Gavin Donohue Testimony on Implementing the Climate Leadership and Community Protection Act
Assembly Standing Committees on Environmental Conservation and on Energy,
and Assembly Climate Change Work Group Joint Hearing on the Implementation of the
Climate Leadership and Community Protection Act (CLCPA)
May 13, 2021
The Independent Power Producers of New York (IPPNY) is New York’s oldest trade association dedicated to representing the independent generators of electric power in New York State. Our members generate the majority of New York's electricity, utilizing almost every generation technology available today, such as wind, solar, natural gas, energy storage, oil, hydro, biomass, and nuclear.
As a member of the Climate Action Council charged with implementing the Climate Leadership and Community Protection Act (CLCPA), I appreciate the opportunity to continue the necessary dialogue to ensure we are implementing this legislation effectively. The effects of climate change are well understood, and addressing those impacts, while transitioning New York to a new energy future, is important. IPPNY actively supports a move to a more efficient electric system in a way that maintains the reliability of our grid and makes sure consumers are not met with significant financial burden.
By January 1, 2022, the Climate Action Council must develop its scoping plan for reducing greenhouse gas emissions and provide it for public review. As of this week, we have now received final recommendations from all of our working groups and advisory panels, which have been assessing pathways to emissions reductions in all aspects of the New York State economy.
While the process so far has been inclusive and has allowed for a better appreciation of various viewpoints, the ultimate focus of the Council must be economy-wide decarbonization while ensuring the electric system, which is the backbone of the entire economy, remains a reliable and affordable catalyst for economic prosperity. Dates and targets become arbitrary without comprehensive plans to meet them and liabilities without full consideration of the reliability impacts of a poorly planned energy transition must be avoided.
IPPNY has released a document outlining six principles for advancing New York State’s clean energy goals and achieving the benchmarks of the CLCPA. They are:
- Reliability is critical and must be maintained.
- Leverage the power of markets to achieve decarbonization.
- Transportation and heating sectors' emissions must be addressed.
- Promote needed transmission development.
- Fuel and technology diversity is essential.
- Economic impacts to consumers must be examined.
These principles guide my work on the Council and will be at the forefront in my efforts as we develop the draft scoping plan so we can reach our shared climate goals in the most efficient way possible.
State of the Electric Grid
It has been 20 years since the inception of New York’s wholesale electricity markets. In that time, these markets have driven independent power producers to make tremendous investments to reduce emissions and provide significant environmental benefits. Sulfur dioxide emissions have decreased by 99 percent, nitrogen oxides by 93 percent, and carbon dioxide emissions have decreased by 52 percent.
In fact, the State’s electric generation sector has seen the sharpest decrease of emissions from 1990 levels of any sector. According to data from the New York State Energy Research and Development Authority (NYSERDA), from 1990 through 2017, the power sector reduced greenhouse gas emissions by 65 percent. This is largely as a result of the forces of the competitive wholesale electricity market and without the availability of direct emission control technologies for carbon dioxide. In that same span of time, emissions from the transportation sector, which is the highest emitting sector, increased by 13 percent. In the ongoing debate on reducing New York’s carbon footprint, fingers are constantly pointed at power plants, but potentially greater emissions reductions can be achieved by focusing greater attention on the other sectors of the economy that have yet to make the strides generators have.
Thanks to the competitive markets, 10,535 megawatts (MW) of older, less efficient generation has retired, and 12,739 MW of new generation has been added to the grid since 2000.
Reliability
The past year, under the coronavirus pandemic, has shown how essential electric system reliability is. Remote work and learning, hospitals, schools, and essential businesses – all aspects of our life depend on having power when needed. As we seek to electrify our way of life in the coming years, the last thing we can do is jeopardize system reliability.
The CLCPA requires a zero-emission power sector by 2040. When it comes to discussions on reaching that requirement, there has been less of a focus on reliability and more of a focus on pre-judging technologies. Each fuel and technology play an important role in maintaining electric system reliability. Currently, 43 percent of the energy produced in New York, including 77 percent of the electricity downstate, is produced by fossil fuel resources. 35 percent of statewide energy and 67 percent of downstate energy comes from dual fuel (gas and oil) resources. These are dispatchable resources that are critical to keeping the lights on.
A fact of the electric grid that has not been given enough credence during the Council process is the need for dispatchable resources to backup intermittent renewable generation and fill the current gaps of energy storage. Multiple studies have shown that we need dispatchable, flexible long-duration resources to maintain reliability cost-effectively:
- Brattle Group’s May 2020 Zero Emission Power System study for the New York Independent System Operator (NYISO) simulating the resources needed to meet state policy objectives and energy needs reliably;
- The June 2020 report presented to the Climate Action Council prepared by Energy and Environmental Economics (E3), Pathways to Deep Decarbonization in New York State;
- Analysis Group’s September 2020 Climate Change Impact and Resilience Study prepared for the NYISO;
- Brattle Group’s January 2021 Initial Report on the New York Power Grid Study prepared for the NYPSC;
- The April 2021 joint study conducted by the New York City Mayor’s Office of Sustainability, National Grid, and Con Edison, Pathways to Carbon-Neutral NYC; and
- The April 2021 Center on Global Energy Policy at Columbia University’s School of International and Public Affairs report, Investing in the US Natural Gas Pipeline System to Support Net-Zero Targets.
Each study, conducted for and by different entities but all with the same goal of finding a path to a low- and zero-carbon future, arrived at the conclusion of the necessity of dispatchable, flexible generation. The current slate of short duration (intraday) batteries being deployed will not provide the dispatchable generation needed when solar and wind resources are unavailable for extended periods of time.
The Council should continue to focus on ways to continue to use dispatchable, flexible generation in the nearer term and to earnestly develop additional innovative technologies to get to the 2040 CLCPA requirement. Emissions from these facilities today already are controlled by the NYS Department of Environmental Conservation’s extensive regulatory programs and those emissions will continue to decline through 2040.
Natural gas is an essential fuel for maintaining reliability currently, and it is used by facilities that can respond quickly to meet the needs of the grid. Looking at the grid in New York City, it is important to note that the majority of units are dual-fuel, switching from gas to oil when necessary to maintain reliability.
With proper regulation and market signals, at some point in the future, zero-emissions fuel technologies, such as those using hydrogen or renewable natural gas, may be an economically viable replacement for natural gas at dispatchable facilities, or perhaps some other technology will prove its ability to balance the intermittency of renewables and energy limited nature of batteries.
In discussion on the Climate Change Impact and Resilience Study in its most recent Power Trends document, the NYISO – the entity charged with overseeing the electric grid – said,
“While increased reliance on renewables will result in greater vulnerability to severe weather, the Climate Study finds that managing the technological transition introduces more difficult reliability challenges than extreme weather does. Most importantly, this analysis suggests that establishing energy market designs and policies to encourage innovation are critical to accelerating development of new flexible and dispatchable resources. This dynamic will be key to managing the transition of New York’s electricity sector reliably and economically.”
One important technical aspect of electric generation is a capacity factor – a measurement of a facility’s actual generation as a percentage of its potential maximum generation. For example, if a plant has a maximum capacity of 100 MW, but only generates an average of 20 MW of power per day over a year, it has an annual capacity factor of 20 percent. Nuclear, hydro, and gas resources all have capacity factors of 70 percent or greater. According to data from the NYISO, the 2020 annual average capacity factors for wind and solar resources were 26 percent and 13 percent, respectively. Moreover, according to Power Trends, there were 74 instances in 2020 when all wind resources in New York State combined supplied less than 100 MW to the grid for periods of more than 8 consecutive hours, which represents just 5% of the almost 2 GW of installed wind capacity.
Of course, low capacity factor resources can benefit tremendously from investment in energy storage, which would balance out the mismatch between high demand days and times when it is not sunny or windy, but existing commercial technologies cannot maintain reliability over multiple consecutive days of wind and/or solar unavailability. The best public policy solutions to achieve New York’s energy goals should not mandate specific technology targets but instead should create markets for all electric generation technologies to provide for system reliability with the least emissions possible.
Outages in the electric system have a huge cost to New York’s economy and health. The looming specter of systemic failure of the electric system in New York for long periods of time is avoidable. We urge the Legislature and the Executive Branch to ensure this unfortunate outcome does not come to pass and to require policies based on thoughtful analysis, in order to guarantee a just transition that allows New York’s economy and its residents to flourish.
Cost Considerations
Conversations on the cost impacts of evolving our grid and our economy have been few and far between. From a power generation standpoint, New York’s generator community has invested in reliability and efficiency for decades and continues to do so. However, as the grid operator pointed out, market designs and policies to encourage innovation and investment in needed resources are necessary. The competitive markets have already proven successful and effective at reducing emissions and reducing consumer costs. Policies must be developed to embrace that success.
Additionally, a comprehensive cost study must be performed to understand the full, economy-wide and consumer impacts of this transition. IPPNY urged that this study be done sooner rather than later, in order to inform the process of the Advisory Panels’ recommendations, but it must be done as soon as possible, with an accounting of consumer bill impacts, in order for the Council to make informed decisions going forward. A focus must be placed on achieving these goals as efficiently and cost-effectively as possible, and part of that means having the full understanding of what technologies are most cost-effective.
Further, more must be done to understand how the State is complying with the requirements of the CLCPA. Much has been said about what private industry can do to comply with the legislation, but what specific, actionable steps is the State taking and implementing to do the same, as required by the CLCPA?
Conclusion
The fight against global climate change requires an all-hands-on-deck approach. The process so far within the Climate Action Council, while positive in its ability to bring a diverse group together, has fallen short of a full embrace of the critical issues at hand, and I look forward to continuing to work with my fellow Council members to reach understanding and agreement on how to meet the CLCPA’s goals reliably and affordably, based upon ongoing expert input. It is paramount that we get this right – that is why we need a more honest and straightforward discussion on what a full transformation of our electric system and economy looks like.
I thank you for the opportunity to submit this testimony and look forward to continuing to work with you. Please contact our office with any questions.
