Draft plan: NYS must 'carefully manage' retirements of power plants amid green-energy uncertainty

New York State's newly released draft energy plan, citing uncertainty around new green-energy projects, calls for a more "strategic" process for retiring an aging fleet of natural gas and other combustion-based power plants.

The language contained in a draft document released Tuesday raises additional questions about the state’s ambitious climate law goals, which call for a zero-emission grid by 2040, on the heels of a Public Service Commission decision last week to nix a new offshore wind power line into New York City.

"Combustion-generating units will remain essential parts of electric grid reliability and affordability, and retirement of these units will not be able to occur until resources that provide the same grid reliability attributes are put in place," the draft plan from the New York State Energy Planning Board states. "New York will seek to carefully manage the retirement of existing assets and evaluate whether there is a need for new generation that is compatible with long-term policy targets."

For Long Island, where the bulk of the power comes from large, antiquated power plants owned by National Grid in Northport, Island Park and Port Jefferson, the statement could provide impetus to those who are calling for the plants to be upgraded. LIPA’s contracts with the plants expire in 2028, and the utility has already negotiated declining tax payment schedules that foresaw their eventual retirement.

LIPA in a statement called the draft plan "thoughtful and transparent" and said it "looks forward to reviewing the plan ..." 

Release of the Draft New York State Energy Plan comes as the Trump administration has changed the government's view of offshore wind and other green-energy technologies from climate saviors to "scams." The administration has halted new permits and leases for wind projects that had been expected to largely displace fossil fuel plants as the primary source of Long Island’s energy over the next decade.

The planning board, which voted unanimously Wednesday to release the draft report for public comment, said in a statement that while shifting federal priorities could impact the pace of the state's clean-energy transition, it "does not change New York’s commitment to continued clean energy growth."

'Significant uncertainty'

The planning board noted the energy sector "faces significant uncertainty" at the time of its plan release, "stemming from economic pressures and, more recently, a shift in political priorities and policies at the federal level. These uncertainties impact long-term planning, investment decisions and possibly the pace of transition to clean energy."

As if to illustrate the point, Norway energy giant Equinor on Wednesday announced it was taking a nearly $1 billion impairment charge tied to its U.S. offshore wind business, including $763 million tied to its Empire 1 wind project off Long Island’s South Shore.

The project, which will deliver its energy to some 500,000 New York City residents when the wind is blowing, was to be part of a larger offshore project that included a second array to serve Long Island. That portion has been canceled, further impacting the company’s quarterly results, according to reports.

Last week, the PSC canceled an offshore wind energy cable project that would have delivered power to New York City, citing federal pressures and affordability issues.

“ ... Recent federal decisions to halt the permitting and construction of offshore wind generation platforms make achieving New York’s offshore wind goal impossible in the near term and undermine the central purpose of the transmission solicitation," the PSC said. "In consideration of all the facts, the need for federal partnership in developing large offshore wind and transmission infrastructure, and the necessity of avoiding the imposition of significant costs and risk on New York ratepayers, the commission decided to rescind its transmission need determination and terminate the [New York Independent System Operator] evaluation process."

The planning board report took note of offshore wind and other clean technologies’ "elevated costs reflective of supply-chain constraints and disruption, tight regional labor markets and high interest rates."

 The board asserted the "federal administration’s energy and unpredictable tariff policies bring additional political regulatory uncertainty, which threatens critical federal support for clean energy development and creates barriers to private investment."

Zero-emission mandates

What’s uncertain from the planning document is precisely how the reset market realities will impact the mandates in the state Climate Act, passed under former Gov. Andrew M. Cuomo. In addition to a zero-emission grid by 2040, it also called for 70% renewables on the grid in just under five years, with some 9,000 megawatts of offshore wind. It also calls for 3,000 megawatts of energy storage by 2030.

As of 2023, 27% of New York’s instate generation came from renewables, primarily hydroelectric. Another 22% came from nuclear plants, all of which are upstate. The plan calls for existing nuclear and hydro plants to "remain major contributors" to the state grid by 2040.

While state planners foresaw "many existing combustion" plants retiring, it also foresaw that 6,000 megawatts of those plants could be repowered and converted to run on hydrogen, an arguably "greener" fuel. But it also notes hydrogen "faces significant deployment challenges" itself, including a high cost.

The report finds a continued role for natural gas: "In all scenarios, the gas system remains an important energy-delivery system, necessitating investments for reliable ongoing provision of service," even as residential and business use declines with more efficient homes and heat pumps.

Zero-emission targets economywide by 2050 will be more challenging to meet, requiring "significant incremental action beyond what is currently contemplated by existing policies," the report states.

 "Due to external factors including supply chain disruptions, inflation, recent cuts to federal clean-energy tax credits and incentives, and other changes in energy and tariff policy from the federal administration, there is considerable uncertainty in the timeline for progress toward emissions reductions," the planners stated, even as New York’s electricity demand is still forecast to grow "significantly" through 2040.

"New York State is prepared to meet this growing electricity demand while maintaining system reliability and making progress toward a zero-emission grid," the plan states. "New York State likewise will support the reliable provision of natural gas and petroleum fuels, as all major fuels used in the state today are forecast to provide meaningful volumes of energy throughout the planning period."

Aging plants

But continuing to rely on older fossil-fuel plants could prove challenging, the report notes.

"A primary challenge for New York’s energy system is its advancing age, which creates unique risks for reliability," the plan states. Most of Long Island’s plants are more than 60 years old, but have been upgraded and maintained over time. LIPA developed a plan to repower the plants in the 2010s, but shelved it as demand was projected to decline.

Older plants and pipelines are "more prone to failure, requiring more costly repairs, and result in a greater environmental impact than newer technologies," the report states. "Over the planning period [through 2040] and beyond, maintaining safe and reliable energy service will require substantial investment in New York State’s aging energy infrastructure."

 The plan foresees "all major fuels currently used in New York State are projected to continue to provide meaningful volumes of energy throughout the planning period, while the contributions of clean and renewable energy sources will grow."

Translation: "Through the 2040 planning period, New York will continue supporting the safe and reliable provision of natural gas and petroleum fuels to electric, residential, commercial, industrial and transportation sectors."

For the aging power plants it means combustion-generating plants "also will remain essential parts of electric grid reliability and energy affordability, and New York will seek to carefully manage the retirement of existing assets and evaluate whether there is need for new generation that is compatible with long-term policy targets."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.