Why is it so hard to build renewables in New York?

Hi everyone, Ed Porter here, host of transmission. Today I'm incredibly excited to share something a bit different from the Moto Energy team. We've just launched a new series of video documentaries called Moto Energy Presents.

These films will take a look at the stories and trends shaping power systems and energy finance in twenty twenty six to uncover the mechanics behind the headlines. Our first episode is all about New York's struggle to hit its renewable energy targets, but this isn't just a New York problem. The issues are shared by systems across the world, grid congestion, transmission upgrade costs, crowded interconnection queues, and policy uncertainty. To keep up with each new episode as it's published, make sure you're subscribed to the Moto Energy YouTube channel. Anyway, let's dive in. Moto Energy presents, why is it so hard to build renewables in New York?

New York wants one of the cleanest power grids in the world.

The law requires that seventy percent of our electricity comes from renewables by twenty thirty and one hundred percent carbon free electricity by twenty forty.

But in twenty twenty six, these targets look completely unrealistic. Today, nearly half of New York's electricity still comes from burning natural gas. Wind and solar make up not much. And the state has built only a fraction of what it promised.

So why is it so hard to build renewables in New York?

To understand the problem, we need to focus on three things, technology, bureaucracy, and economics.

What makes power so complex, engaging, and interesting, unlike any other commodity, you can't effectively store it for long term.

Peter Barrini is the director of industry at Moto Energy. A native New Yorker, Peter has spent more than a decade analyzing US power markets and helping developers to build renewables.

It needs to be generated on demand as needed.

Despite its current hurdles, New York's grid was actually built on renewable energy, except nobody called it that. Hydropower was the backbone of upstate New York in the early nineteen hundreds. Clean, abundant, cheap to produce. It powered factories and towns decades before anybody was talking about the concept of clean power.

Then downstate came to cities. New York City was growing fast, really fast. Between nineteen hundred and nineteen sixty, the population of New York City more than doubled. And the city needed power, lots of it, right where people lived and worked.

In that same period, electricity consumption increased fifty or sixty fold. To provide this electricity locally and quickly, utilities like Consolidated Edison or ConEd built urban fossil fuel plants, burning coal to spin turbines. These were cheaper to build than new hydro sites or long distance transmission lines. And back then, nobody cared about carbon emissions.

Every utility in the eighties, nineties, you know, built coal and gas. Right? It it's all we had. It it's what there was.

Except for nuclear, a zero emission reliable source of around the clock power.

The Indian Point nuclear plant opened in the nineteen sixties. It became a major source of carbon free power for the city until it shut down in twenty twenty one, taking around two thousand megawatts of steady power with it. When it closed, gas fired plants filled the gap, and New York lost a big chunk of its zero carbon supply overnight. CO two emissions rose. However, renewables did start making headway upstate.

Relatively cheap and empty plots of land were perfect for building wind and solar.

In upstate New York, you have plentiful land. And so what that means is it's a lot easier to build power upstate, but it's not necessarily easy to transfer that power downstate.

In and around the city of New York, with some of the most expensive land and real estate prices in the world, it's much harder to replace those gas plants.

If I have a five hundred megawatt gas plant ten miles outside of New York City that's built on a pretty compact footprint, how much more land would you need to replace that with something that was renewable? How are you gonna do it?

That's the origin of today's bottleneck. It's not one problem.

Just the topology, the terrain, the density of population, and the historical deployment of resources, the kind of community view on environmental concerns, all creates this melting pot of New York.

Upstate is rich in clean energy, hydro, nuclear, wind, solar. Around ninety percent of electricity generated there comes from clean sources.

Downstate is everything that upstate is not. Huge demand for power, dense population, very little space to build anything, and the generation it does have comes largely from burning fossil fuels. So why not just build more clean energy upstate to supply the city's downstate? Electricity moves through wires called transmission lines, but these wires have limits.

You can think of a transmission line almost like a a water pipe. Right? There's the diameter of the pipe that determines how much kind of water can flow. There's the rate that water can flow, right, which determines how fast it gets there.

And the transmission lines between upstate and downstate are old and crowded. So why not just build more wires? First, they're expensive, super expensive, millions of dollars per mile, And they touch everything, private property, protected land, indigenous territories, dozens of local governments.

New York is a pretty progressive state when it comes to individual rights around these certain things. And so there are projects that have been stopped just because communities will be vocalized in their local community boards about them.

Any inch of the route can spark a fight. So the state needs to be strategic about what and crucially where it builds new generators.

New York isn't struggling to hit its targets because nobody wants to build clean energy. Everyone wants to build clean energy at the same time. But the state's permitting system is one of the slowest in the country.

Ultimately, New York has a bureaucracy issue.

New York Independent System Operator or New York ISO is the grid operator. Basically, it's like the air traffic controller for electricity in the state. And one of its roles is to decide when and where new generation sources get built.

It's their mandate to make sure that when you turn on the lights, the lights turn on. In order to manage the power system, right, to make sure we don't have blackouts, they need to make sure power's on at the right time in the right place.

To do this, it runs something called the interconnection queue. Essentially, this is a waiting list for potential new generation projects, and they're waiting for permission to build.

As of December twenty twenty five, there were around twenty seven gigawatts worth of projects in the interconnection queue. All of them coming from clean energy sources like wind, solar, and batteries. That sounds great. Right? But getting through that queue is difficult and time consuming.

First, there are expensive deposits required to even enter the queue in the first place. Then come the feasibility studies.

Ultimately, you're going to the New York ISO with a set of local and state documents that says, you know, you've you've done your environmental assessment, you've done your land assessment, you've engaged with the community, and you have ownership rights or a route to ownership for the land to build this asset.

This is then followed by cluster studies.

When you're in the cluster study, what you're telling NiceO is, please tell me how much it's gonna cost me to interconnect my project. If you decide you're okay with that cost, NiceO gives an opportunity for all of those resources to stay or exit. The impact of the interconnection cost on an individual project can be enormous.

Because you aren't just paying to build your project. You're paying for the substations and transmission line upgrades too.

It can be upwards of sixty percent of what your total cap ex outlay is. So imagine you roll up to the grocery store to buy a turkey sandwich, and instead of ten dollars, it's actually seventeen because, you know, they're short of cheese that day.

As a result of all this, most projects die in the queue.

I would say ninety percent plus projects do not make it through to commercial operations.

And then, even if your project gets past the queue, has enough funding, and is ready to go, your project might still face some unexpected hurdles.

The Trump administration today announced an immediate pause on the leases for five large scale offshore wind farms off the East Coast.

Like, quite candidly, one of the most disappointing things to come out of the current administration that we have is the stonewalling of offshore wind development.

Whether this is even legal is up for debate.

A Massachusetts federal judge struck down president Donald Trump's executive order that revokes permits for new offshore wind farms.

Regardless of the outcome, this kind of policy back and forth creates uncertainty for any project and makes other potential builders hesitant to invest.

But there's another more fundamental reason New York is so slow to build renewables. Put simply, the money, for a number of reasons, just doesn't always add up.

I would say one of the things that is is unique to to to New York than other states, there are a lot of rules and regulations around sourcing of labor. Ultimately, it means is you need to use locally sourced labor. All of that infrastructure building is just more expensive to do in New York.

These rules support local jobs and ensure equitable pay, but they also push construction costs twenty five to fifty percent higher than identical projects in Texas where labor laws are less strict. Renewables and batteries face revenue challenges too. Capacity markets, which pay assets to be available at those times when the grid is under the most stress, are poorly suited to intermittent renewables.

As a result, solar only gets paid a fraction of the amount that on demand generators, like gas speakers, can earn.

Why? Well, the grid's power demand is highest from around six to nine PM when everyone returns home from work and starts watching TV.

If I'm a natural gas facility, I just increase the tap, I decrease the tap.

At eight PM, I can generate as much or as little as I want. If I'm a solar facility, at eight PM, the sun is probably set. And so you ask yourself, how much solar is being generated out of my solar panels at eight PM? The answer is probably maybe ten percent.

On top of this, New York has relatively stable energy prices. While this might sound attractive in theory, in reality, battery energy storage systems in particular often require Texas or California style price volatility in order for the business case to pencil out.

The point is they've created a reliability contract to pay you for being there. And so fundamentally, the power prices in the New York ISO are not meant to be volatile. They're not meant to have huge peaks and troughs.

Good for consumers, but less exciting if you're trying to finance a multimillion dollar fleet of batteries. Ultimately, just saying we need more clean energy isn't enough. But what other options does New York have?

ERCOT is the Electric Reliability Council of Texas.

Ultimately, it's the New York ISO equivalent for Texas. Fundamentally, they're approaching interconnection as a connect and manage problem. Meaning, you can interconnect today, and we can manage with your problems later. The result, faster deployment of all renewable resources, battery storage resources, natural gas. It doesn't matter. So if New York is serious about renewable aspirations, probably need to take a hard look in the mirror and and and really ask ourselves, is the cluster study enough to get us to where we wanna be?

With its out of date transmission infrastructure, arduous permitting processes, large interconnection costs, ongoing policy uncertainty, and relatively modest financial incentives, more projects in the New York ISO are bound to remain in limbo or get scrapped altogether. The next decade will decide whether New York becomes a global leader in clean energy like Texas and California or a cautionary tale on how not to design a power market.

What do I think about New York hitting seventy percent renewable portfolio standard by twenty thirty?

No way. Not a chance, but it'll get us closer. And I think that is the more important outcome here.