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NYC report calls for battery peakers, blasts payments for 'archaic' fossil fleet

Operators of aging fossil fuel-fired peak power stations in New York City, which has one of the oldest such fleets in the United States, have collected more than $4.5 billion in capacity payments over the past decade, a bill ultimately paid by residents who would reap enormous economic and environmental benefits from an accelerated shift to energy storage and renewable energy alternatives, according to a report released May 7.

"New York City ratepayers spend billions of dollars to keep archaic, polluting power plants running in their communities," Lewis Milford, president of the Clean Energy Group, a national nonprofit organization, said in a statement. "It is a moral, public health and climate imperative to replace these plants ... with clean renewable and battery storage technology as soon as possible, investing those billions in a community-led, clean energy future."

SNL Image

New York City, during periods of high electricity use, relies
on a fleet of outdated fossil fuel plants.
Source: Thinkstock

Produced in collaboration with Strategen Consulting, which in 2017 said battery peakers were "ready for prime time" as fossil-fuel replacements in New York City, the report is part of a campaign launched by the newly formed PEAK Coalition, which includes Clean Energy Group, New York City Environmental Justice Alliance, New York Lawyers for the Public Interest and other groups.

Replacing the city's fossil peakers with batteries and renewable energy represents "the first major test" for the Climate Leadership and Community Protection Act, according to the PEAK Coalition report. Passed in 2019, the landmark climate law created energy storage targets, mandated 100% carbon-free electricity by 2040 and set a target of economywide net-zero greenhouse gas emissions by 2050. It also included requirements for significant clean energy and energy efficiency investments in disadvantaged communities.

Replacements underway

Most of the capacity payments to 15 New York City peaker plants identified in the PEAK Coalition report went to three companies: NRG Energy Inc., LS Power Group and ArcLight Capital Holdings LLC. Many of the plants are located in low-income parts of the city that suffer from poor air quality, including South Bronx and Sunset Park.

Downstate New York, including New York City and Long Island, has more than 11,000 MW of natural gas- and oil-fired generating capacity from simple-cycle, internal combustion and steam turbine units, most of which have been operating for 40 years or more, according to a recent S&P Global Market Intelligence analysis. Some of those plants have operated for more than 60 years.

While New York had only 51 MW of operating non-hydro storage online as of February, developers have proposed more than 5,500 MW of energy storage resources in downstate New York, New York ISO data showed as of Feb. 29.

One company, Sustainable Power Group LLC, has roughly 1,500 MW of lithium-ion battery projects under development in New York City, while the state of New York has targets of 1,500 MW of storage by 2025 and 3,000 MW by 2030. Sustainable Power Group, or sPower, is an affiliate of power plant owner AES Corp.

Stricter air emissions regulations, meanwhile, are driving the retirement and conversion of some aging peakers.

Operators of facilities in and around New York City have said they plan to retire nearly 650 MW of conventional peak power capacity and add pollution control equipment to another 1,300 MW, according to compliance plans recently obtained by S&P Global Platts. Among the units retiring is LS Power's Ravenswood CT, where the company is developing the state's largest battery storage project.

S&P Global Platts and S&P Global Market Intelligence are both owned by S&P Global Inc.