Evolving power supply-demand dynamics causing reliability concerns: NYISO

The New York Independent System Operator warned about how power reliability margins continue declining as fossil fuel-fired power generation resources retire and incremental supply resources fail to keep up with expected power demand growth, the grid operator said in its latest "Power Trends" report.

"The grid is undergoing rapid and instrumental change," Rich Dewey, NYISO president and CEO, said in a June 2 statement regarding the annual state of the power grid publication.

"We continue to observe declining reliability margins while forecasting a dramatic increase in load. It's imperative during this period of transition that we maintain adequate supply to meet growing consumer demand for electricity," Dewey said.

At a high level, the rapid growth of intermittent, renewable energy resources, and increasing deployment of storage technology is changing the supply side as the building and transportation sectors continue moving toward electrification, according to the report.

Additionally, the rapid development of "energy-intensive economic development projects like semiconductors, data centers, and hyperscale computing" is changing the power system along with society at large, Dewey said in the introduction.

Datacenters, driven by generative AI, machine learning, and cryptocurrency mining, are becoming major power consumers. The grid operator's forecast scenarios indicate that by 2030 power demand could increase by an incremental 1,600 MW to almost 4,000 MW due mainly to new large loads and building electrification, the report said.

Key findings

Power plant retirements are outpacing new supply additions and electrification programs along with new large-load customers associated with economic development initiatives are pushing projected power demand higher.

"Together, these forces are also narrowing reliability margins across New York and increasing the risk of future reliability needs," NYISO said.

Since 2021 NYISO reliability reports have found that reliability margins are declining, and in July 2023, the NYISO issued a Quarterly Short-Term Assessment of Reliability report that found a reliability violation in New York City beginning in the summer of 2025, when several power generation facilities called "peaker plants" were scheduled to leave the market due to stricter emissions requirements from state environmental regulators, the report said.

The grid operator said it needed to retain certain dual-fuel generators as the temporary solution for New York City's Reliability need until a power line transporting hydropower from Canada can be completed in 2026.

State legislation mandates decarbonizing the power grid, but fossil fuel-fired units will be needed for reliability until the "capabilities it offers can be supplied by other resources," which NYISO refers to as dispatchable emissions-free resources.

Energy efficiency and demand-side management will play an important role in maintaining reliability, NYISO said.

Repowering, or retrofitting, aging power plants can lower emissions, meet increasing consumer demand by expanding capacity, and provide grid flexibility that is needed to integrate more renewable energy resources, according to the report.

"From extending the lifespan of existing infrastructure to enhancing grid stability and supporting economic growth, repowering can provide a practical pathway or bridge for achieving lower emissions profiles, and a more resilient energy future," NYISO said.

New York is expected to become a winter-peaking power system by the 2040s due largely to space heating and transportation electrification. On the coldest days, natural gas availability for power generation can be limited, and gas supply interruptions "will introduce further challenges" for power system reliability, the grid operator said.

NYISO also continues to support competitive wholesale power markets as the best way to maintain reliability while minimizing costs to consumers.

Stakeholder feedback

The report finds that an aging power generating fleet, with more than 11% of the state's energy production coming from units that are at least 50 years old, is a reliability challenge, the trade group Independent Power Producers of New York, said in a statement.

"While IPPNY supports the findings of this important report, the NYISO's study clearly demonstrates that the time for State action is now," Gavin Donohue, IPPNY president and CEO, said.

"Energy consumption will continue to increase as New York strives to achieve its electrification goals, and that will require a diverse energy portfolio, as well as modernized generation units," he said.

"This report further proves that the aging units and repowering opportunities need to be addressed as they are critical components of New York transitioning to a cleaner energy future in a reliable, affordable, and responsible fashion," Donohue said.