Environmental Justice campaign to replace New York City peaking power plants

Reposted from Dr. Judith Curry’s Climate Etc.

Posted on April 2, 2021 by curryja | 

by Roger Caiazza

Environmental justice organizations are currently a major driver of environmental regulation in New York. A new report “The Fossil Fuel End Game, A frontline vision to retire New York City’s peaker plants by 2030” illustrates the campaign strategy they are using to shut down peaking power plants in New York City.  Unfortunately their claims are based more on emotion than fact.

Background

In the spring of 2020 Physicians, Scientists, and Engineers (PSE) for Healthy Energy released a report Opportunities for Replacing Peaker Plants with Energy Storage in New York State.  The text for the New York specific report describes the alleged problem:

Across New York, 49 oil- and gas-fired peaker power plants and peaking units at larger plants help meet statewide peak electric demand.  These include both combustion turbines designed to ramp quickly to meet peak demand, and aging steam turbines now used infrequently to meet peak needs. More than a third of New York’s peaker plants burn primarily oil, and three-quarters are over 30 years old resulting in numerous inefficient plants with high rates of greenhouse gas and criteria pollutant emissions for every unit of electricity generated. Some of these plants are in very urban areas: ten plants have more than a million people living within three miles. One-third of the plants are located in areas the state considers to be environmental justice communities, where vulnerable populations typically already experience high levels of health and environmental burdens. New York has set energy storage targets and recently designed peaker plant emission reduction targets, providing an opportunity to replace inefficient, high-emitting peaker plants in vulnerable communities throughout the state with energy storage and solar.

These findings were picked up on by the New York City PEAK Coalition.  They released a report in June 2020 entitled: “Dirty Energy, Big Money”.  Most recently they followed up with The Fossil Fuel End Game, a frontline vision to retire New York City’s peaking power plants by 2030.  The campaign is succeeding because the New York Senate passed the Pollution Justice Act of 2021 on March 3, 2021 that mandates that the peaking power plants have to be retired consistent with these reports.

This campaign is deeply flawed from the get go.  The premise is wrong because peaking power plants are not inherently bad because they provide critical support to the electric system when needed most and that will be the focus of this post. The rationale is incorrect that these peaking power plants are directly affecting air quality in adjacent environmental justice neighborhoods because the health impacts are claimed from secondary pollutants that do not form before they are transported away from the neighborhood.  Replacing all the peaking plants in the time frame as suggested is extremely risky because the technology available today is not up to the task.

In this post I am going to concentrate on the reason for peaking power plants rather than the holes in the environmental arguments against them.  For more information on those aspects, I refer readers to posts on my blog.   The first post on the Peak Coalition report provided information on the primary air quality problem associated with these facilities, the organizations behind the report, the State’s response to date, the underlying issue of environmental justice and addressed the motivation for the analysis.  The second post addressed the rationale and feasibility of the proposed plan relative to environmental effects, affordability, and reliability.  I also discussed the original report Opportunities for Replacing Peaker Plants with Energy Storage in New York State document that provided technical information used by the PEAK Coalition.  I  summarized all three of these technical posts in simpler fashion.  I looked at the trends of inhalable particulates in New York City relative to the claims of a dire health threat.  Finally, I recently wrote a post on the Pollution Justice Act.

New York has implemented rules to replace the old, inefficient and dirty combustion turbines that are a real problem.  I believe it is more appropriate to allow the load-serving entities, generators, and system operators to consider alternatives and implement proven solutions that are cost-effective and enhance rather than risk reliability with new alternatives until those alternatives have been fully vetted.

Blackouts and Peaking Power Plants

There is a long history of blackouts in New York City (NYC).  After a blackout in July 2019 AMNY published a brief history of blackouts in New York City.  In 1959 and 1961 surges in electrical use caused blackouts and “The outage spurred changes to better protect the city’s power grid from future blackouts”.  The 1965 blackout was the first regional blackout and was caused by a transmission problem in Ontario causing a wave of disruptions in the transmission system.  Over 30 million people and 80,000 square miles in Ontario, New York, Connecticut, Massachusetts, New Hampshire, New Jersey, Pennsylvania, Rhode Island, and Vermont were left without power for up to 13 hours. As part of the response to that event New York set up a power pool to manage electricity generation and transmission. 

The over-arching issue for electricity reliability in New York City is geography.  Most of New York City is on islands so there is a natural load pocket.  There was another blackout in 1977 that was limited to NYC directly related to the load pocket.  It was caused by storms cutting off transmission into the City and in-City generation being unable to replace the load.  Without sufficient local power, protective devices turn off overloaded lines and transformers to prevent physical damage to the equipment and this led to the outages.  As a result of this blackout, reliability constraints were implemented to ensure that when storms threaten transmission into the City that sufficient in-City generation is available to prevent a re-occurrence.  In 2003 there was another regional blackout caused by a computer software problem.  Grid operators identified the cause and then developed procedures to prevent it from happening again.  In 2012 tropical storm Sandy caused massive blackouts exacerbated by flood protection weaknesses.  Since then, there have been massive investments to strengthen the infrastructure to prevent a reoccurrence. Note that after every blackout the electric system owners and operators have developed strategies to prevent a reoccurrence.

The New York State Reliability Council is an independent entity “whose mission is to promote and preserve the reliability of electric service on the New York State Power System by developing, maintaining, and, from time-to-time, updating the Reliability Rules which shall be complied with by the New York Independent System Operator (“NYISO”) and all entities engaging in electric transmission, ancillary services, energy and power transactions on the New York State Power System”.   Among their rules that govern reliability are those that address the strategies developed after these blackouts. It turns out that that New York City’s peaking power plants are part of those strategies and are needed to provide additional in-City generation within short periods of time. 

Releasing the report less than a month since the Texas energy debacle should give pause to the organizers of this campaign to consider the ramifications of what happened there to New York reliability requirements.  While there have been reports that dozens of deaths are tied to the storm in Texas, experts say the death toll is likely far larger. Just how many won’t be known for weeks or months.  The blackouts cost the state economy upward of $130 billion in damages and losses, and some people who did have power saw their bills spike by thousands of dollars. Grid operators say that the situation could actually have been a lot worse, with the system minutes away from a months long blackout. 

Clearly the history of blackouts shows that they pose an enormous risk that should be avoided if possible.

Fossil Fuel End Game Report

The report claims to be the “first detailed strategic and policy road map to retire and replace an entire city’s fossil-fuel peaker power plants”. It lays out a community-led strategy to replace about half of New York City’s existing fleet of polluting peaker plants with a combination of offshore wind, distributed solar, energy efficiency, and battery storage by 2025. They claim that the remaining peaker plants could be reliably and cost-effectively replaced with this mix of resources by 2030.

In order to evaluate their alternatives, we need to understand how they think peaking plants are used. The report points out that:

“Electricity from peaker plants is the most expensive energy resource in the system as it comes from centrally-located assets that are used infrequently but must be paid for and maintained to allow availability at times of peak demand. Central location, low utilization and the need for technologies that provide flexibility drive the costs of generation way above those from other energy assets.  For this reason, peaker owners charge for the electricity they produce, and more importantly, also charge for the availability of their resources during system peaks. Such availability is paid through the capacity market, designed to ensure that the system has enough capacity to provide energy during the times of highest energy demand. While NYC is not the only region with a capacity market, it has some of the highest capacity prices in the country. When capacity costs are averaged over the hours of operation, peaker electricity in New York City is up to 1,300% more expensive than the average cost of electricity in the rest of the state.”

It is frustrating to me that the authors don’t recognize the value of assets that provide power when it is needed most.  It is also telling that Texas does not have a capacity market.  In order to ensure power is available whenever it is needed ratepayers have to cover the costs for that availability.  In that light the relatively low costs of Texas electricity do not appear to be such a good deal now.

The report goes on:

Another factor that makes peaker energy more expensive than average is operational inefficiency caused by technological limitations and distribution constraints. For example, there are costs associated with turning on and off certain generating assets that lead plant managers to run them at uneconomic times, driving up consumer costs and increasing local emissions. From a market perspective, peakers are also called to run uneconomically to ensure local reliability. According to the state’s Market Monitor, Potomac Economics, supplemental commitment of NYC’s peakers occurs frequently to increase the amount of supply available in real-time for local load pocket reliability.  Those requirements ensure that there are enough resources to meet load in case of a problem such as the loss of the two largest Bulk Power System elements supporting a particular load pocket, for example, the loss of multiple central generators due to contingencies in the natural gas system. This supplemental commitment tends to undermine market incentives for efficiently meeting reliability requirements and often uplifts market prices, which are eventually passed on to customers. Some of these costs could be alleviated through market reforms or through deployment of modern inverter-based resources like locally-sited battery storage which could provide valuable operating reserves in these load pockets. In 2019, NYC accounted for 87 percent of the State’s total reliability commitment.

These factors are outside my area of expertise but it is my understanding that many of these issues are legacies from the switch from a regulated, vertically integrated utility to New York’s de-regulated market.  Consolidated Edison designed the generation, transmission, and distribution system when they were responsible for all three aspects of the system.  When the market was de-regulated ownership of these assets was not necessarily chosen to ensure operational efficiency.  Anecdotally I have heard from colleagues that it is not clear how these units are dispatched so I suspect at least some of these criticisms have merit.

The report acknowledges that “peakers play an important role in supporting reliable electric service for New Yorkers” and points out that some of them also “produce steam that feeds the city’s “district heating” system, providing heat and cooling to many buildings in Manhattan”.  However, the report offers no recommendations how the steam system would be replaced with their recommended technology.

The analysis evaluates historical data to develop a replacement plan: “More specifically, the peaker fleet was analyzed on a unit-by-unit, hourly basis using historic generation profiles as reported to the EPA for the years 2017, 2018 and 2019”.  Therein lies the a problem.  They argue that over those three years the full capacity of the fleet of peakers in New York City has not been required to meet peaking needs in NYC but because New York’s reliability rules are based on loss of load expectation over ten years their time frame is too short.

They also argue that “In 2018, the year with the most challenging peak, only 4,790 MW out of 6,200 MW (or about 77% of total peaking capacity) was ever used simultaneously. Moreover, more than half of the peaker fleet is rarely used simultaneously, in fact, this only happened during 44 hours of the year (0.5% of the time) and in very short event durations.”  They also analyze operating characteristics. “An analysis of the peaker starts and run duration showed that many of the peakers run for relatively short durations that could be served by energy storage at competitive costs”.  As mentioned before, the short duration of their evaluation period makes these findings weak.  The short-comings of the NYC transmission and distribution system also affect peaker operations and further reduce the credibility of these findings.

The consultant who did the work, Strategen, “used a 90th percentile approach on duration to determine the replacement needs of NYC fossil assets while taking in consideration five factors that would otherwise overestimate the reliability value of peakers in a traditional “longest peaker runtime” approach. These include 1) peaker unit dispatch versus available zone level capacity, 2) peaker unit dispatch versus plant level capacity, 3) peaker unit dispatch for localized non-peaking needs, 3) inconsistent levels of peaker output during longer-runtimes, and 5) unit operational constraints.” There is no question in my mind that this approach under estimates the worst case.  For heaven’s sakes they are saying don’t worry about what happens ten percent of the time at the same time they are addressing peaking units that run less than 5% of the time.

“Assuming a 90-percentile approach on unit duration to account for system characteristics and its reliability needs”, Stategen determined that “28 units with 765 MW of installed capacity have maximum durations of four hours or less, making them attractive candidates for replacement with storage even in a 1-to-1 basis”.  The proposed solution is replacement with energy storage that has a cap on how long power can be provided so it is less flexible, does not consider that energy storage discharge capacities are not 100%, and overlooks life expectancy of batteries two or three times less compared to a fossil generator.  There are 52 other peaking turbines that ran for longer durations which only exacerbates the limitations.  Finally, they propose to replace nine large steam units, accounting for 3,882 MW or 64% of the total fleet capacity. These units “have maximum dispatch durations that go from 80 to 1,500 hours but are also the perfect example of over-dispatch driven by technology constraints”.  Those facilities certainly would not be purpose-built for their present role but they provide dispatchable, in-city power from small foot print facilities and can produce firm dispatchable power for very long periods. 

Clean Energy Vision

According to the report’s overview: “The report lays out a plan for New York City focused on local, distributed solutions. This decentralized approach creates a more resilient power system than the current grid, which depends on centralized fossil-fuel power plants.”  The “Clean Energy Vision for New York City” depends on four resources: offshore wind, community and residential solar, energy efficiency and energy storage.  I will address each below.

Despite the fact that there hasn’t been any offshore wind development so far, the vision counts on this resource and expects that it can be developed faster than proposed.  New York State has a goal to develop 9 GW of offshore wind by 2035.  I have not seen whether this resource will be considered “in-city”.  If not and I would argue that it isn’t, then this is a non-starter.  Because the State has only approved four projects and needs to develop infrastructure to support building those projects, I suspect that development will take longer than proposed.

The report recognizes that there are inherent difficulties siting solar in NYC: “New York City is afflicted with many of the canonical challenges that inhibit rooftop solar development including challenging local regulation, shared rooftop space, a significant population that rents, and aging buildings and electrical infrastructure”.   Because they claim there is a lot of value in having it, they blithely assume that the obstacles can be overcome and assume that 5.4 GW of solar can be developed in NYC.

The analysis relies on energy efficiency to markedly reduce energy use in order to reduce the energy needed during peak periods.  There is a complicating factor that I don’t think they address.  New York’s climate legislation mandates electrification of everything to meet its 2050 zero-emissions goal.  As a result, heating and transportation will have to be electrified and all analysts agree that means that the annual peak load will shift from the summer when solar can provide meaningful power to winter when it cannot. 

The biggest problem I have is with their analysis of energy storage.  They used a linear energy dispatch model to determine how much storage is needed to replace peaker plant generation for their plan.  In their methodology “Energy storage was modeled to provide energy arbitrage services, that is, storing clean energy when it is produced but not used, and discharging it into the grid at times of need.”   Aside from the practical matter that the quantity of energy storage requires significant space which could be an issue in the crowded city there are other concerns.  They only used a single year for the analysis and there is no suggestion that discharge capacity limits were considered.  The analysis does not recognize that in order to replace fossil peakers two types of energy storage are needed.  Longer-duration storage needs to cover, for example, night time for solar resources.  That appears to be the storage addressed.  However, fossil-fired combustion turbines used for peaking operate at fixed loads but solar resources, for example vary if it is a partly cloudy day.  Therefore, energy resources are needed for this short-term variation.  But that’s not all.  Fossil units also provide ancillary services such as frequency control.  The point is that they did not calculate how much energy storage has to be allocated for these other services.

There is another flaw in this approach.  They looked at the characteristics of energy load and how peaking units provided that energy and proposed a solution based on off-shore wind and solar resources assuming that those resources would be available.  I have argued that one of the biggest shortcomings in New York’s implementation process is that have not yet done an evaluation of the availability of wind and solar at the same time over a long period.  To date the primary planning problem has always been the peak load but it is conceivable that the bigger problem for a future grid reliant upon wind and solar will be low coincidental resource availability.  However, because the peak loads are associated with the coldest and hottest weather and those periods are associated with high pressure system with light winds, it is likely that low renewable resource availability will be worst when it is needed most.  In any event, the Strategen analysis did not consider resource availability at all.

Conclusion

Even though there are other shortcomings in the analysis, this post is too long so I will wrap it up.  At this time, environmental justice organization are conducting a well-orchestrated effort to replace peaking power plants in New York City.  New York energy and environmental policy initiatives are catering to these organizations and the New York Senate has even passed a law codifying the approach proposed.   I suspect that this approach will become evident on the national level soon.

There are many inherent advantages to fossil-fired power plants.   In the New York City context, they provide reliable power when needed from relatively small footprints and are a key component to the reliability standards developed from hard experience.  Unfortunately, the arguments to replace them are based more on emotion than fact and seem to be driven by the urge to eliminate one over hyped risk while ignoring the unintended consequences of their solutions which may create other risks that could cause bigger problems.  

In my opinion, it is particularly troubling that the problem of peaking power plants has already being addressed.  Last summer New York promulgated rules to replace the old, inefficient and dirty combustion turbines that are a real problem.  This study and others expand the definition of peaking power plants to other units that cannot be replaced easily.  I think that the organizations behind this report are unwilling to accept any perceived risks from new efficient and clean fossil generating plants partially based on the naïve belief that renewable solutions are only a matter of political will.  Given that political policy decisions played a hand in the recent Texas energy debacle, I think that is a dangerous path to take.

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Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.