New York's '50 By 30': A Model For The Rest Of America

As Hillary Clinton and Donald Trump roll out their very different energy policy platforms -- with Clinton promoting production of renewable energy and Trump of traditional energy -- it's useful to look at activities at the state level.
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As Hillary Clinton and Donald Trump roll out their very different energy policy platforms -- with Clinton promoting production of renewable energy and Trump of traditional energy -- it's useful to look at activities at the state level. Because President Obama's Clean Power Plan is making its way through the courts, there is virtually no federal energy policy, which means the 50 states of America are providing 50 pilot programs showing how different potential new federal energy policies could be implemented.

Among the progressive states, New York is worth watching. Governor Andrew Cuomo has advanced a "50 by 30" (50 percent of electric energy must come from renewables by the year 2030) climate and energy policy. Due to its rich existing endowment of energy resources, New York has the luxury to choose from contending forms of renewable and zero or low carbon energy resources. In 2015, 45 percent of New York's electricity came from oil, gas, and coal. That means 55 percent of electric power already comes from low or zero-carbon emitting resources. Here is the breakdown of that 55 percent.

31 percent of New York's electric energy in 2015 came from New York's nuclear plants. Whatever one's view of nuclear, it does produce carbon-free electric power. The problem is, some of the nuclear plants are in dire straits economically, and some are quite far along in the 60-year expected life span of these facilities. If New York could keep its nuclear plants open, maintaining "50 by 30" will be easier; if all of the nuclear plants close, it will be much, much harder. New York is already at "50 by 30" only by virtue of its struggling nuclear power fleet. Hence the determination of the Cuomo administration to keep the upstate nuclear power plants operating until 2030. The mechanism for allowing nuclear plants to survive is by awarding them "zero emissions credits" and requiring electric distribution companies to purchase those credits.

19 percent of New York's power in 2015 came from hydro, anchored of course by the huge facility at Niagara Falls. Only 2.8 percent of New York's electricity in 2015 came from wind. It has the potential for much more wind development, most of it located in upstate. Additional wind capacity could be developed assuming a buildout of north-to-south and west-to-east transmission to get the clean power to downstate markets. New York can import more clean power from Quebec and from PJM (the New Jersey-Pennsylvania-Maryland market). Several advanced new transmission projects are in development that could serve as "renewable expressways" into New York. New York could also ultimately be home to several thousand MW of offshore wind.

Solar energy is expanding rapidly, although most of it is "behind the meter" or a "retail" form of renewable energy. As the idea of "microgrids" takes hold as a result of New York's regulatory reforms, solar will continue to expand in New York. Energy efficiency is also part of the microgrid toolkit, so substantial additional efficiency improvements will continue. This microgrid-led activity in the retail sector of the industry will show up largely as slightly declining demand for electric power from the wholesale sector.

What implications does the New York experience have for President Clinton, or President Trump's, energy policy? Acknowledging that the state's carbon goal requires keeping nukes alive is an important adjustment in the clean energy narrative. But, the subsidy is aimed at "keeping nukes alive," not at creating the next generation of nuclear plants. That experiment is being conducted in other states (almost all in the South) and it is not going well: it turns out that electricity from new nuclear plants may be more expensive than renewable energy from wind and solar.

It's worth asking what New York will ultimately get from this portfolio of renewable and carbon-free initiatives. One answer comes from the old idea of "comparative advantage." What does New York have that makes it competitive in the renewable energy business? To be sure, it has finance, it has technology and first class educational systems. It seeks to be a 21st century high tech manufacturer.

Perhaps its most important attribute, however, is its location. The State's electric infrastructure -- its transmission and microgrid assets -- can, with modest investment, capitalize on New York's comparative advantages to create a booming, region-wide, renewable energy trade. With New York City and Long Island as the fulcrum, New York should be at the center of commerce between its own energy-rich upstate, the massive power market of "PJM" (essentially the area from New Jersey to North Carolina, westward to Illinois), New England, Quebec and Ontario. The greater northeast of North America abounds with intelligence, capital, and natural resources. New York can uniquely be the hub of regional renewable energy trade.

At first glance, the argument that New York will be the hub of an interregional market in renewable energy seems old-fashioned. But it isn't for two reasons. First, a regional renewable energy market, anchored in expanded trading links between New York and its neighbors, will provide electricity users throughout northeastern North America with access to the affordable renewable energy that is all around us. Second, an open market where energy and technology is traded is critical for the adoption of innovation. When markets are closed -- whether it be by actions of utilities or regulators -- innovation is stifled and along with it the economic growth that New York expects to get out of its renewable energy initiatives. Only with a regional renewable energy markets linking producers and consumers of energy can New York and northeastern North America secure large amounts of carbon-free energy at affordable prices.

What's true for the Northeast would be even more true for the nation as a whole. It's unfortunate that the Obama Administration's clean energy programs were largely thwarted. But Hillary Clinton has elaborated an ambitious and progressive renewable energy vision. The result of New York's effort provides other states with a roadmap on how to transition from vision to action, from the old fossil-fuel based power system to the new one based on renewable and sustainable power sources.

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