A Brattle Group study released in February found that New York could achieve 8.5 GW in “grid flexibility” measures by 2040, saving consumers more than $2 billion a year.

The study was commissioned by the New York Department of Public Service as part of its Grid of the Future initiative, which defined grid flexibility as the “ability to shift either demand or supply to meet bulk power system and/or local distribution needs.” (See NY PSC Launches Grid of the Future Proceeding.)

The 8.5-GW figure is roughly 21% of NYISO’s forecasted winter peak demand and more than six times the current potential of 1.2 and 1.4 GW in the winter and summer, respectively. Grid flexibility measures could help by “displacing the need” for higher-cost resources, the study says.

“This report has really important implications for regulators, decision-makers and figures in industry,” said Amy Heart, senior vice president of public policy at Sunrun. “It sets out what the potential is, and how to get there. It demonstrates that this isn’t theoretical.”

The study says that implementing grid flexibility improvements could avoid $2.9 billion a year in power system costs by 2040, $2.4 billion of which could be returned to consumers. These cost savings come primarily from reducing how much investment in generation capacity would be needed to maintain reliability. Avoided distribution and energy costs were $408 million and $384 million, respectively.

“Really for the first time this says that there is a unique way for a flexible grid to meet this growing demand,” Heart said. “And we have the potential to use these resources and build programs that are cost effective.”

Currently New York’s grid flexibility primarily comes from NYISO demand response programs — Special Case Resources and Emergency Demand Response — amounting to about 1,300 MW of flexibility. An additional 414 MW of flexibility is facilitated by the Economic Demand Response program, in which large consumers reduce loads based on price signals in the day-ahead market.

Brattle found that managed electric vehicle charging, heat pump load control and residential behind-the-meter storage all had significant potential for increasing grid flexibility. In a future report, Brattle will examine the potential of thermal energy storage, thermal energy networks, increased efficiency, front-of-meter distributed storage and large loads with microgrids.

“This flexibility study is looking at things that we’re either currently doing or really close to doing, moving out of a pilot phase into mass market,” said Deb Peck Kelleher, deputy director of the Alliance for Clean Energy New York, highlighting EV charging demand-reduction programs. “I’m glad to see that those programs are working as they were envisioned to work.”

Noah Ginsburg, executive director of the New York Solar Energy Industries Association, said that he was pleased that the report looked at the grid in a holistic way and that it did a good job identifying both barriers and opportunities for flexibility.

“The moral of the story to me is if we are smart and address these barriers and create the right pricing and regulatory conditions to deploy a lot of these flexible assets, that’s just a huge savings opportunity,” Ginsburg said.

Barriers Identified

Brattle identified several key barriers to getting grid flexibility measures implemented, with the lowest-hanging fruit being regulatory barriers like zoning, permitting and lack of state goals.

This hampers adoption by consumers and does not incentivize utilities to incorporate grid flexibility into their projections. The study also notes that New York’s cost-benefit analysis framework may undervalue flexibility initiatives, leading to the deprioritzation of some technologies.

Brattle is saying, “‘Hey, just make this simple and effective and easy for customers to navigate, to sign up and to bring these resources to the table,’” Heart said. “These are the sort of tangible actions that we can get everyone together and hammer out.”

Tariff complexity prevents consumers from understanding or evaluating potential benefits from established compensation mechanisms. Utility tariffs also lack support for bidirectional distributed energy resources, like chargers and batteries, which depresses adoption. Retail rates also are not designed for customers to take advantage of grid flexibility.

Ginsburg said that local building codes compound other regulatory problems. He noted that in most of the Consolidated Edison footprint in New York City, residential battery storage is banned for fire safety reasons.

“This isn’t a matter of getting batteries built; it’s a matter of fairness,” Ginsburg said. “Frankly, New York City and Con Ed ratepayers are funding a lot of the statewide incentive programs that the city of New York doesn’t allow them to access.”

Now that Brattle had identified the barriers, it was now on DPS to pick a pathway to advance, Ginsburg said. He said he hoped this would lead to improved rate design and compensation for distributed storage programs both behind and in front of the meter.

Peck Kelleher said that the biggest challenge for DPS would be coordinating across all of its various proceedings and initiatives revolving around grid modernization.

“It was great work that was published by the Brattle Group,” Peck Kelleher said. “But how to take that data and inject it into each of the separate proceedings and keep them going in the same direction” will be a challenge.

Realistic?

“I think all power systems have unexploited flexibility and that something can, and should, be done,” said Francisco de Leon, a professor of electrical engineering at New York University. “I don’t think flexibility is the final answer to electric energy challenges of the future because its full-blown implementation (as described in the report) is very expensive.”

While de Leon said he was not opposed to the idea of increasing grid flexibility, the report was being “overly optimistic” about grid flexibility. He said the expected cost of generation in the report was far too high for the state to bear politically.

“Using the numbers in the report, the cost of marginal generation of electricity is expected to increase from $40 to 70/kW-year to over $200,” de Leon wrote in an email. “Would you like your electricity bill to increase by three to five times?”

Brattle says its analysis “found that overall net costs may be small relative to the size of the state’s economy and will be offset by the health and societal benefits. Nevertheless, managing power system costs will be crucial to delivering an affordable transition for New Yorkers.”

But de Leon said to expect a change of state government if the price of generation goes up that high as a result of decarbonization. With the current federal government not investing in renewables, and likely consumer unwillingness to deal with such steep price increases, decarbonization by 2040 was extremely unlikely, he said.

While load shifting could be “low hanging fruit,” de Leon was also pessimistic about HVAC upgrades serving as a cost-effective way to reduce demand. He said that the cost of acquiring and installing new heat pumps makes retrofitting cost “thousands of dollars per room,” which is difficult to sell to homeowners and “impossible” to sell to renters.

“We should not pass on the opportunity of heat pumps for new construction,” de Leon wrote. “But in my opinion the cost to retrofit old buildings is very large.”

Demand for electricity is going to grow in New York, whether from AI centers or electrification or manufacturing; no matter what the cause, people still want ways to manage their electricity, Heart said.

“The question becomes how are we going to squeeze as much juice out of these resources that are in people’s homes and businesses to help keep those costs low,” Heart said.

She pointed to the distributed resource deployment in Massachusetts where consumers can enroll in smart thermostat, solar and battery programs that compensate them for injecting power into the grid. (See Mass. DPU Approves 1st Round of Utility Grid Modernization Plans.)

“They have a very successful program,” Heart said. “While we encourage experimenting, we’ve done pilot programs; you don’t have to start from scratch. You can take this framework.”