World Renewable Energy Congress VIII (WREC 2004). Copyright 2004. Published by Elsevier Ltd. Editor AAM Sayigh.

Used by permission of the author

Introduction

New York City is a city in love with electricity. The home of Thomas Edison’s first electric utility back in 1882, and the current home of Times Square with its “spectacle” lighting, New York City owes its reputation as a city that never sleeps to its electricity supply. There is currently 8,800 MW of installed large-scale power generation capacity in New York City, all relying on various types of fossil-fuel based sources.1 There is an additional 2-3 MW of installed renewable power system technology in the City, including anaerobic digesters and rooftop and building integrated solar photovoltaic systems. The amount of power generated from renewable sources is expected to grow in the next few years, but only marginally. Why is this the case? Large portions of the city consist of flat-topped roofs and parking structures, which are ideal for solar deployment. The Hudson and East Rivers enjoy powerful tidal flow twice per day, and for a city whose waterfront was once lined with windmills built by Dutch settlers, urban wind systems also seem a possibility.


Renewable Power in New York City

The majority of the renewable power generated in New York City today is by technology located on government property. Eight anaerobic digesters located at municipal sewage treatment plants capture methane gas that is then used by fuel cells to generate electricity. The largest solar photovoltaic (PV)
system in the city is on the roof of a subway car maintenance facility; two smaller systems are to be installed on subway stations undergoing major renovations. Other prominent PV installations are on a large commercial office building in Times Square and a system integrated into the building façade of a “green” high rise apartment building in lower Manhattan. There are 30-40 small PV systems installed on homes and small apartment buildings around the city. In the next few years, several prominent renewable power installations are anticipated. The Freedom Tower, rising from the ashes of the World Trade Center, plans to install wind turbines at the top of the building to produce electricity; a few miles north, the new football stadium proposed for Manhattan’s west side will similarly feature wind turbines lining the top rim of the stadium. In the East
River, a private company is planning to install hundreds of underwater turbines, generating 5- 10 MW of electricity from the powerful river currents.2

Despite these proposed new installations, research done for the State of New York shows the level of proposed or current installed renewable power generation capacity in New York City is just a fraction of what is technically possible. In particular, solar PV systems are seen as capable of providing up to 7,700 MW of power in New York City by 2022 under certain market conditions, a reflection of the large amount of unused rooftop space and relatively high insolation levels in the city. Biomass and wind systems are seen to have far less potential, totaling 83 MW and 12 MW respectively.3 These numbers represent theoretical maximums for all three technologies, however. The amount of power actually anticipated is generally far lower than these forecasts of theoretical potential. For instance, solar PV deployment is realistically expected to total between 330-396 MW of capacity by 2022, both on rooftops and as part of new building facades.4 Wind system contributions to the city’s overall power supply are expected to remain small over the next 20 years, primarily because the low wind speeds found in the city limit the potential for large wind turbines or wind farms.

Key Factors Affecting Renewables Deployment in NYC

Why have renewable power systems made such a minor contribution to New York City’s electricity picture thus far, and will these problems continue to plague future efforts to promote renewable power system deployment in the city? Interviews with more than three dozen city and state policymakers, industry officials, and community and environmental advocates have identified several key factors influencing the current level of renewables deployment and green power use in New York City:

• Cost: One factor with a clearly favorable impact is the availability of financial incentives from the New York State Energy Research and Development Authority. Since 2000, NYSERDA has established three incentive schemes reducing the per watt installation costs of solar PV systems by between $2-$5/watt. As of the end of March 2004, NYSERDA has provided more than $2.4 million in incentives to 32 photovoltaic project installations in New York City with a combined peak power generation capacity of 609 kilowatts.5 Additional funding has been made available to the tidal power project in the East River, and to the fuel cell installations at sewage treatment facilities around the city.
  Several renewable power project developers cite NYSERDA funding as critical to their decision to move ahead with the project;6 other developers similarly report the failure to obtain NYSERDA funding was instrumental in their decision to cancel the renewable power component of their project.7
  
  These incentives are necessary because like most consumers, there is a strong ‘least cost’ preference among local consumers when it comes to electricity. ‘Green’ power offerings by local Energy Service Companies cost roughly one-half cent more per kilowatt hour than power from traditional sources,8 and this higher cost may be one of the reasons for the current low rate of enrollment in these programs. Because New York City already has very high electricity costs – among the highest in the nation – anything that increases the cost of power is viewed skeptically. In their comments to State regulators on the proposed structure of a statewide Renewables Portfolio Standard, City energy officials expressed concern the RPS could drive up local electricity costs, harming the city’s economic competitiveness.9 Firms involved in the installation of renewable power
  systems in New York City report that without subsidies, power from solar PV can be two to six times as expensive as the current retail price of electricity.10 With NYSERDA rebates and other tax breaks, this cost can drop to a level where it is equal to or slightly more costly than the current retail price of electricity.

• Environment as Secondary Consideration: Related to the least cost preference is a general focus on cost rather than environmental considerations in electricity policy decision-making. The New York Independent System Operator decides which power sources will feed the statewide and local grid based on day-ahead and hour-ahead price quotes submitted by power generators, a policy sanctioned by U.S. Government
  regulators. In New York City, this has meant that for many years, grid managers have called on highly polluting power plants to provide power. Had these plants not received dispensations from clean air rules, the city would have lost a sizable portion of its generation capacity, at the risk of dire reliability and cost consequences. There is no guarantee, of course, that had power generation decisions been made primarily on environmental grounds, there would have been a dash to develop renewable power schemes. The extent to which renewables deployment would have been promoted depends on the local perspective to the question, “How clean is clean enough?” Efforts to ‘re-power’ older, highly polluting power plants in New York City with new natural-gas fired turbines have won plaudits from city and state policymakers and local advocacy groups. To date, these groups have not been willing to insist on more drastic – and possibly more costly – steps promoting or requiring the widespread installation of renewable power systems as an even cleaner approach to local power generation.

• Preference for Voluntary Action on Renewables Deployment Rather than Mandates: In 1999, the City of New York developed a series of High Performance Building Guidelines intended to serve as a menu of “green” ideas that consultants and architects can voluntarily draw from when designing a new building or retrofit project for a City agency. Included in the guidelines is a brief mention of renewable energy resources, including PV systems. To date, use of the guidelines has been voluntary, and only a few of the dozens of projects undertaken by the City’s Department of Design and Construction since the guidelines were issued have included any renewable power component.11 This refusal to mandate renewables or green power use stands in stark contrast to the requirements of the Battery Park City Authority (BPCA), a state agency with authority over a 92-acre plot of land in lower Manhattan featuring extensive residential and commercial development. Under guidelines developed by the BPCA in 2002 and 2003, new buildings in Battery Park City must generate a minimum of 5% of their own power on-site from renewable sources such as solar PV or wind power. 30% of the power consumed in the building must be provided by green power sources in or outside of the City.12 The Solaire high-rise apartment building, featuring building integrated and rooftop PV systems, was the first building to be constructed under these guidelines. The BPCA is currently soliciting bids from developers for two more large commercial and residential buildings, with construction due to commence in 2005.

• Interconnection Rules: Blackouts and other power outages bring home in a very stark manner how New Yorkers depend on electricity. Subway trains, traffic signals, elevators, and complex computerized financial transactions involving parties from around the world all require access to a stable, reliable power supply. Over the years, state regulators have imposed operating requirements on the local load-serving utility (Con Edison) to ensure the reliability of the local grid. However, the majority of the grid’s reliability comes from Con Ed’s network system design, built to ensure that a failure on a single line does not automatically darken an entire block or borough. Because of this system design, renewable power sources linked to the Con Ed grid can run into problems if the device produces more power than is used by the customer owning the unit. Con Ed technical specifications for distributed generation technologies limit the size of inter-connected renewable power systems or require them to install equipment that can swiftly disconnect the device from the grid if it violates certain key operating protocols, such as the maintenance of a one-way flow of electricity from Con Edison to the customer.13 These requirements have forced a reduction in the size of several solar PV installations around the city; another installation opted to install a costly battery system to absorb any surplus electricity.14 Such steps may still not eliminate a requirement by Con Edison to install a reverse power relay which can shut down the PV unit in a mille-second if it feeds power back into the grid. Regardless of the path chosen, these technical fixes all adversely affect the cost-effectiveness of renewable schemes installed around New York City. There are ways to circumvent the grid connection problem. The first is to treat the renewable power device as a miniature power plant, and rather than using the system to displace Con Ed’s power supply to a single consumer, power generated by the system can be fed directly into Con Edison’s high voltage feeder lines, earning the owner a fee equal to the locational based marginal price for power. This rate varies on a daily basis; during 2003, it ranged from $0.05-$0.082 per kilowatt-hour.15 Though technically feasible, this approach may only make sense for larger installations, as the cost of a transformer to boost the voltage of power created by these systems to the voltage level flowing on the primary feeder line can be significant. A second solution is to continue to use the device to provide power to a single consumer, and to sell any surplus power to one or more neighboring consumers using a micro-grid superimposed on top of Con Ed’s existing
  electrical grid. Though technically feasible, such an approach is not currently allowed in New York State. Tariffs detailing the rate to be charged to customers for the surplus power must first be established by State regulators, and permission must also be granted by the City of New York. The type of permission granted by the City, and the complexity of the process involved in granting this permission, would vary significantly based on whether wiring to the neighboring consumers passes under or over City-owned streets or sidewalks.

Analysis/Conclusion

Like most cities, New York’s involvement in electricity matters is limited. The City does not operate its own large-scale electric generating facilities, and overall responsibility for regulating Con Edison and the many electric power plants around the city has been in State hands since 1910. Today, the City’s official role largely involves submitting comments to state officials on different regulatory matters, conducting research on energy issues of interest to state and local policymakers, serving as a conduit for low-cost power designed to promote business retention, and exercising zoning and permitting authority to influence the siting of major electricity projects in the city.16 As the user of large amounts of power, the City can also serve as a role model for other energy users, or attempt to use its purchasing power to leverage change in the marketplace. Given these roles, it is reasonable to question how much capacity the local government has to influence green power use or the level of renewables deployment in the community. Certain of the factors influencing renewables use locally do fall within the City of New York’s purview – City officials could, for instance, follow the BPCA’s lead by mandating on-site renewables use in new City government buildings or major retrofit projects. The City could also take the politically more difficult step of mandating on-site renewables deployment by private buildings applying for building permit approval.

On the other hand, forcing Con Edison to modify its interconnect rules or sanctioning the development of new micro-grids generally involves powers that rest with State regulators. Rules governing the order in which different power sources are dispatched to supply power are set at the state and federal levels, again limiting the City’s ability to intervene. Finally, although electricity industry restructuring in New York kept a portion of a consumer’s electric bill (i.e., delivery charges and taxes) under State regulatory control, the marketplace
now sets the price customers must pay for electricity generation. The City could choose to supplement State financial incentives to bring down the cost of renewables deployment in New York City, but this is a political decision that might face opposition given a general public preference for least-cost power sources. In sum, New York City’s experience highlights many of the structural challenges policymakers and advocates face if they seek to promote greater levels of urban renewables use. These challenges exist not because cities lack renewable resource potential, but because regulatory, political, and technical factors limiting renewables use extend beyond a Mayor or City Manager’s span of control.

References

1 New York City Energy Policy Task Force, “New York City Energy Policy: An Electricity
Resource Roadmap,” January 2004, p. 15.
2 Verdant Power website, www.verdantpower.com/Initiatives/eastriver.shtml, 2004.
3 Optimal Energy Inc. et al, “Energy Efficiency and Renewable Energy Resource
Development Potential in New York State (Volume Four: Renewable Supply Technical
Report)”, August 2003, pp. 4-34, 4-193, 4-196, 4-199, 4-265.
4 Ibid, pp. 4-200, 4-201.
5 Personal communication with Jeff Peterson, Program Manager, Energy Resources,
Transportation and Power Systems, and Environment, New York State Energy Research and
Development Authority, 5 April 2004.
6 Personal communication with Neil Pariser, Executive Vice President, South Bronx Overall
Economic Development Corporation, 27 October 2003; Personal communication with
Anthony Pereira, President, AltPower Inc., 3 December 2003.
7 Personal communication with Les Bluestone, President, MC2 Partners, 24 February 2004.
8 Con Ed Solutions website, www.conedsolutions.com/Residential/GreenPowerFAQ.htm.
9 New York City Economic Development Corporation Energy Department, “Comments of the
City of New York: Case 03-E-0188 Proceeding on a Motion of the Commission Regarding a
Retail Renewable Portfolio Standard,” 26 September 2003.
10 Personal communication with David Buckner, President, Solar Energy Systems, 5 April
2004; Personal communication with Anthony Pereira, President, AltPower Inc., 7 April 2004.
11 New York City Energy Policy Task Force, “New York City Energy Policy: An Electricity
Resource Roadmap,” January 2004, p. 51.
12 Battery Park City Authority, “Hugh L. Carey Battery Park City Authority
Commercial/Institutional Environmental Guidelines”, 2002, p. 16, and “Hugh L. Carey
Battery Park City Authority Residential Environmental Guidelines (Version 4)”, 2003, p. 7.
13 Con Edison, “Specification EO-2115, Revision 5: Handbook of General Requirements for
Electrical Service to Dispersed Generation Customers,” December 2002, p. 39.
14 Personal communication with Paul Parkhill, Project Manager, Greenpoint Manufacturing
and Design Center, 7 October 2003.
15 New York Independent System Operator, “Monthly Report”, February 2004, p. 4-K.
16 Even these powers do not give the City the final say in siting decisions, as State law
delegates this authority to the New York State Board on Electric Generation Siting and the
Environment. Under Article X, which expired at the end of 2002, the Siting Board can
override local zoning rules if it deems it necessary to ensure the development of new power
generation capacity in a community. The law is currently up for reauthorization in the New
York State Legislature.