Key Takeaways
The builder of a transmission line designed to access $11 billion of renewable energy assets determined costs were rising and they would need to be paid more.
Costs are skyrocketing for builders due to inflated equipment prices, driven by a climate agenda and federal and state money and regulations that are forcing the closure of existing generation sources.
New York agreed to set aside the “Clean Path” transmission system bringing electricity from renewable generation sources (wind and solar) upstate to demand centers downstate.
New York City could face energy shortfalls as early as the summer of 2026 if an additional transmission line is not built bringing hydroelectric power from Canada.
New York State has been successful at shutting down fossil fuel and nuclear generation, but it is having a hard time replacing it with generation or transmission that will meet its particular standards, so its electricity is becoming more expensive and less reliable.
A planned transmission line for “clean energy” development has been terminated by the state of New York and its developers—a line planned to come online in 2027. The Clean Path project is a 175-mile transmission line designed to play a “critical” role in New York’s climate goals by delivering 5 gigawatts of renewable energy—wind, solar, and hydroelectric power—to New York City, which is facing anticipated electricity shortages in 2033 and 2034. The state aims to generate 70% of its electricity from renewable sources by 2030 and to achieve a “zero-emission electric grid” by 2040. However, the developers of the project had initially agreed on a budget and terms with the state before the impacts of inflation and rising material costs affected the overall project. In response, the developers sought higher subsidies from ratepayers, but this request was denied.
Clean Path NY is an $11 billion renewable energy project that includes 3,800 megawatts of wind and solar power sourced from more than 20 new renewable generation facilities. The project also features a new 175-mile underground and underwater transmission line, which will connect to the New York Power Authority’s existing 1,160-megawatt Blenheim-Gilboa Pumped Storage Power Plant. To meet New York’s climate objectives, new transmission infrastructure is needed to transport upstate renewable energy to downstate regions, which are still heavily reliant on fossil fuels due to current transmission limitations.
The New York Independent System Operator (ISO) recently published its 2024 Reliability Needs Assessment, which identified a 17-megawatt shortfall in the summer of 2033 for New York City, increasing to 97 megawatts in the summer of 2034. The ISO also noted that reliability margins could be at risk by the summer of 2026 if the Champlain Hudson Power Express transmission project is not brought online by May of 2026. The Champlain Hudson project is a 339-mile transmission line that would bring 1,250 megawatts of power to New York City from Québec’s hydroelectric generators.
The transmission line is expected to supply around 20% of New York City’s power. Developers broke ground on the line last month. The ISO assessment assumes the retirement of 517 megawatts of small gas plants in 2031 based on state legislation, demand growth from large facilities that fuel artificial intelligence and electrification of heating and transportation, and the unavailability of non-firm gas generation during the winter peak period. New York has enormous reserves of natural gas which extend from the Marcellus shale in Pennsylvania but it has banned hydraulic fracturing.
According to the ISO, New York’s peak system demand is forecast to grow by approximately 7,300 megawatts in winter and 2,300 megawatts in summer over the next ten years, which is driving the reliability need and risks identified in the assessment. “As the New York statewide grid is expected to become winter peaking in the mid-2030s, it is expected that the gas supply to electric generation plants will be strained beyond what has been observed historically,” the ISO said. The new transmission line from Quebec to New York City will help, but it is not expected to provide winter capacity.
The projected violation of reliability criteria identified in the ISO’s recent reliability assessment is the second potential shortfall it has identified recently. In July, the ISO concluded New York City will face a 446-megawatt deficit in its reliability margin beginning in the summer of 2025 due to rising electricity demand and new nitrogen oxide emission limits on peaker plants, resulting in their premature retirement. To maintain reliability, the grid operator opted to keep four peaker plants operating past their expected May 2025 retirement date. The four generators are a “temporary solution,” and will run for an additional two years to support New York City’s reliability needs.
Conclusion
New York State and the developers of the Clean Path transmission line decided to terminate the project that would bring power generated by renewable energy from upstate New York to New York City. New York State refused the developer’s request for higher rate payer subsidies due to the increased cost of key project components that were hit by inflation and Bidenomics. The project’s increased cost and cancellation are just some of the extraordinary challenges that the grid faces in the transition to renewable energy. Blue states are rushing the renewable energy transition and forcing premature retirement of fossil fuel generators that are happening too quickly and that are not aligned with the addition of new resources. Besides risking reliability, the transition is also adding to the cost of energy for consumers as the new transmission lines and the wind and solar units would not be needed if the fossil fuel plants were allowed to continue to operate. But onerous regulations by the state and federal governments are forcing their premature retirement.
