New York Goes Full Central Planning for The Electricity Sector

From the MANHATTAN CONTRARIAN

Francis Menton

Here in New York State, we have an electricity system that, as of this moment, is functioning just fine. Granted, we pay more for the electricity than we should — probably in the range of 50% or more extra — mainly because we have banned the exploitation of our own abundant natural gas resources from the Marcellus and Utica shale formations in the upstate areas. And granted also that we just in 2020 and 2021 closed the two big nuclear reactors at Indian Point, about 40 miles north of New York City, which had supplied more than 25% of the City’s power. (We immediately replaced those nuclear plants with two brand new natural gas power plants of almost equivalent capacity, and with those additions the current system continues to work with a high degree of reliability. Building those new gas plants was our last rational act before peak environmental insanity kicked in.)

It is not news that our existing, functional electricity system grievously offends the sensibilities of environmental activists, particularly due to its high reliance on natural gas to generate the power. By our Climate Change and Community Protection Act of 2019 (Climate Act), the legislature has decreed that we are to have a rapid transition to “net zero” carbon emissions, first in the electricity sector, and then for the entire economy. No feasibility study or demonstration project for us! The only option is Full Speed Ahead, without a clue as to whether this will work or not.

The free markets have figured out that natural gas is the current low-cost way to make incremental electricity; thus, the energy transition does not budge without government command and massive subsidies. That will not stop us. Forget what the markets are clearly telling us. It’s time for the markets to take their orders from the politicians and the bureaucrats. We will go Full Central Planning. Has that ever proved to be a problem anywhere in the past? Not that anyone here seems to recognize.

As previously discussed in this post of December 29, 2021, the Climate Act ordered up a Climate Action Council, and directed said Council to produce a Scoping Plan to show us the path forward to net zero utopia. The Council was stacked with environmental activists and sorely lacking in anyone with expertise in how the energy system actually works. A Scoping Plan was duly produced— more than 300 pages of text and another 400+ of appendices. In that December 2021 post I characterized the Scoping Plan (then in near-final draft form) as “preposterous” and “amateurish,” essentially taking the approach of ordering up the end result and directing the little people to figure out the engineering details. Sample quote: “The authors are like a parody version of King Canute, who actually believe that when they order the tide to stop rising, it will obey.”

More recently, it has been brought to my attention that other documents exist supposedly giving more detail as to how New York is going to accomplish the net zero transition. First, daughter (and MC contributor) Jane participated in a conference call among board members of Queens co-ops, attended by Donovan Richards, the Queens Borough President. The purpose of the call was to present concerns about whether the grid would be adequate to support the change to electric heat that is being forced on the co-ops by a New York City statute. According to Jane, Richards and his staff pooh-poohed the idea that grid adequacy might pose any problem. To allay any concerns, they referred Jane and her co-board members to a January 2022 Report issued by the electric utility Con Edison, with the title “An Integrated View of Our Energy System through 2050.”

Separately, reader Bill Ponton refers me to another Report, this one put out in January 2021 by the New York Public Service Commission and the NYS Energy Research and Development Authority, with the title “Initial Report on the Power Grid Study.” (At that link there is a further link where you can download a pdf of the full Report.)

Let me start with a few thoughts on the Con Edison Report. It is lots of verbiage and plenty of charts and graphs. And it is more or less exactly what you would expect if you think for say, one minute, about what position Con Edison might take. As a deeply regulated entity, they are completely required to affirm the directives and applaud the wisdom of their government overlords. But more than that, they are clearly salivating over the prospect of getting to make billions of dollars of new investments, all of which will earn a guaranteed, regulated rate of return for their investors — and if we are really, really lucky, the end result will be that we get the exact same electricity for much higher cost. If we aren’t so lucky, we will get much less reliable electricity for the much higher cost. The cost factor is played down throughout the Report, and we never get any meaningful quantification.

But all the verbiage and charts and graphs mainly have the purpose of obscuring the fact that Con Ed does not take responsibility for making sure that there is enough electricity availability to supply customer demand on the grid. That’s somebody else’s job.

To set the tone, here is a quote from page 1:

[W]e are committed to being the next-generation, clean energy company that our customers deserve and expect. We will play a critical role in delivering on the ambitious climate and clean energy goals set by New York State and New York City, including reaching net-zero greenhouse gas (GHG) emissions by 2050. In addition, the need for safe, reliable, and secure energy infrastructure remains paramount.

OK, where in there did you say that you take responsibility for there being enough electricity to meet demand?

Cost barely gets mentioned in the introductory section. It finally turns up in the last paragraph. Here’s how they spin it:

We recognize this transition to a net-zero GHG emissions energy system will require significant investment. We seek to make investments that achieve the goals of this transition as cost- effectively as possible, which necessitates growing our electric system while maintaining our gas and steam systems to achieve clean energy goals.

In other words, whoo-boy is there a lot of money for us to make here!

But how about the question of who is going to supply the electricity? Buried in a section on “Our History” (page 9), we find this:

We primarily own transmission and distribution assets and no generation aside from our steam co-generation.

Oh, right, Con Ed got out of the generation business over the course of the past several decades. Somebody else will be building all of those new wind turbines and solar panels. Or maybe they won’t. Not our business. On page 3 we get a table of all of the fantastic new renewable generation to come:

• Up to 41 GW of utility scale solar generation from across New York State
• Up to 19.4 GW of offshore wind from the Atlantic Ocean
• Up to 13.8 GW of onshore wind from upstate New York
• 3.5 GW of renewable hydropower from Canada

And how much of that do you take responsibility for?

We have developed plans to build the necessary electric transmission and distribution infrastructure by 2050 to . . . [I]nterconnect and balance new renewable generation from [these new renewable generators].

In other words, it’s not our job to actually build the things, let alone decide how many of them to build or where. Our job is “interconnection” and “balance.” Providing the actual generation capacity is the job of the Central Planners — people with no profit motive and whose jobs are not on the line if the whole thing turns out not to work. Are they doing the job? No comment.

And how about the trillions of dollars worth of energy storage that will be needed when the sun doesn’t shine and the wind doesn’t blow? See if you can decode this word salad:

We have developed plans to build the necessary electric transmission and distribution infrastructure by 2050 to . . . [d]evelop and facilitate up to 12.6 GW of energy storage through direct utility investments and customer programs at customer and utility scales.

Where even to start? “12.6 GW” of storage? They don’t even know the correct units to discuss this issue. If these are four-hour duration lithium ion batteries (unspecified, but what else could they be talking about?), that will give you 50.4 GWh of storage — enough to cover New York State for a couple of hours at most of low sun and wind. Competent calculations indicate a storage requirement of more like 20 to 30 days of storage to deal with the seasonality of the sun and wind. So this is at best a small fraction of one percent of what will be needed to back up the solar/wind grid of the future.

But what does Con Ed care? They’re not actually saying here that they are taking responsibility for making the new system work, let alone even providing the batteries themselves. They’re only saying that they have “developed plans” to “facilitate” the storage, which could occur either through “utility investments” or “customer programs.” In other words, I guess, hey sucker, use your electric car battery to power the house when the grid goes down.

Yes, this is what the Borough President of Queens is offering up to reassure his constituents that they have nothing to worry about as our government simultaneously shuts down all electricity generation that works and compels them to go all electric to heat their homes.

In the next post I’ll offer some observations from Bill Ponton on the NYSERDA grid study.