA proposed an update to the Cross-State Air Pollution Rule (CSAPR) to address interstate transport of air pollution under the 2008 ozone NAAQS. The CSAPR update revises the rule to address interstate transport for the ozone standard and requires 25 states including New York to adjust their 2017 Ozone Season allowance limits for NOx. The bottom line is that these initiatives will require further NOx reductions from NY Electric Generating Units (EGUs).
However there are implementation issues. In its proposal to further reduce New York emissions, EPA did not recognize that New York has already implemented its own regulations that reduced EGU emissions 67% since 2005. More importantly, because of the reductions implemented for existing NY programs there simply are no cost-effective reductions available to realistically meet the proposed CSAPR EPA budget. If you want to look at my projection for emissions and operations in New York for the CSAPR rule, go to regulations.gov and search for EPA-HQ-OAR-2015-0500-0322 in the docket.
However, the CSAPR problem pales relative to meeting the lower ozone standard problem. I believe that meeting this limit will require actions that directly contradict the plan for the reformed energy electric system in New York. Peak ozone is an episodic problem with the highest concentrations observed during high energy demand periods. The hazy, hot and humid heat waves when everyone wants to run their air conditioners are the periods of high ozone. Therefore, controlling units that only operate during those peak demand periods will be necessary to meet the new standard.
In particular, NY state environmental regulators have indicated that they think that the 82 simple cycle combustion turbines at four different facilities used for peaking power in New York City cannot continue to operate as they do now and plans have to be developed for their retirement and replacement. Those units are so old that it is very unlikely that cost-effective add-on controls can be implemented. At the same time REV claims that it will reduce the cost of power during high energy demand periods by shaving the peak demand and which will reduce the price paid to generators during those periods. Unfortunately high prices in peak periods is the current business model for viable peaking generation. If you don’t pay them for that service how will they survive absent direct subsidy?
In order to understand the New York problem, consider July 19, 2013 when an all-time record for state-side energy demand was set. New York City is a general load pocket and within the city there also are smaller embedded load pockets so in-city generation is necessary during these high energy demand days. The Astoria (504.2 MW summer capability), Gowanus (550.3 MW), Narrows (283.4 MW) and Ravenswood (289.2 MW) combustion turbine facilities are located within the city and only provide energy to in-City sources. On July 19, 2013 the capacity of those turbines was 48% of their maximum capability and they produced 18,874 MWh of gross load.
We have to see numbers to determine if the claim that REV could replace peaking turbines is reasonable. In general the claim is that renewables or distributed generation is going to “solve” the problem that prices are high during peaking periods and that is unfair to consumers. First consider solar photo-voltaic power. Assuming 0.75 kWH per day per square yard, then 8.1 square miles of solar photovoltaics would be needed to cover the 18,874 MWh load demand which is not something that can be done within the City. What about wind energy? On the peak hour (5 PM) the peaking turbines were at 83% of full capacity generating or 1,354 MW. According to the NYISO “more than 1,000 megawatts was generated on July 19, 2013” which means that the entire current wind energy capability of New York State would not have provided enough power for the peak hour. Moreover, neither of these gross estimates considers whether either intermittent resource could match the load shape.
Now consider distributed generation. The Berkeley Lab describes examples of microgrid distributed generation. In order for the following microgrids included in that summary to provide enough power for the peak hour, it would require the following: 1,297 Mesa del Sol systems (mixed commercial-residential microgrid in Albuquerque, NM), 192 Santa Rita systems (Jail on 0.5 km2 site in Dublin, CA), 640 Sendai systems (Microgrid supplying the teaching hospital of Tohuku Fukushi University in Japan), or 36 New York University systems (On-site power and Combined Heat and Power for the NYU campus).
Clearly REV plans to use all these different generating types and reduce power consumption through energy efficiency and conservation programs. However, these back-of-the envelope calculations suggest that New York should demonstrate how they anticipate their energy vision will address this particular issue. Clearly in-city renewable energy cannot solve this problem. Ultimately, if REV will in fact encourage renewable energy development, then the particular problem of getting this power to New York City must be addressed. As a result, the State should demonstrate how existing transmission constraints will be removed to allow more renewable power to be transmitted to replace in-city generation. Also it must be kept in mind that there are limitations on power transmission requiring in-city generation necessary to prevent a reoccurrence of the NYC blackout caused by the loss of transmission lines.
In my opinion, however, the ultimate unaddressed issue is how will REV incentivize investments in peaking turbines if that plan cannot replace the peaking turbine resource? What kind of business case can New York make to de-regulated generators to have them make the investments in New York City peaking generation given the REV goal to shave high energy demand prices? I can’t see how this will get resolved other than the State providing guaranteed contracts which ultimately re-regulates the market and sure as heck will cost NY consumers more because not only will we subsidize renewables and distributed generation but also the energy resources necessary to maintain reliable power.
This post is my personal opinion and not the Environmental Energy Alliance of New York (EEANY). In no way do they reflect the position of any of my employers, either present or past, nor do they reflect the position of EEANY member companies.
JC comment: As with all guest posts, please keep your comments civil and relevant.