New York Power in Transition

New York State’s power system is in transition. Aging infrastructure and historically high prices have led policy makers to rethink the state’s power markets and facilitate their modernization.  While regulations   are still being defined, utilities, generators, consumers and other market participants are trying to determine what this all means.  The Capstone team worked with Bloomberg New Energy Finance (BNEF) and focused on four primary disruptions to the current market (policies, new ratemaking methodology, additional transmission, and a potential loss of the Indian Point Nuclear Facility) and three specific topics within the market (capacity markets, microgrids, and demand response).

Policies, such as Reforming the Energy Vision (REV), will stimulate the growth of clean energy and revamp the current infrastructure, as will the ratemaking changes it creates.  New transmission could lower prices or cover for gaps in demand, such as one created by the loss of Indian Point.

Across the board, the team found that there are many opportunities for growth in microgrids and demand response due to market conditions (e.g. electricity prices, spark spreads) and incentives.  These will likely increase due to policies that favor demand reduction and load shaving, as well as an overall goal for increased reliability and security.  While there are potential changes that could occur within capacity markets, none are foreseen at this time.  With all of this potential change, the New York Electricity sector is at the forefront of electricity markets nationwide in terms of progressive change and should be watched in the years that come.