New York State is Betting Big that by Switching to Cleaner Power it will become a Jobs Magnet

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.

By Leslie Kaufman, InsideClimate News   
May 25, 2017

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."