Power Conundrums: Electrical Resources in the NYC Load Pocket
DOI:
https://doi.org/10.13052/dgaej2156-3306.2021Abstract
Power system deregulation has introduced new investment market
dynamics into the development of electrical resources. Under deregulation,
load pockets present various special, inter-related investment decision-
making problems. A variety of examples are provided. A game theoretic
approach suggests that large project development is constrained by
uncertainties about other projects and that, as a result, decisions are
not made in the timeframe that energy system planners had become
accustomed to under regulated regimes. This is consistent with observed
recent behavior in the New York metropolitan area power market. The
performance of power plant developers with approved Article X sites is
reviewed. Delays today in project investment and construction are shown
to result in predictable power shortages five to seven years in the future.
An argument is presented that smaller, demand-side type investments
avoid the investment-decision uncertainties of large supply-side projects
and bring desirable, more economically efficient investment behaviors
into the power market. The quantified potential of demand-side resources
in New York City is assessed in relation to projected demand growth. It
is observed that the reduced ability to control power plant investment in
a deregulated market makes the mobilization of demand-side resources a
more critical part of market performance.
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References
The New Palgrave Dictionary of Economics.
See Steven Stoft. Power System Economics, 2002. esp pp 390-394
for a locational marginal pricing (LMP) and congestion pricing
framework.
NY ISO “Power Alert” 2001 and “Power Alert” 2002.
J.Fisher. “Working Off a Surplus,” Hart’s Energy Markets v.8 no.12.
December 2003.
Air emission rules prohibit coal-burning within NYC and both
residual and diesel oils are restricted.
See B. Barcott “Changing All the Rules” NY Times Sunday
Magazine, April 4, 2004 for a summary account of this issue.
Pace Law Energy Project “A Clean Energy Strategy for the
Hudson River Valley.” Presentation of research findings, May
at the Hudson River Foundation, NYC.
The demand-response estimate is limited in the high-case to
the presently existing participation in the ISO’s demand-
response programs. The high-end efficiency estimate is little
more than 10% of NYC base load, when energy audits of
individual facilities typically find 25-40% electrical reductions
cost-effectively available. The on-site power estimate is limited
substantially below the 3,000 MW of cogeneration opportunity
found technically feasible in NYC by a NYSERDA study in 2002.
NRDC journal On Earth, December 2002.
The source of Figure 3 is the New York Energy Research and
Development Authority, New York State Energy Plan 2002.
For a full account of the development of IRP and utility efficiency
programs nationally and their demise under deregulation see
Richard Hirsh, Power Loss, 2001.
Hopefully many of the projects reaching their 10-year life are not
actually being retired (and therefore showing up as capacity
reductions in the data that account for the curve’s downturn
after 2002) but instead are being maintained and sustained by
private sector (facility) funding so that the picture may not be
quite what this graph suggests.
SBC-NYSERDA investment at $150 million per year is just more
than one half of what utility efficiency investment had been at its
-1993 peak.
