Energy in the Empire State

New York state has ambitious climate goals, but has made next to no progress in meeting them.

New York State is the 3rd largest economy in the United States, the center of the US financial industry, and 7th largest energy generator in the country. The state, run by Democrats since 2006, has ambitious goals introduced by the Climate Leadership and Community Protection Act to reduce carbon emissions by 45% by 2030 and 85% by 2050 compared to 1990 levels. Furthermore, it aims to generate 70% of its electricity from carbon-free sources by 2030 and achieve 100% carbon-free electricity by 2040. Additionally, the state aims to shift millions of vehicles and homes from oil and gas to electricity consumption.

To reach these goals, New York plans to substantially increase the amount of renewable energy connected to the grid, transitioning from an energy mix dominated by natural gas to wind and solar energy. This transition is set to occur without constructing new nuclear power plants, as existing reactors are scheduled to be shut down. Achieving the 2040 target will necessitate adding over 90 gigawatts (GW) of intermittent renewable energy.

Despite New York's purported strong mandate to transform its energy mix, progress has been lacking. The transformation remains elusive five years after the previous governor announced the goals. New York's 2030 target of 70% emission-free energy appears reasonable, considering that hydroelectric, nuclear, and other renewables already constitute around half of the state's energy production. Achieving the 2030 target should be feasible, given that Texas has added over 30 GW of wind capacity since 2019 alone. However, New York has regressed, having only constructed 2.4 GW of capacity of all kinds in the last five years while deactivating 4.7 GW of capacity.

New York's slow transition to renewable energy has been deliberate. The Climate Leadership and Community Protection Act has opted to delegate the specifics of how, where, and when renewable energy projects will be developed to a 22-member committee, which has been gradually formulating a plan over the past five years. There is no urgency to finalize these details. However, the progress is further hindered by consultations with locals who oppose planned renewable energy projects, providers demanding subsidies the state refuses to pay, and environmental activists who adamantly oppose any dilution of the Climate Leadership and Community Protection Act. Despite bold claims of climate leadership, New York's approach has left it stagnant. 

Powering New York 

New York State first drafted a climate action plan in 2015. In 2016, New York's carbon emissions represented 3.52% of the country’s total. While New York's typical household emissions were only 67% of the national average in 2019, climate activist organizations such as NY Renewal and Environmental Advocacy NY had placed significant pressure on then-Gov Cuomo to go further in reducing emissions. After elections in 2018 in which the Democrats gained control of the New York Senate, in 2019, Gov. Cuomo announced changes to the 2015 plan to put New York at the forefront of “the most aggressive climate change program in the United States of America, period.” The plans don't just affect energy generation, which is around 15% of the state's total emissions, but also transportation, housing, and industrial emissions. 

The organization responsible for determining the future of New York’s energy mix and usage is the Climate Action Council, a 22-member body currently co-chaired by Doreen Harris, CEO of the New York State Energy Research and Development Authority and Basil Seggos, Commissioner, New York State Department of Environmental Conservation. The Council delivered its scoping report arriving in December 2023, four years after it was commissioned. In the 445-page report, only 20 are devoted to how New York will achieve its energy transition, with other topics, such as climate justice, receiving more attention. Like many public consultations, the amount of time consulting the public was enormous, with the council receiving over 35,000 separate public comments. The plan recommends a cap and invest program, setting an annual limit on the emissions each sector can emit annually. The limit will be gradually lowered, but there are no clear details on how these limits will be enforced or overseen. 

In 2022, New York generated 128 TWh of energy, with the state requiring some imported energy from Canada. The main supplier of New York's energy is natural gas. The state generates just shy of half (48.19%) of its energy from gas mainly imported from neighboring Pennsylvania, which has been one of many beneficiaries of the US liquid natural gas success story. Gas also plays an important role as the fuel in backup generators, known as “peaker” plants. These older and more polluting plants around New York City provide extra power only a few days a year when demand is highest. Although some providers have wanted to modernize these plants to make them less polluting (and run them for longer), the state has refused permission to upgrade them under significant pressure from local activists, and instead, these plants will close by 2025. This means New York faces a 440MW gap in capability as there are not enough transmission lines to move power generated in the north of the state to America’s largest city. 

Ravenswood Generating Station in Long Island City - a “peaker” plant.

Although New York has not built any gas power plants since 2012, it is extending the life of four plants to maintain grid reliability. Gas has remained vital as a dispatchable power source in places that have switched to a much more renewable-dependent grid. As New York is yet to make the transition, it remains to be seen how much the state will have to rely on its aging plants, but experience from Texas and the UK suggests it will not be able to fully decarbonize, even with substantial amounts of dispatchable hydroelectric power.  

Hydroelectric power is the second largest contributor to the grid, with 21.84% of the state's needs met by over 300 plants. The last major hydroelectric project was completed in 1973. Most of New York's 27.4 TWh of annual hydroelectric power is generated in the north of the state and must be transported to the south, where the main population resides. New York is in the process of building new transmission lines across the state to import hydroelectric power from Canada, but it is not planning any new hydroelectric power plants of its own. New York is not alone in avoiding major hydroelectric projects despite the power they generate being emission-free, partly due to the environmental damage of constructing one. The US has not built a major hydroelectric power station since the 1980s.  

Despite only three operational sites, nuclear energy provides 21.45% of New York’s power. The State has not built a nuclear power plant since 1988. Current climate plans make no mention of building more nuclear capacity despite the fact that nuclear power does not generate any carbon emissions and is a reliable supplier of dispatchable power. Under Gov Cuomo, the three-reactor Indian Point power station closed down, resulting in an increase in gas generation, the exact opposite of what New York climate plans desire. While capital costs for new nuclear power stations are especially high in the US, with the Vogtle plant in Georgia costing over $34 billion, small modular reactors designed to be cheaper and faster to build are entirely absent from discussions on New York's future energy mix.

Wind power is a small contributor to the grid, generating 3.66% of the state's energy needs. While existing Wind power installations are mainly located upstate, the Climate Leadership and Community Protection Act aims to generate 9 GW from offshore wind power by 2035. Unlike the United Kingdom, Denmark, and Germany, the US has virtually no significant offshore wind capacity. The Jones Act, a federal law requiring all goods transported between US ports to be entirely constructed, owned, and crewed within the US by US citizens, hinders the exploitation of offshore wind. As US shipbuilding capacity has shrunk and offshore wind turbines have mainly been developed by European companies using ships constructed in East Asia, there are next to no ships available to build offshore wind turbines. The Vineyard Wind 800 MW project built off the coast of Massachusetts did spur the construction of a specialized US-built vessel to assemble wind turbines to meet the Jones Act criteria, but offshore wind is constrained by too few of these vessels. 

New York's largest current offshore wind farm is a 132-MW project called South Fork. While the construction of the farm cost around $680 million, the cost of customers will pay for that energy is much higher. After years of legal battles fought by residents to find out how much the project costs, the Long Island Power Association claimed in 2017 that South Forks energy would cost $160 MWh. In 2022, the US Department of Energy estimated that the cost of offshore wind was on average $84. As offshore wind is still in its infancy in the US, costs may have been expected to be higher, but even these costs are made under levelized cost of energy (LCOE) estimates that are not suitable for estimating the long-term costs of intermittent energy. It is likely the costs will be far higher, especially as this project then required an additional $512 million in interconnection costs paid by ratepayers.

Although determining the precise price of any intermittent renewable is challenging, developers who have previously secured contracts to supply offshore wind believe that, at the rates they negotiated, wind power is significantly higher than what the Department of Energy believes. New York had negotiated 4.5 GW of its 9 GW offshore wind target to be delivered by 2035. In 2023, wind farm developer BP-Equinor sought to negotiate their contract with NYISO as the previously agreed prices were now unviable. New Yorkers were initially going to pay $107.50/MWh for Empire Wind 2, a 1,260 MW project. After accounting for inflation, interest rate rises, and a lack of workers, the partners were reportedly asking for an increase in the strike price to $177.84/MWh. New York refused to renegotiate the contract, leaving BP Euinor and Orsted-Eversource to cancel their contracts. 

Although pitched as a cheap and renewable power source, offshore wind currently appears to be an unrealistic option for New York. Although the state may try to subsidize offshore wind generation, it will not be doing this from a place of fiscal health. The state faces a $4.3 billion deficit in funds in 2023 that is expected to grow to over $7 billion in 2027 without any significant energy subsidies in place. Its offshore wind target may have to be modified, although the political cost for the incumbent Gov, Kathy Houchlen, may be galling. 

With hydroelectric power unappealing due to environmental damage, more nuclear power not even a part of the discussion, and offshore wind too expensive, the remaining renewable power sources available are solar power and biomass. Solar power in New York is mainly distributed solar - ie, panels on people's houses rather than concentrated in large solar farms operated by generators. This form of solar energy adds significant complexity to the grid because it often intermittently generates too much and too little. Despite falling solar costs, New York has no planned large-scale solar farms or significant battery storage facilities. As an intermittent renewable, claims of solar costs that are based on LCOE are unreliable. Any significant expansion of solar capacity would bring increased hidden costs and complexity. A deeper problem for New York is that its solar potential is quite low, especially in periods where electricity demand is high for heating during the winter. If New York did engage in large-scale solar expansion, it would still have to find power sources during the winter as battery technology is not yet nearly advanced enough to store months’ worth of electricity.  

Biomass is not currently a major contributor to New York's energy grid but is a potential option in the future of the state’s energy mix. Whether biomass, typically wood pellets burnt to power steam turbines, counts as a renewable energy source is currently a fierce debate. The EU Renewable Energy Directive counts it as a renewable source, while the European Academies Science Advisory Council advises that biomass should not count as a renewable energy source. Advocates of biomass claim it is renewable as the pellets are made from timber industry waste products, which are being replanted, and that this is carbon neutral because the trees have already processed carbon as they were growing. While this may be true on a small scale, mass adoption of wood burning is undoubtedly negative for the environment. However, as the current European biomass situation is a political fudge, it is not implausible this could also result in biomass adoption in New York, especially as the US Energy Department currently regards it as renewable. 

Conclusion  

New York’s energy plans to reach 70% carbon-free generation clearly faces some challenges. Although hydroelectric power can likely be relied upon to continue to produce around 28TWh a year, how it will generate the other 100 TWh from only carbon-free sources is an open question. 

For the time being, New York will continue to be stuck between the demands of environmental activists, the law, and a lack of viable projects. The governor’s attempts to bring some measurements of emissions into line with how the federal government measures were met by fierce opposition and halted, leaving the prospect of the Climate Leadership and Community Protection Act being repealed deeply unlikely. The political cost of rowing back the country’s most ambitious climate goals is too high, especially if Governor Kathy Hochul has ambitions to position herself as a national political figure if the Democrats lose this year's presidential election. 

While New York will not be a climate leader, its complete inability to move towards its climate goals may be a blessing in disguise. As it is not installing large amounts of intermittent energy sources, it is currently not hugely stressing its grid, like Texas. If significant advances can be made in battery technology, it does not pay high upfront development costs. If it turns out that intermittent renewable energy is a zero-interest rate phenomenon, New York may have made an unintentionally wise choice in continuing to kick its energy transition down the road.