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New York Grid Operator Warns of Reliability Deficit in New York City Area by 2025

The New York City area could have a deficit as large as 446 megawatts as early as summer 2025, according to the New York Independent System Operator.

The deficit in reliability margins for the New York City area is driven primarily by the combination of a forecasted increase in peak demand and the unavailability of certain generators, according to the NYISO report, Short-Term Assessment of Reliability:2023 Quarter 2.

Specifically, some generating plants affected by legislation known as the Peaker Rule will not be available, leaving NYISO’s New York City zone with a deficiency of as much as 446 MW for a duration of nine hours on the peak day during expected weather conditions when accounting for forecasted economic growth and policy driven increases in demand, the report said.

The Peaker Rule, adopted by the New York State Department of Environmental Conservation in 2019, limits nitrogen oxides emissions from simple-cycle combustion turbines used as peakers to meet spikes in demand.

As of May 1, 2023, 1,027 MW of affected peakers have deactivated or limited their operation, and an additional 590 MW of peakers are expected to become unavailable beginning May 1, 2025, all of them in New York City, the report said.

Beyond 2023, the New York City transmission security margin is expected to improve in 2026 if the Champlain Hudson Power Express connection from Hydro Quebec to New York City enters service on schedule in spring 2026, but the margin gradually erodes thereafter as expected demand for electricity grows, the report said.

Forecasted reliability margins within New York City may not be sufficient if the Champlain Hudson Power Express project experiences a significant delay, additional power plants become unavailable, or demand significantly exceeds current forecasts, according to the report.

Without the Champlain Hudson Power Express project in service or other offsetting changes or solutions, the reliability margins continue to be deficient for the report’s 10-year planning horizon, NYISO said. In addition, while Champlain Hudson Power Express is expected to contribute to reliability in the summer, it is not expected to provide any capacity in the winter.

Beginning in August 2023, NYISO said it plans to solicit market-based solutions to the reliability need that could include supply or demand-side solutions, such as generation, storage, and/or new participation in programs that aim to reduce demand.

In October and November 2023, after the solicitation window has closed, NYISO said it would evaluate the submitted proposals. If they are not viable or sufficient to meet the reliability need, interim solutions will need to be put in place, NYISO said.

One potential outcome could be relying on generators that are subject to the Peaker Rule to remain in operation until a permanent solution is in place, NYISO said.

In anticipation of such a scenario, the Peaker Rule authorized NYISO to designate certain units to remain in operation beyond 2025 on an as-needed basis for reliability.

Based on the findings its Short-Term Reliability Process, NYISO said it may designate certain units, in sufficient quantity, to remain in operation for an additional two years, until May 1, 2027, with the potential of an additional two-year extension to May 1, 2029, if a permanent solution has been selected but is not yet online.

NYISO said it would only temporarily retain peakers as a last-step approach if it does not expect solutions to be in place by the time the identified reliability need is expected in 2025.

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