Investments in infrastructure, renewable sources will help Northern New York grow as a leader in energy production
Northern New York is an important supplier of low-emission energy for the state as New York ranks fifth in the nation for renewable energy capacity with 94 percent of electricity generated in the north country produced from renewable sources. And because the region uses only about one-third of the total electricity it produces, the north country also reaps the economic benefits of exporting the remainder.
But with low natural gas prices challenging renewable energy and much of the state’s electrical transmission infrastructure aging, challenges to garner investments to the grid and opportunities to ramp up renewable energy production, notably wind, lie ahead.
Of the 94 percent of grid-tied electricity commercially produced in the north country, 78.5 percent came from hydropower, 12.8 percent from wind and 2.36 percent from biomass in 2010, according to a North Country Sustainability Plan released in May, a comprehensive look at energy in the region funded by the New York State Energy Research and Development Authority. The largest source of non-renewable electricity in the region was generated from a mix of sources, the largest portion of which was natural gas; this summer’s transformation of the former coal-burning site at Fort Drum into ReEnergy Black River eliminated the use of coal, petroleum, coke, tire and most fuel oil used for electricity production in the region, that report said.
“The high contribution from renewable electricity generation in the north country far exceeds the statewide goal of 20 percent energy generation from renewable sources by 2015,” the report stated. “This places the region in a unique position: it is able to make a substantial contribution to this statewide goal while fully providing for its own electricity needs and generating large quantities of renewable electricity for export to surrounding regions.”
Net exportation is “absolutely an economic driver,” said Stephen D. Bird, an associate professor of political science at Clarkson University, Potsdam, who focuses primarily on energy and environmental policy, noting the substantial economic impact of hydro facilities. That’s primarily the St. Lawrence-Franklin D. Roosevelt hydroelectric power plant in Massena, which has 32 turbine-generators half controlled by the New York Power Authority with a production potential of more than 900,000 kilowatts.
“The economic value of cheap power in and of itself is really substantial,” Mr. Bird said. Because of NYPA contracts with municipalities such as Massena, electric rates are one-half to one-third of New York City rates.
While the rates may not be “driving a whole bunch of new entrants in the game” as often power is but one small component of a business’s overall expenses and decision on where to locate, Mr. Bird said that inexpensive power is keeping companies in the region that would likely have left otherwise.
“There’s no way that Alcoa would still be here unless it had that access to cheap power,” he said.
The “lion’s share” of the dam’s production — more than half — goes to Alcoa’s electricity-demanding aluminum smelting operations and the low rate “really is keeping Alcoa in the north country,” NYPA president and chief executive Gil C. Quiniones said in an interview.
About 90 percent of the dam’s generation goes to private companies, including Alcoa. Statewide, 51 municipal electric systems and rural cooperatives get cheap hydropower from NYPA’s Niagara hydroelectric plant in Lewiston, which works in tandem with the FDR plant.
This summer, a 30-year contract went into effect committing Alcoa to investing at least $600 million to modernize its Massena operations and retain at least 900 jobs at the company’s Massena East and Massena West smelters in return for low-cost electricity from NYPA.
The power authority recently completed a $281 million upgrade to all 16 of the dam’s units and control system, positioning it to operate for the next 50 years, Mr. Quiniones said.
The dam’s economic impact extends to other companies, too. Its Preservation Power program, which is available to businesses in Franklin, Jefferson and St. Lawrence counties, and ReCharge NY, available to businesses and nonprofits in the seven-county north country region, have retained 7,890 jobs and created 199 jobs through the provisions of cheap power, NYPA says. In total, 24 businesses and seven nonprofits receive allocations, including Upstate Niagara Cooperative, which started producing yogurt at a facility in North Lawrence in 2011.
At the same time cheap hydropower is “keeping Alcoa in the north country as an anchor, other excess power that has not been allocated is a signal to the industry that there is capacity in the north country,” Mr. Quiniones said. Preservation Power and ReCharge NY have a combined 214.7 megawatts of unallocated power; NYPA works with various economic development organizations to help attract new businesses to the area, capitalizing on the draw of cheap power.
And, as identified in Gov. Andrew M. Cuomo’s $5.7 billion Energy Highway Blueprint, a comprehensive plan to upgrade the state’s transmission lines over the next five to 10 years, upgrades to the Moses-Willis line are under way. The Energy Highway Task Force identified that project, known as the Moses-Willis Separation Project, as reducing bottlenecks to spur renewable energy development in Northern New York. It will improve the reliability along the only major transmission corridor traveling east from the plant.
A local investment: 230 kV line upgrade
An upgrade to the north country’s two existing, 75-year old Moses-Adirondack-Porter 230 kV lines to 345 kV lines is a $1.35 billion project that has been touted as having the potential to ramp up the north country’s energy exportation and renewable production.
It was marked as an “actionable project” following the governor’s request for action under his Energy Highway Task Force in April 2012, after being listed as a potential project to improve state power flows in a 2009 report.
The new lines, which would require 260 circuit miles of rebuilding, would have northern terminals at the Moses station near Massena. One would connect with the Chases Lake wind facility and then continue to its southern terminal at its Marcy station. The other would run directly from Moses to its southern terminal at Edic station. Both southern terminals are near Utica. The power authority owns the Moses-Adirondack section, which is about a decade older than the Adirondack-Porter section, which National Grid owns.
Three projects totaling $385 million were marked “immediately actionable” and, according to a New York Transmission Owners report, are distinguished from the actionable category in that they help the upstate-downstate power flow and can better address needs if the downstate Indian Point nuclear plant were to close by the end of 2015.
Last month, the state’s Public Service Commission approved construction of more than $500 million in new power lines, expected to be in service by mid-2016 and deemed necessary to maintain the grid should Indian Point close. The lines are in the Ramapo area of New Jersey, Delaware and Sullivan counties, and on Staten Island.
The Massena-Marcy project and the others in that tier of necessity are “being held aside for now,” but are all in the mix, said John E. Maserjian, spokesman for New York Transmission Owners, who called it “one of many projects identified as improving power flow in the state.”
“At some point in the future, we may revise the project or the state may request additional proposals to further improve the state’s transmission grid,” he said.
Mr. Quiniones said that “it’s one of the projects that we are actively looking at, especially the NYPA portion.” The upgrade would build a more modern, flexible and resilient transmission line that would improve the flow of power and facilitate integration of renewables as more wind farms crop up in the north country, as well as stimulate the economy during the construction phase, he said.
The power authority has embarked on a $726 million life extension of its 1,400 circuit-miles of transmission lines in response to the Energy Highway initiative; the 230 line is part of a subset of projects that NYPA aims to complete before 2020, Mr. Quiniones said.
The upgrade would also increase interconnection with Canada, given that Quebec has peak demand for electricity for heat in the winter, while New York’s peak demand is in the summer.
“There’s an opportunity to collect and exchange power,” he said, adding that interconnections to Canada indirectly “help the entire power flow be more effective and efficient.”
Mr. Bird added that while the line wouldn’t necessarily bring in more money, it might increase opportunities to build new power projects in the area, as well as prevent rate increases that result from clogged lines.
“More companies might say they would be willing to build in the north country so they can sell to New York City and make that money,” he said.
Champlain-Hudson Power Express: A potential aquatic clean energy bonanza
One project in the pipeline that has garnered some criticism from upstate lawmakers is the Champlain-Hudson Power Express, a privately financed, $2.2 billion, 333-mile, 1,000 megawatts buried transmission line that would bring cheap hydropower from the U.S.-Canadian border to electricity-hungry customers in the New York City area.
The line has been in development since 2008 and has since gone through a number of regulatory and public approval meetings. The project cleared some significant permitting this year that Transmission Developers Inc., Albany, which is building the line, says should result in construction commencing in early 2015 and the line in service by late 2017.
About 75 percent of the power for the line will come from HydroQuebec, a utility owned by the Canadian province, while the rest will come from other sources, with a focus on wind. The developer also says that the lines will not rely on eminent domain but be buried mostly in existing public and railroad rights of way, using cables that are virtually maintenance free once installed.
State legislators last year, however, led by state Sen. George Maziarz, a Western New York Republican, disagreed on several of the line’s selling points, including whether private investors will ultimately foot the entire bill, whether the line will increase rates for upstate customers and whether the line will squeeze out New York power producers and the jobs they generate.
“There’s lots of room for lots of projects — we’re just one of many that needs to be built,” David G. Jessome, the president and CEO of TDI, said in an interview. “It lines up with the governor’s Energy Highway. There’s no single solution.”
As the economy grows, “new resources need to come on,” he said.
“The project still continues to make fantastic sense because it’s going to bring lower cost electricity into the marketplace and it’s all done by private financing.”
In April, the New York State Public Service Commission approved the project, which Mr. Jessome said was a “very significant milestone for the project” because it meant the PSC identified it “as bringing renewable power into a very congested New York state marketplace, helping to diversify the fuel supply in the city and helping to reduce the reliance on natural gas.” Early last month, the Army Corps of Engineers also issued a notice of completeness of the project’s approval to locate cables in navigable waters, launching a public comment period that ends this month. Developers still need to obtain federal permits and secure financing.
“Everything is driving toward a financial close before the end of next year,” Mr. Jessome said.
A comprehensive Environmental Impact Statement on the project released by the U.S. Department of Energy in September reported that about 300 direct construction jobs would be created over the four-year construction period; Mr. Jessome said an analysis commissioned by TDI through London Economics found that 2,400 jobs across a diverse spectrum of the economy would be created long term primarily because of savings on electric costs.
And Mr. Jessome added that it’s “certainly possible” that upstate or north country wind producers could see a surge in the opportunity to fill in the segment of power not supplied by hydro.
“We will allow projects from anywhere that can get access to the line to get in the process,” he said.
Martin D. Heintzelman, an associate professor of economics and financial studies at Clarkson University, said that if the north country is able to hook into the line, it’s a “potentially huge benefit in terms of developing more renewable power sources” in the region.
“It’s an opportunity to bring more cheap power into New York state that should lower electricity prices for consumers,” he said. “I think it’s a very good thing. What it will allow is substituting to a certain extent — bringing in hydro power that will substitute some fossil fuel or conventional sources of generation. There are potentially large environmental benefits in terms of reduced pollution.”
“I don’t foresee that line squeezing out power production from the north country,” he added.
Is the answer blowing in the wind?
New York state ranks 12th in the nation for installed wind capacity, the fastest growing source of new electric power for several years and, as of spring 2012, 18 wind energy projects were operating with a rated capacity of more than 1,400 megawatts. Including Franklin and Clinton counties, the north country is home to three of those projects, the largest of which is the 195-turbine Maple Ridge Wind Farm in Lewis County that began operating in 2006.
In the north country, eight wind projects are presently in the New York Independent Service Operators’s interconnectedness queue, with varying dates of completion, but many, including those in Jefferson and Lewis counties, have been stalled by public opposition and financial uncertainty.
A 2010 Growing Wind report from the NYISO, a nonprofit that runs the state’s bulk electricity grid, concluded that the state could expand its wind production to 8,000 megawatts by 2018 with “no adverse reliability impact.” That report also concluded that “investments in upgrades on transmission infrastructure owned by NYPA would facilitate delivery of energy from proposed wind projects in Clinton and Franklin counties in Northern New York.”
Paul N. Copleman, a spokesman for the Spanish energy giant Iberdrola Renewables that built Maple Ridge along with Horizon Wind Energy, said the company is “very pleased with the performance of the project and our ability to deliver power into the New York market” and that there have only been “isolated and minimal instances of Maple Ridge not being able to deliver energy due to transmission constraints.”
“Our ability to deliver power is meeting or exceeding our expectations,” he said.
The farm’s 322-megawatt capacity provides roughly enough clean energy to supply electricity for 96,000 New York homes. While transmission potential at Maple Ridge might not hinder the farm’s generation, it “becomes an issue as you look at developing further in New York state,” Mr. Copleman said.
“That makes New York like lots of states,” he said. “To better take advantage of natural resources, we need a more robust transmission system, not just because renewables require it but because the system itself is fairly antiquated in the sense that a lot was built many years ago,” coupled with the fact that electricity consumption is increasing.
Iberdrola indicated last month that it intends to pursue its 48-turbine, 96-megawatt Horse Creek Wind Farm project in Clayton with “modifications,” but has not specified how much or if it intends to scale it back. Among roadblocks to that project is the pending expiration of the federal wind production tax credit incentive that provides $23 per megawatt of electricity generated for the first decade of a wind farm’s operation.
The Clayton project has already been scaled back from an initial 2005 proposal for a 130-megawatt project with 62 turbines in southeast Clayton.
In January, Iberdrola also called off its Stone Church Wind Farm project in nearby Hammond, citing uncertainty over wind power regulations and the wind energy market.
Iberdrola’s 39-turbine, 78-megawatt Roaring Brook Wind Farm project south of Maple Ridge in the town of Martinsburg is also under development, but Mr. Copleman last month said the company doesn’t yet have plans to start construction, but continues to consider it a good site for a wind farm.
Also in Lewis County, the Copenhagen Wind Farm, which is being developed by Brooklyn-based OwnEnergy, is progressing, with the developer this summer signing contracts with 13 farmers to build a 10-mile overhead 115-kilowatt power transmission line through their fields. The company also received a 20-year tax break to help finance the $198.5 million, 49-turbine, 79.2 megawatt project. The NYISO queue lists the project’s proposed commercial operation date as December 2017.
And in St. Lawrence County, Iberdrola’s North Ridge Wind project is also in the queue, with an approximate generating capacity of 100 megawatts, but Mr. Copleman said that project isn’t yet at the stage where formal permitting can begin.
A north country project that has been enormously contentious is British Petroleum’s Cape Vincent Wind Farm. Its status is now unclear after BP Wind Energy this fall moved to sell its entire in-development wind portfolio by the end of the year. The developer is, however, still proceeding with its state Article X application for the 285-megawatt project.
Economically, wind power is primarily a driver from a private standpoint, as wind installations generate jobs during the installation period, but few after that, Mr. Bird, the Clarkson professor, said. Maple Ridge employs about 35 people between the wind farm operator and the turbine manufacturer. Mr. Copleman declined to specify either jobs related to turbine maintenance or the costs of that.
“The direct value to the north country is actually much more about lease payments, directly to land owners, and property taxes,” Mr. Bird said. “Those dollars added up over the years are really significant and they’re local.”
At Maple Ridge, annual revenue payments to landowners involved have been more than $1 million, in addition to about $8 million annually in Payment in Lieu of Taxes and real estate tax payments. The farm also generates about $3.5 million a year for the Lowville Academy and Central School district.
With NYSERDA funding, Mr. Bird is working with a group of other Clarkson professors as well as data and power companies nationwide on a pilot project that seeks a way around the transmission obstacles in renewable energy generation — wind, solar and hydro — through green data centers. The idea is that sending data over fiber-optic networks, for colleges, hospitals, corporations or other entities that need data processing, is more energy efficient than moving power over transmission lines, for example, because when wind power is less plentiful, the workload for the data centers could be routed to a different pod with no impact on the user. Mr. Bird said the project is still some time away from a large-scale incarnation; economic and policy analysis is under way.
Detractors of wind power have cited concerns over the loss in property values as a result of wind farms.
“My research strongly suggests that there can be negative effects on property values,” said Mr. Heintzelman, who published a comprehensive study on the matter in 2011. “That does not imply that it’s a bad investment.”
His research found that PILOT payments to local communities are perhaps not high enough to offset property values, but he said the switch from coal and less clean power sources is a “real economic benefit” that should be considered.
His research found that proximity to turbines had no effect on property values in Lewis County, while it “has a usually negative and often significant impact on property values in Clinton and Franklin counties,” decreasing sales prices anywhere from about 8 to 17 percent, depending on proximity to the turbine. He speculates that’s primarily due to the way the turbines are situated farther from large communities in Lewis County than in Franklin and Clinton.
Though he hasn’t projected on the Cape Vincent project, a town-appointed committee has concluded that almost 4 percent of property owners would benefit directly from easement payments made by the developers and that PILOT agreements between developers and the town were estimated at more than $1 million annually.
The future: small-scale renewables, large-scale investments or both?
More than 80 percent of high-voltage transmission facilities in the state went into service before 1980, meaning that the grid requires millions in upgrade investments. That’s prompted some economists and scientists to propose that unclogging the grid might be more effectively accomplished through smaller, regional systems of renewable energy production, made more attractive as the return on investment for home-based alternative energy projects like wind turbines and solar panels improves.
A further dichotomy lurks in that two-thirds of the electricity supply is generated upstate, where only one-third of the demand is; a scenario that’s flipped downstate.
“The way the grid and transmission systems are set up, I believe that the energy future will have lots of distributed generation — solar panels, wind turbines, anaerobic digesters,” said Susan E. Powers, a professor in the civil and engineering department at Clarkson University and associate director for sustainability at the school’s Institute for a Sustainable Environment. “Eventually we need to get to the point that we have energy generation on the local scale.”
Nationwide, she said, the grid must be revamped to meet current needs, but in upgrading the system, “we really need to be thinking about upgrading to facilitate regionally, so it’s generated everywhere. That puts less of an emphasis on these high-voltage, long-distance lines.”
If we only invest in those lines, “we’re not re-thinking the bigger problem and trying to promote more distributed generation — largely renewable resources, small hydropower instead of mega-hydropower, small wind farms.”
Distributed generation could also help with the problem of storing wind by better averaging out where it’s produced and providing communities with a backup system for in-between hours, she said. And with technology rapidly improving the ability to store and generate electricity, now is the time to consider a “more radical change.”
“We’re trying to patch a 100-year old system,” she said. “It was the right solution 100 years ago; it’s not the right system today.”
Mr. Quiniones and Mr. Bird at Clarkson agree that a hybrid model is perhaps more viable.
“It’s not one or the other — the trend in the electric power industry is that there is going to be more distributed resources,” Mr. Quiniones said. “Smaller community grids will work in tandem with the current utility grid.”
When there is more penetration of electric cars, solar TVs and wind into the system in 15 to 20 years, the grid needs to transform accordingly, a need that the Energy Highway project is addressing.
“The governor is 100 percent correct that if we unclog the bottleneck the entire power circuit system will be more efficient and will help power economic growth statewide,” Mr. Quiniones said. “We need to have a grid that is more flexible, more resilient and more connected. You need to modernize both sides. There is going to be a use for the grid in the future of more distributed generation.”
Improving transmission capability enables all forms of energy to work more efficiently off the grid and will enable the north country to continue as a net exporter of energy, Mr. Bird said.
“If we want to sell extra energy to Canada and New York City, we will have to improve transmission lines,” he said. “I’m also in favor of making more robust locally based energy distribution centers” and investments in local energy infrastructure such as biomass stoves and solar panels.
Like Mr. Quiniones, he envisions a “double-barreled” approach that would capitalize on the north country’s strengths as a net exporter and simultaneously “make the local, regional economy more sustainability based and more driven by local resources.”
“We’re really well positioned to promote renewable energy,” Mr. Bird said.
Leah Buletti is a staff writer for NNY Magazines. Contact her at 661-2381 or email@example.com.