Increased participation from New York state facilities managers in demand response programs could help reduce emissions and boost electrical grid resilience, experts say.
New York City alone could create up to nearly 6.7 GW of demand flexibility in the winter and 1.75 GW in the summer by implementing a demand management system alongside expected levels of electrification by 2050, according to a report released last month by the PEAK Coalition, consisting of the New York City Environmental Justice Alliance, New York Lawyers for the Public Interest, Clean Energy Group, The Point Community Development Corp. and Uprose. A system utilizing solar, battery storage, smart devices and controllable thermostats, as well as virtual power plants that aggregate these technologies, could help reduce the city’s reliance on costly, polluting fossil fuel peaker plants, according to the report.
Building owners and facility managers across New York state face barriers to participating in demand response programs, according to Megan Carr, Skadden fellow at NYLPI’s environmental justice program and one of the authors of the report. Further, New York has not seen the proliferation of virtual power plants like some other states, Carr said in an interview. “While jurisdictions such as Colorado and Maryland have newly mandated that utilities plan VPP implementation, New York has no such mandate on the horizon,” she said.
The U.S. utility regulatory structure creates incentives for investor-owned utilities to make capital investments in fossil fuel infrastructure and traditional “pole and wires” solutions, passing on costs to ratepayers and earning “a hefty profit,” according to the report. The utilities “don't have any incentives to make … operational changes and implement demand response and virtual power plants,” Carr said.
To encourage demand response and VPP adoption, the PEAK Coalition report recommends that the state require the PSC to prioritize investments that reduce dependency on new fossil fuel infrastructure or “require a showing that utilities have maximized opportunities to shave off peak demand through operational changes, such as demand response, VPPs and energy efficiency programs.”
The report also suggests restructuring incentives to enable utilities to garner higher profits from investments that do not increase greenhouse gas emissions. Further reforms could also make demand response, VPP and energy efficiency programs more accessible to low- and middle-income communities by providing upfront payment incentives, streamlined on-bill credits and multilingual information for easier enrollment, the report says.
In New York City, buildings are “not automatically enrolled” in demand management programs, Carr said. “[The] enrollment process should be more straightforward and robust,” with more outreach and education, as well as opportunities for commercial building owners to invest in clean energy sources like rooftop solar and battery storage systems, “which can lead to significant financial benefits,” she said. Commercial buildings that install such sources and become part of a VPP “not only take [electricity] from the grid, but could also host distributed energy resources and feed back into the grid,” she added.
Daniel Chu, senior energy planner for the NYC-EJA, pointed to New York utility Consolidated Edison’s demand response requirements as another barrier. The utility requires a minimum reduction of 50 kilowatts, which smaller operators may struggle to meet, Chu said in an interview. “A lot of times, it’s on building operators to decide how they can participate in these programs,” said Chu, who was part of the team that authored the PEAK Coalition report. Chu advocates for regulatory changes that would make it easier for utilities to expand demand-response programs and further incentivize buildings’ participation.
According to Abbe Ramanan, project director at Clean Energy Group, New York PSC members can do more “to push utilities like Con Ed to offer more robust demand response programs,” which are critical in addressing New York’s projected reliability gap.
The New York Independent System Operator has identified a short-term reliability need in New York City starting in summer 2025. The quasi-government organization, which operates New York state’s electric grid and manages its wholesale electricity markets, noted that the city could experience a deficiency of as much as 446 megawatts for approximately nine hours on peak days under expected weather conditions when accounting for forecasted economic growth and policy-driven increases in demand. The PEAK Coalition report equates that projected deficiency to roughly 4.5% of the city’s total peak load.
Renewable energy projects, while necessary, often take years to implement; demand response programs offer a quicker and more flexible solution that can bridge the reliability gap in the interim, Ramanan said.
Ramanan advises facilities managers to take advantage of the New York State Research and Development Authority’s technical assistance program, which aims to help operators deploy solar and battery storage systems. Conducting facilities assessments for such installations and getting detailed cost estimates, including tax credits and potential utility bill savings from energy upgrades, are other proactive steps managers can take, Ramanan said.
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