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Why Do Employers Care?

Ensuring adequate energy supply is an economic development imperative. To attract, retain, and grow businesses in our region, employers must have the confidence that the grid can supply their businesses’ energy demands. If not, they will look elsewhere.

“Shrinking reliability margins” is not a phrase that inspires confidence in investors, site selectors, or Buffalonians in a blizzard.

Demand Up, Supply Down

Businesses are becoming increasingly energy intensive. Accordingly, there is considerably more demand on the grid than in prior years. The report notes: “requests from data centers, high-performance computing projects and chip manufacturing [have] grown dramatically in recent years. 19 projects are currently requesting to connect to the grid for a total incremental load of 3,000 MW. The timing of these projects will have major impacts on system risk, highlighting the need for large investment in energy infrastructure.”

Moreover, as state climate policy aims to replace gas-powered equipment with electric (vehicles, appliances, heating systems, etc.), the demand for electricity will increase – and not just marginally. According to the report, if the state pursues full electrification, grid demands could double over the next twenty years.

The need for power is higher than ever and will only grow. Meeting that demand will require a Herculean effort to expand the grid. However, New York is going in the wrong direction.

According to the report, since 2019, New York has added 2,274 MW of generating capacity, but deactivated 4,315 MW – a net decrease of 2,041 MW. The decrease is because the state shuttered nuclear and natural gas electric generating facilities during this timeframe.

Less Reliable Grid

The result of all of this: New York is experiencing thinning reliability margins – the cushion between power supply and demand. According to the report, “the margin between available and required resources has narrowed to roughly half of what it was in 2018.”

Power producers and energy utilities are working overtime to address these challenges by adding new generating capacity, expanding transmission infrastructure, and promoting efficiency upgrades. However, sound public policymaking is needed to ensure energy remains affordable and reliable.

How Should Policymakers Respond?

The BNP’s energy advocacy is crafted with these grid realities in mind. Consistent with our Advocacy Agenda, lawmakers should:

1. Bolster power generation. To supply adequate power, the state cannot afford to turn away generation, especially from reliable dispatchable sources. High-load, low-emission sources like nuclear and hydrogen must be embraced. The report concluded: “As New York seeks to retire more fossil fuel units in the coming years it will be essential to deploy new energy resources with the same reliability attributes to maintain grid reliability. Until new, non-emitting alternatives like hydrogen or advanced nuclear generation are developed and commercialized, fossil resources are needed to fill an essential role in preserving reliable grid operations.”
2. Invest in transmission capacity. New generation facilities need to be connected to the grid with ease. Infrastructure support is also needed to deliver high loads to prospective energy-intensive businesses.
3. Invest in energy efficiency. We must optimize how every unit of energy is used. The BNP has supported legislation that would enable utilities to provide weatherization/insulation upgrades to property owners to reduce energy demands.
4. Avoid overstraining the grid. Despite the concerns raised in this report, state lawmakers are considering this week the NY HEAT Act, which would facilitate decommissioning of natural gas infrastructure, adding the home heating demands of full neighborhoods onto the electric grid. Lawmakers need to avoid policy decisions that would further shrink reliability margins.

Questions? Email Director of Government Affairs Josh Veronica at JVeronica@thepartnership.org.