Renewable energy, manufacturing plants and AI data centers are popping up outside urban areas, often in regions with poor electrical infrastructure.
New York utilities are spending more than $4 billion to modernize the grid for those facilities. They are investments for which New Yorkers — many of whom are already struggling with utility costs — will have to pay for in the coming years.
"Transmission is the enabler," said Bart Franey, vice president of clean energy development for National Grid.
A renewable energy or a manufacturing facility can't just pop up and connect to the electric system. Transmission lines act as a freeway connecting the state's urban cores. Then there's the distribution system — the highway offramps — which send power from transmission lines to homes and businesses.
Because those transmission lines can only carry so much electricity, parts of the state become blocked off from investment.
"As demand for electricity grows, identifying sites with sufficient capacity is increasingly difficult," said James C. Johnson, executive director of the Steuben County Industrial Development Agency.
Improving those lines adds lanes to the energy highway.
The state is working to develop wind and solar resources as part of clean energy mandates laid out in the 2019 Climate Leadership and Community Protection Act.
It's most economically feasible to locate a solar farm on flat agricultural land. But agricultural communities don't generally have strong electric infrastructure, because they're not traditionally in areas with burgeoning economic development.
That can lead to numerous projects flooding a few communities where transmission infrastructure is limited, while making development impossible in swaths of the state where it's not.
"The transmission we have up there (in rural areas) was built a century ago, and it was there to serve rural communities that don't have a lot of economic growth," Franey said. "Now, we're asking that same wire to export a lot of the renewables from those remote corners to loads across the entire state."
In 2023, the Public Service Commission authorized utility companies to spend $4.3 billion on 62 transmission projects to allow renewable energy into more areas of the state. Because the development will, in theory, benefit all New Yorkers, the costs are paid for by everyone. The companies will start charging customers for the projects as they are completed.
By 2030, residential households that use average amounts of power will pay between $32 and $64 a year for those improvements.
Franey emphasizes the investments will not only help handle transmission of the renewable energy electricity but also improve an aging system. Power created in northern and western New York struggles to make it to Albany because of transmission constraints. Several National Grid projects in the St. Lawrence County area and in Rotterdam will allow more affordable energy into Albany, Franey said.
National Grid's Upstate Upgrade plan, which includes the renewable energy-driven investments, will construct or rebuild 1,000 miles of transmission lines and 45 substations.
The improvements "will enable a lot more opportunity for manufacturing, for industrialization," said Michal Bartczak, one of the leaders of Avangrid's transmission development program.
"These projects have allowed us to respond to economic development opportunities that have been out of reach in the past," said Johnson, the economic development leader in Steuben County.
Much of western New York's existing infrastructure is at least 50 years old, Bartczak noted. An aging grid is not just a New York problem. About 30% of America's transmission lines are beyond their useful life, the Bank of America Institute found. Several circuit breakers being replaced at a National Grid substation in Rotterdam were from 1968, the Times Union observed on a recent tour of the facility.
"Replacing aging infrastructure is more cost-effective in the long term for our customers, which is why we are wisely investing in replacement and modernization to ensuring long life for our assets," said Patrick Stella, a National Grid spokesman.
Dozens of New York State Electric & Gas substations, which help manage and distribute electricity, are also not able to support the energy demands of future growth in those areas unless necessary upgrades — paid for by developers — are made. The Public Service Commission approved the transmission projects, in part, because increased clarity around grid access is expected to reduce the prices charged by renewable energy developers.
Much of the work being done in New York to handle the distribution of electricity from renewable energy sources has already been completed in states with more advanced solar and wind industries, including Texas, which has better infrastructure in place to handle the additional capacity on its grid.
In the early 2010s, Texas built thousands of miles of high-voltage transmission to connect renewable energy development in rural parts of the state to urban areas, the U.S. Department of Energy reported in 2023. Investment in New York was mostly limited to addressing reliability concerns during that period, not clearing the way for new power generation, the same study asserted.
Improving transmission is reasonable, but requiring that residents of Suffolk and Erie counties pay the same for the investment is not, said John Howard, who voted against the plan when he was formerly a member of the Public Service Commission. Costs should be allocated proportionately to those who benefit from the plan, Howard contends.
Utility companies were also given latitude to spend 50% more than the approved $4.3 billion if projects ran over budget, something to which Howard also objected.
"Tell me what other things anybody would buy that would do this. ... It just flies in the face of consumer sensibility," Howard said.
He also objected to the healthy profits utility companies will enjoy from the spending. Utility companies' high profit margins lead to higher rates, according to more than a dozen former utility regulators, company executives, economists and energy consultants who spoke to the Times Union in October.
All this investment is occurring on top of utility companies' requests for higher rates to fund other investments in the state's antiquated electric and gas system. National Grid customers started paying about $22 a month more in September after the Public Service Commission approved more than $5 billion in investments. Three other New York utilities are seeking electric rate increases.
"Let's not lose sight of the fact that we're underutilizing the grid that we've already built and already paid for," said Noah Ginsburg, executive director of the New York Solar Energy Industries Association.
Renewable energy projects can't come online unless the grid can fully support their capacity. As a result, developers spend millions to improve system reliability.
The state could adopt flexible interconnection, allowing grid operators to shut down a facility if it threatens to overload the system during peak hours. Developers shoulder the risk of losing out on revenue during certain parts of the day. Without needing to pay for costly upgrades, projects could be built faster and cheaper, Ginsburg asserted.
It's also questionable whether the right transmission projects were chosen. Between January and October this year, 180 wind, solar and other energy-intensive projects were cancelled, according to New York Independent System Operator data. That's less than at the same point last year, but far more cancellations than in 2023 and 2022.
Some of the cancellations can be attributed to changes in the grid connection process, said Marguerite Wells, executive director at the Alliance for Clean Energy New York. The state "needs a new approach to determine which grid upgrades are necessary and how to pay for them" to ensure investment is paid for equitably and successfully opens up new areas of the state for development, Wells added.
'Increasingly Impossible'
The effectiveness of the grid investments is being tested at a high-stakes moment for New Yorkers — an era when the cost of living remains very high for many residents and businesses.
In 2020 — when the world's attention was focused on the coronavirus pandemic — a vicious feedback loop grew in the energy industry. Over the past several years, a series of events has also contributed to a rise in energy costs.
Between 2005 and 2020, electricity demand remained flat in the United States. The cost of electricity even fell between 2015 and 2019 in New York, according to the New York State Energy Research and Development Authority.
Those trends held in the early days of the pandemic, but the groundwork for runaway costs then started to build. In July 2020, National Grid asked the Public Service Commission to raise electric rates and make upgrades to its system.
Many projects weren't approved by the commission because there "was a recognition that consumers were really struggling," said Ian Donaldson, a communications and policy manager at the Public Utility Law Project.
But the need for infrastructure improvements didn't go away, and many were deferred to National Grid's rate plan this year. Utility expenditures on infrastructure have risen steeply every year since 2020, according to a state Department of Public Service report.
Now, many New Yorkers are struggling more to pay utility bills than they were during the pandemic.
Residential and commercial customers had as much debt with National Grid in October as they did in October 2020, after adjusting for inflation. The company's electric rates outpaced inflation by about 17% during that time span.
And when Russia invaded Ukraine in 2022, it pushed up the cost of natural gas. Prices remain elevated as the war drags on and the United States exports more gas, leaving domestic supply strained.
Post-pandemic inflation and increased interest rates both slowed renewable energy development in New York and increased the projects' costs.
At the same time, strides in artificial intelligence and cryptocurrency led to the emergence of energy-intensive data centers across the state. Former President Joe Biden's administration invested in onshoring domestic manufacturing, which also necessitates large amounts of electricity. Micron alone may require the power output of a nuclear power plant for its chip fab facilities being built in upstate New York.
In the backdrop, there are shifts occurring in New York's Climate Act, which provides incentives for rooftop solar, renewable energy and the state's nuclear plants through fees on utility bills. National Grid customers pay about $10 a month for programs related to clean energy and greenhouse gas reduction mandates.
Another troubling trend: As energy becomes ever more central to both economic growth and household affordability, even seasoned observers are finding it harder to untangle the complex policies and market forces shaping the industry.
"It's increasingly impossible for the average mortal to understand what the hell is going on," said Howard, the former Public Service commissioner.
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