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Uncertainty surrounds energy highway

NEW YORK—Energy, and lots of it—from both new and existing sources. The big question—where the financing will come from.

Gov. Andrew Cuomo and his Energy Highway Task Force are attempting to solicit at least $2 billion in private investment to update the outdated energy systems in the state.

The main problem is congestion. Much of the state’s energy is produced upstate. Bringing it downstate through conduits and power lines creates congestion. Matthew Cordaro, former utility CEO at several different companies, compared it to “trying to put too much water through a small pipe.”

Using infrastructure that is already in place, such as replacing energy lines with newer wires and replacing small pipes with bigger pipes, could greatly help congestion, said Cordaro. Wires have been improved over the last two decades. They’re now made with better materials, creating less resistance on the wires. They are also simply bigger and wider.

Almost half of the power plants in the state are more than 40 years old, creating another problem. Upgrading the oldest, least efficient plants, and retiring others are two examples of what the Energy Highway program could do, said Gil Quiniones, chief operating officer of the New York Power Authority.

Alternatives such as natural gas, coal, and renewables, such as solar, hydro, and wind, are all sought, according to the task force, as are more policies and recommendations. Quiniones and the rest of the task force answered questions about the Energy Highway on Wednesday at a summit at Columbia University.

“What we’re hoping is that interested respondents are not just talking about their projects, but what are the components that they will need so that projects can move forward … whether it’s siting, or financing, [or] cost of recovery issues,” said Quiniones.

The Energy Highway program was proposed in Cuomo’s 2012 State of the State Address after receiving a lot of proposals to improve energy systems last year. On Wednesday it was announced that a Request for Information will be issued on April 11 seeking proposals such as new renewable energy production, more downstate production, and updated cybersecurity. These types of proposals would create jobs and investment.

However, the crux of the new program, attracting private investment, remains uncertain.

“That’s always been the contention—who pays for transmission?” said former utility CEO Cordaro. “The guiding principle is who benefits from the transmission should pay for it.”

Energy traveling south from upstate typically gets congested around Utica and Albany. Clearing this problem up would benefit the whole state, meaning costs could be spread out among customers statewide, said Cordaro, who sits on the board of the New York area Affordable Reliable Electricity Alliance.

Power lines and power plants are forms of long-term investment, like stocks. Paul Steidler, director of communications for the alliance, said it is unclear how motivated private investors currently are.

“It’s complicated,” said Steidler. The complication includes figuring out what the costs are, and how much the investor will gain.

Gov. Cuomo has said that he wants to “tap into upstate’s potential for renewable energy.” The Energy Highway has the “tremendous” potential for increased wind power specifically in upstate and Western New York, and Quebec, Canada.

A conference for those interested in the program will be held at 1 p.m. on April 19 at the DoubleTree Hotel in Tarrytown. Responses to proposals are due on May 30 and the action plan will be issued this summer.