New York Independent System Operator Information for Policy Makers

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From Watts Up With That?

Roger Caiazza

I have published three previous articles about New York Independent System Operator (NYISO) analyses related to New York’s Climate Leadership and Community Protection Act (Climate Act).  This post describes their new webpage that summarizes their activities “to design and implement the operations, planning and market enhancements necessary for the grid in transition.”  It does a good job explaining some of the issues associated with a net-zero transition.  The only thing left is to get New York policy makers to listen.

Background

The implementation plan for New York’s Climate Act “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 is underway.  At the end of 2022 the Climate Action Council completed a Scoping Plan that makes recommends strategies to meet the targets.   The Hochul Administration is developing regulations and proposing legislation to respond to those recommendations in 2023.

Unfortunately, the Scoping Plan is just a conglomeration of control strategies that are projected to provide the emission reductions required.  The Plan did not do any feasibility analyses or address any “what if” questions raised by the NYISO.  I have written three posts that described issues raised by NYISO,  The first post (New York Climate Act: Is Anyone Listening to the Experts?) described the NYISO 2021-2030 Comprehensive Reliability Plan (CRP) report (appendices).  The difficulties raised in the report are so large that I raised the question whether any policy maker in New York was listening to this expert opinion.  The second post (New York Climate Act: What the Experts are Saying Now) highlighted results shown in a draft presentation for the 2021-2040 System & Resource Outlook that all but admitted meeting the net-zero goals of the Climate Act are impossible on the mandated schedule.  The third article described the final version of the 2021-2040 System & Resource Outlook.  It shows that in order to minimize the storage and renewable over-build requirements that a Dispatchable Emissions-Free Resource (DEFR) is needed but goes on to point out that DEFRs such as hydrogen, renewable natural gas, and small modular nuclear reactors are not commercially viable today. “DEFRs will require committed public and private investment in research and development efforts to identify the most efficient and cost-effective technologies with a view towards the development and eventual adoption of commercially viable resources.” 

The NYISO oversees system reliability and the competitive electric market in New York.  They are responsible for “keeping the lights on for New Yorkers by managing today’s energy flows and by planning the grid far into the future.”  Frankly, with regards to the Climate Act transition they are in a very difficult position because New York’s Climate Act was written by climate activists who had a very poor understanding of the challenges of a transition to a zero-emissions grid.  There are two options for the future.  If the State comes to its senses and takes the work done by the NYISO to heart and chooses a path consistent with their recommendations, then NYISO will be characterized as obstructionists who just don’t understand that academics know better than anyone in the industry.  If the State ignores their warnings and there is a catastrophic blackout, then they will be blamed for improperly implementing the vision of the academics.  Either way they will be scapegoats.

Information for Policy Makers

The new website (pdf copy) is obviously designed to try to explain the complexities of electric system operations and planning for a non-technical audience.  The documentation has three main sections: “Planning for Reliability”, “Wholesale Electric Markets”, and “Our Independence and Transparency”.  Because the information is a useful overview, I will summarize each section below.

The Planning for Reliability section explains that the NYISO is responsible not only for the real-time matching of generation with load operations for the electric system, but also “planning far into the future to make sure the electric system and its interrelated components can meet customer demand.”   The introduction concludes: “The acceleration of New York’s transition to a zero-emission grid is creating a system of new, intermittent generation, which benefits the environment but can make it more challenging to keep the system reliable.”  So how does the website describe the challenges?

They explain that wind and solar are not dispatchable resources and are intermittent so energy storage is needed.  They point out that the current energy technology is limited.  The website goes on to explain:

The grid will always need sufficient flexible and dispatchable resources to balance variations in wind and solar resource output. These resources need to be long-duration, dispatchable, and emission-free.  Essentially, they must have the attributes of fossil generators (responding quickly to rapid system changes) without the emissions. Such resources are not currently commercially available and may not be for many years.

This is a wind-up to make the point that:

The retirement of fossil-based resources is outpacing the development of new renewable-based resources and other dispatchable, emissions-free resources. The effect is that reliability margins will thin to concerning levels beginning in 2023, highlighting the need for a careful transition that maintains grid reliability and resilience.

 I am a bit disappointed with this description.  In order to really emphasize the risk involved it is necessary to understand the current reliability standards are the result of decades of experience and evaluation.  The resulting standards have done a good job preventing blackouts.  However, in the future there are potential issues because the standards are based on the presumption that the system is static.  The unprecedented introduction of significant amounts of new intermittent and non-dispatchable resources changes things a lot.  I don’t think this discussion explains how much riskier planning is becoming as a result.

This section also points out the importance of transmission.  The fact is that New York City will never be able to produce enough electricity from in-City wind and solar so the power necessary will have to be transmitted from elsewhere.  They are constraints on this transmission regionally and also locally where upgrades are needed to get the power from newly developed wind and solar projects.  The website explains the transmission planning process and concludes: “A historic level of investment in the transmission system is currently underway, with projects that will deliver more clean energy to consumers while enhancing grid resilience and reliability”. 

The website raises a little discussed aspect of the transition process.  There is an interconnection procedure where the NYISIO determines if a proposed new resource will have reliability issues and whether transmission system upgrades are needed to address them.  The website brags about the transparency of their process but does not bring up another uncertainty.  In particular, the interconnection hardware for intermittent resources must be able to differentiate between power fluctuations caused by variable wind, for example, and transient power changes in the grid.  If they don’t handle this correctly problems ensue.  For example, the 2022 Odessa Texas disturbance illustrates the “need for immediate industry action to ensure reliable operation of the bulk power system with the ever-increasing penetrations of inverter-based resources”.

This section of the website concludes with a description of the planning process and “NYISO’s role in identifying system needs, and finding solutions, is part of the process of planning for the grid of the future.”

The next section, Wholesale Electric Markets, gives an overview of competitive wholesale electric markets.  It is not surprising that they extoll the virtues of market-based solutions including consumer benefits because that is the basis for their existence.  Nevertheless, it also is a useful overview of how the markets work. 

In order to match the generation with the load the NYISO has three markets: the energy market, ancillary service market, and capacity market. 

These three markets work together. In simple terms:

  • Energy markets secure resources to supply the demand on a minute-to-minute basis.
  • Ancillary service markets procure a variety of additional services to protect the electric system and balance supply and demand to meet system needs instantaneously.
  • Capacity markets provide incentives to generation resources to maintain additional energy reserves over a longer period. Through the capacity market, we determine how much capacity is needed to meet the expected peak demand for the year plus a margin of additional resources to call on, if necessary.

According to the NYISO website the wholesale market can support New York’s Climate Act goals. It states:

Competitive, wholesale markets can help with the transition to a zero-emission grid by sending the right economic signals to developers to invest in new technologies in the right geographic area to best serve the grid. These markets leverage competition to keep electricity as cost-effective and efficient for New Yorkers as possible, and to help make sure there are adequate resources in place in the future.

I disagree with the implication of the statements that “Competitive markets have over time created pressure on the generating fleet to switch to newer, more efficient generation plants” and “Since 2000, electric generators that primarily combust natural gas increased from less than 50% to more than 60% of the generating capacity in the state”.   This is the same argument that proponents of the Regional Greenhouse Gas Initiative make when they argue that emissions have come down significantly and insinuate that the emissions trading system was a primary factor in the emission reductions.  The price of natural gas came down so much relative to other fuels that the generating fleet would have switched to newer, more efficient generating plants with or without the RGGI program. I believe that the conversions would have happened even without competitive markets.

I am disappointed with the following explanation how the market can support the Climate Act:

Additionally, the NYISO has implemented market enhancements to support climate goals and to position the NYISO as a national leader in competitive wholesale electricity markets. Through engagement with stakeholders and regulators, new market rules for energy storage integration, participation in our wholesale electricity markets by distributed energy resources, and new ancillary services products support reliability and minimize costs for consumers. Market rules that incentivize investment in resources that can respond rapidly to changing conditions will be essential for maintaining reliability of the grid of the future.

In my opinion, the transformation of the electric system that was built up over decades using dispatchable synchronous generating resources into a system that relies on a significant amount of intermittent, asynchronous generating resources is an enormous challenge.  NYISO planners have to not only attempt to anticipate all the effects of all these changes to the electric grid but also try to design market rules that provide the resources needed.  The addition of the market component should have been highlighted as a significant additional challenge to get a system that works.

The final portion of this section discussed electricity prices in the NYISO region.

The Our Independence and Transparency section explains how the NYISO was formed and how it operates.  It provides a concise overview of the regulatory and reliability organization oversight requirements for any independent system operator.  There is a description of the governance policies and budgeting.

They also emphasize their independence but there is some backstory here.  At one point in the previous Mario Cuomo Administration, the current chairman of the New York State Energy Research & Development Authority, Richard Kauffman was Cuomo’s energy czar.  In a filing to the Public Service Commission, the NYISO noted that in order to meet Cuomo’s Clean Energy Standard, a predecessor regulation to the Climate Act, New York would have to install over 1,000 new miles of bulk transmission lines at great cost and effort.  In response, , Richard Kauffman, accused NYISO Director Brad Jones and his NYISO report as “misleading, incomplete, and grossly inaccurate…revealing an alarming lack of developed analysis into the imperative to address climate change…” Kauffman’s letter accused Jones of protecting fossil fuel generators and said that he was “dismayed by [Jones’] public comments. Not long after that Jones left and ever since comments have been much more guarded.  Kaufmann also authored a commentary for The Hill  about a “carbon bubble” that claimed that government intervention will be necessary if the market response to climate change is delayed too long.  In this political climate it is not surprising that all NYISO planning reports are carefully worded to not antagonize the Administration. In my opinion, however, the Administration needs to hear the unvarnished truth.

Discussion

The title for this webpage says it is information for policy makers.  New York climate policy is driven by the Climate Act’s Climate Action Council.  That body consists of 22 members that were chosen by ideology not expertise. Their contribution to the Climate Act implementation was the Scoping Plan that was approved last December.  The Council only paid lip service to any pretense of addressing reliability concerns with the NYISO so even if this document had been available at the start of the Scoping Plan development process I doubt that the majority of the members would have read it, much less acted on the recommendations.

This year the Hochul Administration is pushing to implement the recommendations of the Scoping Plan either by new legislation or by proposing new regulations.   When pressed about the lack of feasibility analyses in the Scoping Plan the Climate Action Council has said those concerns would be addressed in the regulatory process.  I imagine the policy makers who are responsible for the new legislation and regulations are the target audience.  Unfortunately, I fear their minds are already made up and the issues raised here will be ignored.

The summary for policy makers has several key messages that New York policy makers need to consider as they develop legislation and regulations.  The state should not shutdown existing fossil-fuel generators until sufficient clean energy resource are available.  A new resource is needed but is not ready for use and may not be available for “many” years so an emphasis on developing that resource must be a priority.   Because New York’s fossil resources are retiring faster than new resources are coming on line there already are concerns about the reliability margin. Unprecedented upgrades to the transmission system will be required to get the power from wind and solar projects to New York City where it is needed the most.

Conclusion

I think this is a very useful overview of policy issues that the NYISO is considering relative to the implementation of the Climate Act.  However, I am not optimistic that the target audience will consider these issues as implementation proceeds.  In the political climate of Albany it is not clear how to get policy makers to consider the risks of ignoring the issues raised.


Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  More details on the Climate Leadership & Community Protection Act are available here and an inventory of over 250 articles about the Climate Act is also available.   This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.