How New York Is Building the Renewable Energy Grid of the Future
This is a story of ripping up old incentives that encouraged selling as much electricity as possible, then unleashing the entrepreneurs.
New York State is making a $5 billion bet that by making its power cleaner, it can become a magnet for the clean energy jobs of the future.
Its efforts stand out among the many states racing to integrate more renewables into their power grids—such
as Massachusetts, Hawaii and California—not necessarily for the
technology but because of what's happening behind the scenes: New York
has launched a Herculean effort to turn around an antiquated system that
has deterred innovation for generations by rewarding utilities for
selling more electricity.
To get utilities to embrace a changing electricity system, the state
is establishing ways for the companies to be reimbursed for some of the
savings from energy efficiency programs that are reducing demand for
their services. It also is allowing them to reap more return on their
investments in equipment needed to bring more renewable energy into the
grid. And it is investing in entrepreneurs who are inventing the
technology to make it all work.
The state is so gung-ho that its rules require utilities to come up
with demonstration projects that test out a new business model, in
partnership with at least one private sector company.
The
result, say the state's regulators, is that New York is already
attracting hundreds of innovative companies of all stripes. The plum
opportunities are not only in installing wind turbines and solar panels,
which are generating new employment opportunities
across the country, they are also in emerging technologies related to
smart grid management and storage. These jobs are largely invisible to
the public and, in some cases, didn't even exist a few years ago.
While the
state hasn't yet projected overall how many jobs are in the new energy
economy, they have released enticing tidbits. In January, the New York
State Energy and Research Development Authority (NYSERDA) released a
report projecting that by 2030,
New York's energy storage industry could realize annual revenues
between $5.6 billion and $8.7 billion, with total job growth between
17,300 and 26,800 employees. Jobs in the energy storage industry already
grew by 30 percent between 2012 and 2015 to 3,600.
"We
are now the leading market for energy storage companies," boasts John
Rhodes, president and CEO of NYSERDA, pointing to companies like NOHMs Technologies in Rochester and BessTech in Troy. "And probably microgrid technology as well."
One
of the companies that has been drawn to New York's new markets is Opus
One Solutions. New York's vision relies on distributed, independent
power operations that ramp up and down with the intermittent sunshine
and wind, as well as with the fits and starts of demand for power.
Opus One has software that can understand how those waves of power from
distributed resources interact with traditional power flows. Just as
important, its software can make real-time price estimates for the value
of those local power sources.
"Why New York?" asks Alison Smith, the
start-up's director of markets, gazing out at the Manhattan skyline
from a conference room at the Urban Future Lab, a state-sponsored
incubator for start-ups.
"It
is the most forward-thinking state in North America in considering how
we build the critical elements of a distributed grid," she answers.
Incubating Clean Energy Innovation
Three
years ago, New York announced that it would spend $5.3 billion toward
meeting its goal of having 50 percent of its electricity come from
renewable sources by 2030. (The state only had 24 percent renewable
generation in state this year.) Mandates related to these standards have
resulted in significant additions of wind and solar to the grid—but
that is just the most readily visible part of the changes New York is
undergoing.
According to Richard Kauffman, the state's chairman
of energy and finance, it didn't take long to figure out that "New York
cannot cost effectively make this transition just by bolting wind and
solar onto the grid of Westinghouse and Tesla," referring to two of the
original creators of the grid, George Westinghouse and Nicola Tesla.
Instead, New York wants a new "hybrid grid" that integrates intermittent
and distributed resources like wind or solar or microgrids.
At the core of the problem to getting that grid was a stodgy,
legacy financial model for utilities that didn't support innovation.
Utilities have historically been rewarded with 9 percent rate increases
when they add capital expenditure for transmission and distribution to
new central power stations, which in New York are historically gas and
coal with some nuclear and hydro. The result is that New York has added
so much base load capacity to meet peak demand (largely in these
traditional forms of energy generation) that on an average day the state
uses just 54 percent of generation capacity.
"Technology is not what is holding us back," said Kauffman. "Could I
tomorrow install smart meters in every home and save energy? Absolutely.
But until now, there has been absolutely no financial incentive to do
this."
NY Renews is a coalition of 109 labor, community, environmental, and social justice organizations across the state of New York from Buffalo to Brooklyn. The coalition seeks a transition from dirty fossil fuels to 100% clean renewable energy with good jobs, healthy communities, and climate justice for all New Yorkers.
