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January 22, 2025

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SERC Assessment Warns of Winter Vulnerabilities

In its 2024-2025 Winter Reliability Assessment, published Jan. 15, SERC Reliability reported that all subregions have enough resources to meet demand under normal conditions this winter. But the regional entity warned that extreme conditions could put the grid under strain and potentially lead to a high risk of energy shortfalls. 

SERC produces the WRA each year as a regionally focused companion to NERC’s winter assessment. The ERO published its most recent WRA on Nov. 14, 2024, finding expected demand for most areas to be higher compared to the prior year and warning that multiple regions face elevated risk of energy shortfalls during widespread extreme winter conditions. (See NERC Sees ‘Reasons for Optimism’ as Winter Approaches.) 

Like the NERC assessment, SERC’s WRA focused on the three months between December 2024 and February 2025. The RE’s staff collected, verified and validated data on generation and transmission resources, planned outages, and demand projections from entities in its footprint, including balancing authorities, generator owners and operators, planning coordinators, and transmission owners. Data collection began in the first quarter of 2024, with updates incorporated before publication. 

The report drew on the National Weather Service’s winter outlook issued in October 2024, which predicted above-normal temperatures and below-normal precipitation across most of SERC’s subregions. SERC noted in the report that, while “the aggregated load forecast total for the SERC region is typically higher in the summer months,” several of its subregions are either dual peaking or winter peaking — namely SERC Central, SERC East, SERC PJM and SERC Southeast. 

The vulnerability of these areas to winter conditions was a significant topic in the report, with SERC observing the U.S. suffered 20 separate billion-dollar weather and climate disasters (meaning events in which overall damages reached or exceeded $1 billion) just in the first eight months of 2024. The National Oceanic and Atmospheric Administration since has updated its list, with 27 billion-dollar events confirmed to have occurred in 2024. 

Billion-dollar weather and climate events in the U.S. through August 2024. | SERC

Several of these affected SERC’s footprint, including tornado outbreaks in January and April and the Central, Southern and Northeastern winter storm and cold wave in January. The report added that 2024 “was far from the most extreme year for cold weather events on the grid.” 

All subregions reported meeting NERC’s recommended reserve margin of at least 15% under SERC’s 50/50 forecast, which represents a load prediction with a 50% chance of being exceeded. However, under the 90/10 forecast, indicating a 10% chance of being exceeded, all but two subregions — SERC Florida and SERC MISO-South — indicated they would fall short of the recommended margins. 

The Central, East, Southeast and MISO-Central subregions were assessed as elevated risk, meaning a reserve margin of 6 to 14% for the 90/10 forecast, but the PJM subregion indicated a reserve margin of 4% under those conditions, putting it into the high-risk category. Additionally, SERC noted that all subregions except Florida would be below target reserve margins if load in a 90/10 scenario is underestimated by 10%. 

SERC noted several actions that could help with preparations for adverse conditions, including securing fuel inventories and natural gas delivery options. The RE also noted that some SERC entities have oil backups, while others have contracted firm gas storage to guard against supply interruptions. 

In addition, SERC said, reliability standards that have come into effect since the winter storms of 2021 and 2022 require generator owners to have winter preparedness plans and annual training, along with other preparations. The RE recommended that entities “pay special attention to their day-ahead load forecasting process” to avoid the kind of forecasting errors that led to the reliability issues associated with those storms. 

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DC Circuit Court Leaves ITC’s Abandonment Incentive Untouched Despite Iowa ROFR Uncertainty

The D.C. Circuit Court of Appeals has dismissed transmission customers’ argument against ITC Midwest receiving an abandonment rate incentive for an Iowa line segment included in MISO’s long-range transmission planning.  

That’s despite ongoing uncertainty over the fate of Iowa’s right of first refusal law.  

The court decided Jan. 14 that the collection of organizations — Resale Power Group of Iowa, the Industrial Energy Consumers of America, the Coalition of MISO Transmission Customers and the Wisconsin Industrial Energy Group — didn’t prove “imminent injury” from ITC Midwest being able to recover 100% of prudently incurred costs building the Skunk River-Ipava 345-kV line in Iowa if the project is canceled due to factors beyond ITC’s control (23-1334).  

The groups disputed the incentive on account of Iowa’s right of first refusal law being overturned in late 2023 and ambiguity surrounding which developer ultimately will build the segment of the long-range transmission project. (See Iowa ROFR Law Overturned, Throwing Multiple MISO LRTP Projects into Uncertainty.) They said ITC’s ownership is “uncertain” and likely “void” from the direction of the ongoing litigation and the incentive appears destined to expose them to the risk of higher rates in the future.  

However, the D.C. Circuit Court said the transmission customers couldn’t point to “concrete costs any one of them now confronts,” nor were they able to show that they “will ever suffer any injury” from the abandonment incentive if ITC continues to build the project as intended.  

“For their injury to occur, not only would the Iowa Supreme Court need to affirm a permanent and retroactive Iowa ROFR injunction, MISO would need to open competitive bidding for the project, and ITC would need to lose the bid, invoke the abandonment incentive, and demonstrate to the commission its costs were prudent and the resulting rates are just and reasonable and not unduly discriminatory,” the court said, agreeing with ITC that the “highly attenuated chain of possibilities” is predicated on “guesswork as to how independent decisionmakers will exercise their judgment.”  

The court concluded the transmission customers lacked standing to challenge FERC’s decision.  

FERC originally granted ITC’s request for an abandonment incentive in August 2023, deciding the project could face siting, regulatory and environmental risks. Months later, the commission upheld its decision to grant ITC an abandoned plant incentive, though MISO consumer groups argued against it (ER23-2033-001). 

FERC Commissioner Mark Christie took issue with the abandoned plant incentive altogether and dissented from the order. The 345-kV line segment is part of MISO’s first, $10 billion long-range transmission plan.  

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CEC Workshop to Focus on Impact of Pathways Initiative

The California Energy Commission will hold a workshop Jan. 24 to discuss the West-Wide Governance Pathways Initiative, signaling that the state is gearing up to consider a proposal to alter CAISO’s governance structure to accommodate broader Western concerns about the ISO’s lack of independence from California politics. 

The meeting will be the first Pathways-related public event since the group’s Launch Committee voted in November 2024 to approve the “Step 2” proposal to create a new “regional organization” (RO) to provide independent oversight for CAISO’s Western Energy Imbalance Market (WEIM) and Extended Day-Ahead Market (EDAM). (See Pathways Initiative Approves ‘Step 2’ Plan, Wins $1M in Federal Funding.) 

It also comes three weeks after the start of the 2025 California legislative session, which will see the state’s key Pathways backers — likely to include labor and public power utility representatives — submit a bill to implement the Step 2 plan. Feb. 22 is the deadline for submitting legislation. 

“The goal in holding this workshop is to build a factual record capturing how current stakeholder groups and interested members of the public view regional electric grid cooperation through the Pathways Initiative,” the CEC said in its Jan. 14 meeting notice. “Additionally, the CEC hopes to foster a public dialogue around the benefits to Californians from Step 2 of the Pathways Initiative.” 

The workshop will include representatives from “key stakeholder groups including regulators, market participants, labor and environmental advocates” and feature discussion about the “potential economic and reliability impacts” of Pathways, according to the notice. The commission won’t take any votes on the matter, and the public is invited to make comments. 

“The current integration landscape before Western electricity system leaders looks quite different than just a few years ago,” the CEC said. “The carbon reduction goals, policy directives and economics driving the transition to clean energy systems continue to reshape the Western resource mix, prospective regional markets and the transmission planning needed to support these changes.”  

Pathways “is an ongoing topic of interest that pertains to evolving regional energy markets,” it noted. 

The CEC is holding the workshop as part of its 2024 Integrated Energy Policy Report Update proceeding, overseen by Chair David Hochschild and Co-Chair Siva Gunda. Industry stakeholders and members of the public can participate in person at the California Natural Resources Agency’s headquarters in Sacramento or call in online or by telephone (see notice for details). 

Pathways Updates 

The Pathways Initiative is embarking on key transitions this year after the group’s Launch Committee concluded its key task in 2024 with the approval of the Step 2 proposal. Those include appointment of the RO’s seven-member board and the start of work by the newly established Formation Committee charged with guiding the development of the new entity.

The new committee will include familiar faces from the older one, including Kathleen Staks of Western Freedom as chair, Evie Kahl of CalCCA, Jim Shetler of the Balancing Authority of Northern California, Scott Ranzal of Pacific Gas and Electric, Alaine Ginnochio of the Western Interstate Energy Board, Lisa Tormoen Hickey of Interwest Energy Alliance and Michele Beck of the Utah Office of Consumer Services.

Three members of the Western Energy Markets Body of State Regulators will also participate: Darcie Houck of the California Public Utilities Commission, Milt Doumit of the Washington Utilities and Transportation Commission and John Hammond of the Idaho Public Utilities Commission.

“So far, the Formation Committee has been working on mostly logistical items — meeting cadence for us, the [Launch Committee], and public stakeholder meetings, as well as a work plan that we will ultimately share with the public that will have more information about public engagement opportunities over the course of the next year,” Staks told RTO Insider in an email.

Staks clarified once again that neither committee will be engaging with the California legislature as formal entities.

“Those who engage in legislative efforts are doing so in their individual or organizational capacity, not on behalf of the [Launch Committee],” she said.

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Oceantic Emphasizes OSW’s Economic Benefits

A U.S. offshore wind trade industry association is reemphasizing the sector’s economic benefits ahead of the inauguration of a president who wants to shut it down.

Oceantic Network on Jan. 15 released “Offshore Energy at Work,” a new report that focuses on the thousands of jobs created and billions of dollars invested through more than 1,900 supplier contracts that span 40 states.

Oceantic places the total announced investment at more than $40 billion and notes much of it has its roots late in President Trump’s first term.

Since then, construction has begun on projects totaling nearly 5 GW of capacity, 21 shipyards have received $1.8 billion in vessel orders and $25 billion has been earmarked for creating and expanding a domestic supply chain and ecosystem.

The last number includes $277 million in workforce development, $383 million in research and development, the $1.8 billion for 50 new or retrofitted ships and boats, $5.2 billion for upgrades to 25 U.S. ports, $6.1 billion for supply chain or manufacturing and $11 billion for shared transmission infrastructure.

These investments range from places one would expect, such as an Edison Chouest shipyard on the Louisiana coast, to such unlikely places as the Ljungstrom steel fabrication plant in western New York, hundreds of miles from the ocean.

Building a domestic offshore wind industry has been a priority for President Biden for its expected economic and environmental benefits.

President-elect Trump, by contrast, has long held an abiding dislike for the giant wind turbines, and he ratcheted up his rhetoric on the campaign trail. As recently as Jan. 7, he told reporters he would seek to halt construction of “windmills” that he said harm whales and cannot operate without a subsidy.

However, another Trump priority is boosting the U.S. economy.

Just as the rest of the U.S. renewable energy sector has been doing since Nov. 5, the Oceantic report plays up the economic benefits, juxtaposing dollar figures in the millions and billions with anecdotes about individual Americans working in the field.

CEO Liz Burdock said in a news release: “The American offshore wind energy industry is creating thousands of jobs across a national supply chain, driving billions in supply chain investments and delivering reliable, homegrown energy to meet our country’s growing power needs while ensuring energy security for decades.”

She added: “This report tells a story of success, momentum, American ingenuity, and grit. Offshore wind energy is creating skilled jobs, revitalizing once-forgotten economies and offering new opportunities for personal growth and economic prosperity, proving that when offshore wind is working, so is America.”

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USDA Allocates $6B More for Rural Clean Energy

The latest tranche of USDA rural electric grants and loans exceeds $6 billion and is expected to spread benefits across 30 states.

The Department of Agriculture’s Jan. 10 announcements involve the Empowering Rural America (New ERA) and Powering Affordable Clean Energy (PACE) programs.

Rural electric cooperatives and communities will use the money to lower electricity costs, reduce emissions and support jobs.

New ERA and PACE were created by the Inflation Reduction Act in 2022 and were called the largest investment in rural electrification since the Rural Electrification Act of 1936. More than one in five rural Americans are expected to benefit from the clean energy investments, USDA said.

Most of this latest round of funding — loans and grants totaling $5.49 billion for 28 clean energy projects — is through New ERA. Roughly $565 million in partially forgivable loans was allocated through PACE for 26 clean energy projects.

USDA said it has obligated approximately $9 billion of the New ERA program’s $9.7 billion budget authority for more than $14.5 billion in loans and grants benefiting 35 states where rural electric cooperatives have committed to build or buy more than 13 GW of clean energy.

Adding in private-sector funds, total rural investment through New ERA is expected to exceed $35 billion, USDA said.

Awards range from a few hundred thousand to more than a billion dollars and are going to projects such as solar, wind and battery installations; demand side management; run-of-river hydropower; loan refinancing; distributed energy resource management systems; solar agrivoltaics; transmission upgrades; power purchase agreements; load management; and virtual power plants.

Meanwhile, partially forgivable loans obligated through PACE now total more than $1.6 billion, USDA said. Solar projects dominate the allocations, with some storage and hydro projects on the list as well.

Details about funding recipients are available on the New ERA website and the PACE website.

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Biden Wants Data Centers, Clean Energy on Federal Land by 2027

With days left in his administration, President Joe Biden issued an executive order Jan. 14, aimed at siting and permitting cutting-edge artificial intelligence data centers on federal land by 2027, along with the clean energy and transmission needed to power them.

These “frontier AI” facilities ― providing AI capabilities and services beyond the current state of the industry ― would be financed by the companies that build them without raising consumers’ electricity bills. Strong labor and environmental standards and community engagement also would be required, according to the comprehensive and extensively detailed order.

In a statement released with the order, Biden cited national security and economic competitiveness as key drivers for U.S. leadership in AI. “We will not let America be out-built when it comes to the technology that will define the future,” he said.

“This executive order will direct the Department of Defense and the Department of Energy to lease federal sites where the private sector can build frontier AI infrastructure at speed and scale,” Biden said. “These efforts are designed to accelerate the clean energy transition in a way that is responsible and respectful to local communities, and in a way that does not impose any new costs on American families.”

Biden envisions an aggressive timeline for designating sites for data center development and permitting the facilities, along with associated clean energy and transmission.

In less than two months ― by Feb. 28 ― the Defense and Energy departments would be required to identify at least three sites each on federal land that would be suitable for these projects and could be fully permitted and approved to begin construction by the end of the year.

High-priority sites would include those with access and proximity to “high-capacity transmission infrastructure with unused capacity,” existing fossil fuel plants that could be “repowered” with clean energy and “communities seeking to host AI infrastructure.”

At the same time, by March 15, the Bureau of Land Management would be required to identify sites on federal land under its jurisdiction that would be suitable for developing the clean energy projects to be built as part of the new data centers. The potential sites would have to be on federal land that has been designated as appropriate for utility-scale solar development.

The order defines clean energy as any generation producing few or no carbon dioxide emissions. Beyond solar, wind and storage, the order lists geothermal, nuclear fission and fusion, hydropower, hydrokinetic power ― such as wave energy ― and carbon capture, utilization and storage.

“Priority geothermal zones” would be identified by BLM, again by March 15, “based on their potential for geothermal power generation resources, including hydrothermal and next generation geothermal power and thermal storage.”

DOE and DOD then would launch competitive solicitations on March 31 for “non-federal entities” to lease federal land for data centers, to be followed by announcements of any winning proposals by June 30. The order calls for a framework to be developed, also by June 30, so winning proposals would be cleared to lease federal land designated for clean energy development for their data centers.

Other provisions in the order seek to accelerate interconnection of the projects, with DOE identifying “underutilized points of interconnection … that demonstrate the highest potential for uses associated with AI infrastructure.” Transmission developers and operators with lines near the projects would be required to “identify any grid upgrades,” including advanced conductors and other grid-enhancing technologies, that could expand capacity for interconnection.

To streamline permitting, the order calls for the major permitting agencies ― DOD, DOE and the Agriculture, Commerce and Interior departments ― to perform a “programmatic environmental review” of the environmental impacts of data center construction and operation, and potential options for mitigation. The programmatic review and other “categorical exclusions” could be used to accelerate environmental reviews.

Under the National Environmental Policy Act, categorical exclusions apply to actions or projects the government finds will not have significant environmental impacts and therefore do not require further NEPA review.

What Will Trump Do?

The Biden order represents an attempt by the outgoing president to respond to electricity demand growth from AI data centers with clean energy as opposed to the new natural gas plants some utilities plan to build.

Just how much power will be needed remains a moving target. A much-cited figure, traceable to a May 2024 analysis from Goldman Sachs, is that a ChatGPT query can consume nearly 10 times as much electricity as a standard Google search. Also released in May, a report from the Electric Power Research Institute estimated data centers would consume 9% of U.S. power by 2030. (See Data Centers and Demand Growth Top 2025 Agenda.)

More recent figures from the Lawrence Berkeley National Laboratory show that data centers, which accounted for 76 TWh, or 1.9%, of U.S. energy demand in 2018, hit 176 TWh, or 4.4%, in 2023. LBNL predicts future growth ranging from 325 to 580 TWh by 2028, or 6.7 to 12% of total U.S. energy demand.

At the same time, a new analysis from the National Renewable Energy Laboratory finds that “between 51 to 84 GW of renewable energy could be deployed on federal lands by 2035, requiring only around half of 1% of total federal land area in the contiguous U.S.” Federal lands technically could support up to 7,700 GW of renewable development, according to NREL.

Responding to Biden’s order, data center trade groups focused on the positive impacts for U.S. AI leadership, while skirting issues of permitting and transmission development.

Josh Levi, president of the Data Center Coalition, said the order “recognizes the essential role of the data center industry in advancing America’s national security and global economic competitiveness and promotes the rapid development of additional data center and energy capacity to support the nation’s leadership in AI.”

“U.S. AI leadership depends on a sustained and robust commitment to the technology’s development and deployment, including the essential infrastructure that supports its growth,” said Gordon Bitko, executive vice president of public sector policy for the Information Technology Industry Council. “Fostering the U.S. tech industry’s ability to work with the government and other partners to solve existing challenges such as permitting and electricity transmission will enable the U.S. to construct state-of-the art data centers powered by a resilient and diversified infrastructure.

“We urge the incoming Trump Administration to continue to work with industry to build the capacity the U.S. needs to advance this economic and security imperative,” Bitko said.

DCC and ITI both include major hyperscale developers in their memberships, such as Amazon, Microsoft and Google.

Neither clean energy industry groups nor environmental advocates had released statements on the order as of publication deadline.

However, given the size of hyperscale AI data centers, and the clean energy projects needed to power them, fast environmental permitting for projects on federal land may be difficult. One of the largest data centers in the U.S., the Citadel in Nevada, covers an estimated 7.2 million square feet, or about 165 acres.

Another key question is whether President-elect Donald Trump will consider moving ahead with the planned development of AI data centers on federal land or simply scrap it.

Trump and Republicans have advocated for economic development on federal lands, although their plans for energy development center on fossil fuel drilling and production, along with critical mineral mining.

At a Jan. 14 press conference, Trump heralded a $20 billion investment for data center development in the U.S., announced by EDGNEX Data Centers, a data center developer from the United Arab Emirates. The company is owned by DAMAC, a luxury real estate firm.

According to a Jan. 8 press release, EDGNEX plans a major move into the U.S. market and says it could double its investment in coming years.

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Virginia Legislators Introduce Bills to Deal with Data Center Growth

Northern Virginia legislators on Jan. 14 introduced a package of bills to address growing demand from data centers that they hope to pass in a short session that is scheduled to adjourn next month. 

“Data centers have been operating without guardrails in the commonwealth, and the costs are being shouldered overwhelmingly by a handful of districts, including mine,” said Sen. Russet Perry (D), whose district covers parts of Arlington, Fairfax and Loudoun counties, the last of which is home to so-called “Data Center Alley.” 

“We want Virginia to remain a leader in innovation and technological advancement, but there remains a dire and pressing need to ensure the preservation of our resources and protect the pocketbooks of our constituents,” she continued. “It’s not easy to strike that balance, but this legislative package does just that.” 

Virginia is home to the largest concentration of data centers in the world, and growth in the sector is on pace to double overall demand for power in the next decade. It could cause the average residential customer’s electricity bill to rise by $37/month by 2040, Perry said at a press conference in Richmond. 

All of the bills to address data center growth last session were effectively put on hold so the Joint Legislative Audit and Review Commission (JLARC) could publish a report on the sector’s impact, Perry said. That report was released in December. (See Virginia Legislature Report Tackles How to Meet Demand from Data Centers.) 

The legislative package picks up some recommendations from the JLARC report. Its backers divided their effort into four pillars: protecting families and businesses (cost allocation), enhancing transparency around development, responsibly managing resources and incentivizing efficiency. 

Perry and Sen. Richard Stuart (R) introduced Senate Bill 960, with the companion House Bill 2101 being introduced by Dels. Michelle Maldonado (D) and Michael Webert (R). They would require the State Corporation Commission to ensure that other customer classes do not subsidize data center growth. 

“What we have seen, at least in my district, is that we are going to inherit quite a bit of infrastructure due to our growing energy needs,” said Webert, whose district covers parts of Fauquier and Culpeper counties, just south of Loudoun. “And my constituents are very, very much concerned about that, and so that’s one of the reasons why I agreed to co-patron the piece of legislation with Michelle. Comprehensive action from the General Assembly in the form of recognizing data centers as a unique customer class and assigning their share of cost seems like a fair thing to do.” 

The transparency pillar would be fulfilled by HB 2035, which would require the Department of Energy Quality to track and publish energy, water and emissions data from data centers above 30 MW. The other bill in the pillar, HB 1601, would require large data centers applying for local permits to offer more data on noise impacts and the local utility to update localities on any new infrastructure required. 

Responsibly managing resources is covered by HB 2027, which would require the SCC to review applications for any high load facilities with demand above 25 MW. The process would have to review grid reliability, cost impacts, economic contributions of the facilities and the demand’s impact on Virginia’s energy and environmental policies. 

Del. Rip Sullivan (D) and Sen. Creigh Deeds (D) are working on legislation that would link tax incentives for data centers to energy efficiency and renewable energy procurement for the fourth pillar, but those bills have yet to be filed. 

“I haven’t spoken with the governor directly about this, but what I will say is that we are not trying to say, ‘No data centers,’ or anything like that,” Perry said. “But what we are trying to say is that our communities deserve a seat at the table.” 

The forecasted growth for the sector is unsustainable, she added. 

Gov. Glenn Youngkin (R) briefly touched on data centers in his annual State of the Commonwealth speech Jan. 13 before the General Assembly, noting they support 74,000 jobs, $9.1 billion in GDP and billions in revenue that localities use for education, public safety and other services. 

“We should continue to be the data center capital of the world and make sure Richmond is doing what is necessary to support that goal,” Youngkin said. “Different communities will make different decisions on data centers, but these must be their decisions. And Richmond should not stop them from capitalizing on these incredible economic opportunities.” 

The Data Center Coalition, an industry trade group, said it looked forward to working with legislators this session to ensure the continued responsible growth of the sector. In a statement from its president, Josh Levi, the group said that the JLARC report validated Virginia’s leadership in data centers. 

“The report notes the many local, state and federal agencies that oversee policies and regulations surrounding data center development and are empowered to protect Virginians while managing potential environmental and community impacts,” Levi said. “JLARC also confirmed that data centers currently pay the full cost of service for the energy they use and suggests the State Corporation Commission has the technical expertise and is best positioned to ensure this continues as additional generation and transmission are deployed to support economic growth.” 

The Piedmont Environmental Council supports each of the bills that have been introduced, noting that unconstrained growth of data centers could lead to peak demand of 60 GW by 2050, which is nearly three times its current peak of 22 GW. 

“Now is the time for action. Without state oversight and increased local disclosures, we are headed for a catastrophic collision of unprecedented energy demand and a shortage of generation capacity,” PEC President Chris Miller said in a statement. “Dominion is signing contracts for power it does not have and does not have a realistic plan for providing. Right now, our state’s leaders are playing a game of chicken with our energy grid.” 

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NY Defers Action on Controversial Cap-and-invest

Development of a greenhouse gas emissions cap-and-invest system first proposed two years ago is getting pushed further down the road in New York.

Gov. Kathy Hochul (D) made no mention of the controversial concept in her State of the State address Jan. 14, and there is only limited mention of it in her printed version.

The program has been in development for well over a year but has bogged down amid concerns that the billions of dollars to be extracted from greenhouse gas-emitting industries could translate to higher prices, job losses or other negative impacts for New Yorkers.

Much of the governor’s address, in fact, was devoted to proposals that would reduce costs or increase financial benefits for low- and middle-income New Yorkers.

Energy and climate were the very last topics in both her speech and the accompanying playbook.

In that playbook, it sounds like New York is doing at least a partial reset on cap-and-invest planning: In the coming months, it says, the lead agencies will “take steps forward on developing the cap-and-invest program, proposing new reporting regulations to gather information on emissions sources, while creating more space and time for public transparency and a robust investment planning process.”

Hochul writes: “New York needs to get the transition right and keep our state affordable for families.”

Ostensibly, the staff at various agencies have been doing just that since mid-2023. But finding common ground apparently has been difficult. (See Opposing Sides Want to Speed, Slow NY Cap-and-invest.)

The State of the State is the governor’s public opening hand in the lengthy, intertwined process by which the coming year’s budget and many key policy issues will be decided.

This year, Hochul has no fewer than 201 proposals in her plan, but like the thousands of proposals submitted by legislators, many may be modified or killed during negotiations before the April 1 start of the next fiscal year, and some may not even reach the starting line.

Hochul has several other proposals in the energy and environmental sectors.

Climate Investment

Hochul seeks more than $1 billion for creating jobs, reducing pollution and slashing household energy bills in what she called the largest single climate investment in state history.

This will pay for retrofits of housing; incentives for heat pump installation; making public infrastructure serve as “hubs of sustainability,” such as by building thermal energy networks on state-run college campuses; expanding green transportation options; and supporting businesses of all sizes in decarbonization efforts.

Nuclear

It has been apparent for a while that New York officials increasingly are interested in advanced nuclear power, even as they framed the polarizing concept in carefully neutral tones.

Hochul calls for creation of a “Master Plan for Responsible Advanced Nuclear Development,” and the state on Jan. 14 issued a “Blueprint for Consideration of Advanced Nuclear Energy Technologies.”

Hochul said in a news release that New York will lead a multistate initiative on advanced nuclear energy expected to launch in February.

Also, she said the state will support Constellation Energy Corp. in its pursuit of federal grant funding to support exploration of adding one or more advanced reactors at its Nine Mile Point facility in northern New York.

Public Power

Hochul said she will direct state agencies to enter into contracts with the New York Power Authority in pursuit of a 100% renewable energy goal for state agencies by 2030. This will include at least 500 MW of generation.

This is separate from — but not unrelated to — another NYPA initiative.

NYPA has a tentative framework for 3.5 GW of renewable energy projects, the first tranche of proposals under its recently expanded authority as a developer of renewable energy alone or in partnership with the private sector.

NYPA itself acknowledges that even if all those proposals go forward, many can be expected to be lost to the normal industry attrition process.

Public power advocates call for NYPA to aim much higher — 15 GW instead of 3.5 GW — as President Biden is replaced by President Trump and leadership of the energy transition falls to states. They hoped to hear more in the State of the State.

Reactions

Hochul’s non-action Jan. 14 on cap-and-invest apparently caught some supporters of the system by surprise.

Two separate reports were issued Jan. 13 by Switchbox and Resources for the Future, each involving separate sets of climate advocates and each explaining in great detail the benefits that such a system would provide to communities and households through reduced emissions and financial assistance.

After the State of the State address, the Environmental Defense Fund’s Kate Courtin said in a news release:

“At a time when states with climate commitments should be stepping up to lead, New York is stepping back. By continuing to kick cap-and-invest down the road, Gov. Hochul is delaying the benefits that New Yorkers want — cleaner air, lower energy bills and more resilient communities. Meanwhile, the cost burdens from climate change-fueled disasters, like excessive flooding and severe storms, will continue to mount.”

Eric Walker at WE ACT for Environmental Justice had similar thoughts, and also criticized Hochul’s proposed $1 billion climate investment, which would be funded through tax dollars. He said via email:

“Today’s announcement is really a minimalist first step toward broader climate action. Instead of taking bold action, Gov. Hochul announced a plan that fails to meet the scale of the challenges we face. Worse, a billion-dollar state appropriation shifts the financial burden to struggling New Yorkers instead of holding the corporations responsible for pollution accountable. A robust cap-and-invest program is the long-term solution New Yorkers need to tackle pollution, improve air quality and deliver a just transition for our communities.”

Public power advocates also panned Hochul’s proposal, and they staged a protest outside the State of the State.

“The choice is clear, Gov. Hochul, New York can build 15 GW of public renewables or the state, like so much of the world, will continue to burn,” said Teddy Ogborn, an organizer with Planet Over Profit who was arrested during the demonstration. “With a climate denier as president, it’s more important than ever for New York to lead the way. New York can still meet its legally mandated climate targets, but Gov. Hochul must take action today.”

NYPA President Justin Driscoll, by contrast, was supportive. In a prepared statement, he said: “Gov. Hochul’s historic investment in climate mitigation is crucial for New York as we prepare for the ever more frequent 100-year storms and climate challenges. NYPA is proud to support this investment, work with organized labor and our partners in government to bring public power to public spaces and serve as a trusted advisor delivering innovative solutions to power New York into the future.”

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ISO-NE Introduces Proposed Resource Retirement Changes

ISO-NE plans to decouple resource retirements from the capacity auction process and adopt a two-year notification timeline for retiring generators, the RTO told stakeholders at the NEPOOL Markets Committee meeting Jan. 14.  

The proposal is one component of ISO-NE’s wide-ranging capacity auction reform project, which aims to transition the region to a “prompt” capacity market held just months before each capacity commitment period (CCP), instead of the current time frame of over three years. (See ISO-NE in 2025: Capacity Reforms, Tx Solicitation and FERC Orders.) 

While retiring resources currently are required to submit de-list bids through the forward capacity auction process over the four years prior to the relevant CCP, “the move to a prompt capacity auction necessitates a new mechanism to collect resource retirements,” said Kevin Coopey of ISO-NE. 

Coopey added that the new process “will be the mechanism to reduce or eliminate interconnection service” for both capacity interconnection rights and energy-only interconnection rights. ISO-NE plans to use the term “deactivation” for resources that are permanently exiting both the capacity and energy markets, and “capacity market deactivation” for resources strictly exiting the capacity market. 

Coopey said there are “natural tensions” between adopting a shorter versus a longer retirement notification timeline.  

“A shorter timeline allows participants to improve the efficiency of deactivation decisions by having better market information,” he said, while “a longer timeline allows the market, including entrants and the ISO, to better respond to deactivations.” 

ISO-NE also emphasized the importance of simplicity in the new retirement design to prevent confusion and allow participants “to access market information in a timely manner that enhances efficient decision-making.” 

Zeky Murra Anton of ISO-NE noted the RTO “evaluated timelines ranging from four years to six months” before landing on the two-year timeline. Relative to the current timeline, a two-year notification period would give generators more up-to-date information to enable more efficient retirement decisions while still providing time for the RTO and other participants to respond to issues created by retirements, he said.  

ISO-NE plans to review deactivation notifications for reliability and market power issues before publishing the information prior to each capacity auction.  

Murra Anton acknowledged that the shorter retirement notification timeline could present challenges if transmission issues are identified.  

“Experience with transmission construction shows the time from needs identification to completion is frequently longer than two years,” he said. 

If solutions are not feasible within the two-year time frame, ISO-NE’s tariff authorizes reliability must-run agreements to retain resources for local transmission reliability issues. 

ISO-NE will continue to work with stakeholders on the proposal at the MC in February. It plans to file with FERC the resource retirement and prompt auction reforms by the end of 2025, followed by a second filing in 2026 focused on resource accreditation and dividing CCPs into seasonal periods. The changes are intended to take effect for the 2028-29 CCP. 

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Calif. Lagging on Hydrogen Fueling Station Target, CARB Finds

Rather than expanding its network of light-duty hydrogen-fueling stations, California lost three stations last year, casting doubt on the state’s ability to meet a 200-station goal, a new report found. 

As of July 15, 2024, there were 62 light-duty hydrogen-fueling stations in California, down from 65 stations in 2023, according to the December 2024 report from the California Air Resources Board. Although four new stations opened during the year, seven stations owned by Shell closed, for a net loss of three stations. 

The number of hydrogen-fueling stations in CARB’s 2022 report was 60. 

CARB now projects 129 retail hydrogen-fueling stations in the state by 2030 — well short of the target of 200 stations by 2025 set by Gov. Jerry Brown in a 2018 executive order. 

The latest projections also have fallen behind those from CARB’s 2023 evaluation, in which 92 open stations were expected by the end of 2024, based on developer feedback. 

Link to FCEV Sales

CARB’s annual report on hydrogen-fueling station development tallies stations where drivers of light-duty fuel cell electric vehicles (FCEVs) can pull up, fuel and pay, like at a conventional gas station. Among the 62 retail stations counted in the 2024 report, seven were considered temporarily non-operational, but expected to reopen. 

The slow progress in station development also means projected sales of FCEVs have dropped. The report noted the close tie between automakers’ FCEV sales estimates and the rate of fueling station development, fuel supply cost and reliability, and range of FCEV models. 

“In multiple studies and surveys, consumers have repeatedly ranked charging and fueling infrastructure as a top concern for either purchasing a new ZEV or even using the ZEV they currently drive,” the report said. 

That sentiment could be key as California will require all new cars sold in the state to be zero-emission or plug-in hybrids by 2035. 

Through September 2024, 17,999 FCEVs had been sold in California, including 427 in the first nine months of last year, according to a California Energy Commission ZEV dashboard. 

In comparison, 293,747 battery-electric cars and 49,039 plug-in hybrids were sold in the state from January through September 2024. 

Shell Pull-out

Shell announced in February 2024 that it was permanently closing its seven light-duty hydrogen-fueling stations in California “due to hydrogen supply complications and other external market factors,” according to a notice from the company posted by the Hydrogen Fuel Cell Partnership. 

The announcement came after Shell asked the California Energy Commission to cancel grant funding the company had been awarded for 50 new hydrogen-fueling stations and one station upgrade. 

Reasons for canceling the grant included political and economic uncertainty, permitting hurdles, high construction costs and problems sourcing green hydrogen, according to a letter from a Shell official cited by CleanTechnica. 

Although slow progress on station development has been noted in CARB’s previous reports, reasons for the lag have shifted, the agency said. 

“Barriers identified in past analyses, including securing site access, permitting timelines, utility connection timelines and other site-specific issues, may still linger but are not the dominant issues today,” the report said. 

Instead, station developers have cited economic factors — including high inflation rates, low credit values from the Low-Carbon Fuel Standard program and the small size of the hydrogen refueling industry — along with trouble finding skilled, affordable contractors. 

Factors that could cause the pace to pick up are time limits on spending station-development grants, an expected resolution of hydrogen-supply bottlenecks in Southern California and efforts to address supply-chain issues, CARB said. 

CARB also suggested progress could be made in partnership with California’s hydrogen hub known as ARCHES, or Alliance for Renewable Clean Hydrogen Energy Systems. 

“The state should continue to support the production of clean hydrogen and lay the groundwork for ARCHES to scale up the market and drive down prices,” the report said.