New York Offers Alternative Approach to Becoming a Clean Energy Economy

For several years utility industry strategists and public utility officials have been trying to come to grips with a potentially lethal threat to the utility business model. Now New York is taking the lead in finding an approach that may serve as a useful model for other states.

In fact, New York — which has been long been part of the Regional Greenhouse Gas Initiative that places caps on power plants in the Northeast — is quickly becoming one of the most effective states in the country when it comes to promoting clean energy solutions. In the year and a half since the devastating impact of Hurricane Sandy, New York Gov. Cuomo has appointed strong leadership and devoted large-scale investment to develop a resilient energy infrastructure that can withstand the extreme weather events brought on by climate change. And the state is now digging into a major evaluation of how energy is produced, distributed, and priced.

On April 24, during what could have been a routine proceeding for the state’s utilities board, Gov. Cuomo made a highly unusual announcement: the Public Service Commission will re-evaluate the entire regulatory framework that governs how New York residents receive and pay for electricity. Over the next few years, EDF will work closely with the Governor’s office, the Public Service Commission, and utilities like Consolidated Edison to identify solutions that maintain reliable and affordable power while allowing more customer control and greater grid efficiency. Imagine a future in which customers could produce and store energy from rooftop solar panels and be compensated for helping the electric grid.

The move puts New York at the forefront of states looking to keep pace with a rapidly-evolving energy industry. Fueled by the need to mitigate climate change, the proliferation of new energy services and products is beginning to erode the utility industry’s longstanding business model: providing the maximum amount of electricity for the maximum dollar return. Much like telecommunication companies that saw landlines fall by the wayside over the last decade, utility companies are facing a future in which electric vehicles, rooftop solar panels, and other types of local, on-site power generation are commonplace.

New York’s decision to rethink its electricity market might have been enough news for one day, but Gov. Cuomo accompanied it with a promise to invest $1 billion  in solar energy. This move was aimed at making New York’s solar industry sustainable and free of subsidies, while creating a “more resilient and flexible power grid, lower[ing] the state’s carbon footprint, and promot[ing] a cleaner and healthier environment for all New Yorkers.”

The investment will go to the NY-Sun Initiative, which provides long-term funding to existing businesses in the solar energy market and attracts new investments to New York from global solar companies. The president of the New York State Solar Energy Industries Association, Shaun Chapman, lauded the investment as the “greatest market opportunity for solar anywhere in the United States without exception.”

New York is also taking the lead in market-based approaches to clean energy development. Last year, the state launched the country’s second Green Bank – the first is in Connecticut – to spur private investment in clean energy. The bank, which started with $210 million and will eventually be capitalized at $1 billion, could unlock an estimated $78 billion in financing from the private sector.

New York will also introduce new laws that require utility companies to undertake impact studies to assess their vulnerability to climate change-related risks. The new laws will ask utilities to document how they intend to address the increasing likelihood of extreme weather events, such as severe storms and prolonged heat waves.

New York hasn’t quite caught up with California when it comes to clean energy policy, but it is building a well-deserved reputation for bold, innovative thinking. In the years ahead EDF will be working hard to help put these exciting ideas into practice.

Rory Christian is the director of New York Clean Energy for the Environmental Defense Fund.


Morning Consult