Regulators Take First Step to Ensure New York’s Distributed Energy Future is Clean

New YorkNew York’s environmental and utility regulators are moving closer to a unified approach to building a cleaner, more robust, and affordable energy system.

The Public Service Commission (PSC), New York’s utility regulator, has been working to rethink how New York makes, moves, and uses electricity through its innovative Reforming the Energy Vision (REV) initiative. Specifically, it has been steering utilities toward a more decentralized electric grid, one that relies more heavily on distributed energy resources. These resources may be clean (such as energy efficiency or solar rooftops) but they may also be dirty (such as older diesel generators). While REV aims to encourage carbon emissions reductions, there is a risk that the initiative could cause environmental harm by driving adoption of dirty distributed energy resources. Getting environmental rules in place before REV becomes a driver of these types of emissions is a matter of real urgency.

In December 2015, the New York State Department of Environmental Conservation (DEC) moved to assist the PSC with this dilemma by proposing Part 222, a new set of regulatory standards that aim to address emissions from generators that burn fossil fuels. (EDF recently submitted comments in response to the proposal.) Federal regulations exist for some distributed generation emissions, but they are limited and not tailored to the needs of New York’s increasingly decentralized electric grid. With these newly proposed regulatory standards, we can begin to address the issue that while some distributed energy resources can be expected to bring great environmental benefits, others may be very damaging to public health and the environment.

Making sure increased reliance on distributed energy resources is environmentally beneficial overall is critical to REV’s success. While the proposed rule is a step in the right direction, the DEC could do more to lay the groundwork for a clean, distributed future. Some opportunities include:

  1. Close the information gap

Currently, there is no comprehensive information on fossil-fueled distributed generation, which is a problem for regulators or other parties responsible for managing emissions system-wide. We know these generators are numerous, but we simply don’t know exactly what they are, where they are, and how much pollution they are emitting.

Closing this information gap is of paramount importance given the likelihood that a decentralized system will mean new incentives that could encourage even more usage of fossil-fueled distributed generation. Regulating emissions from today’s distributed generation is complex and it will become more challenging if we are not prepared to consider more numerous sources. In the future, the New York electric marketplace will likely have the infrastructure to support the gathering and analysis of energy consumption and system data. The DEC can use this infrastructure to track the operation of distributed generation and make reasonable emissions estimates, allowing New Yorkers to get more value from that infrastructure.

  1. Beware of loopholes

There’s a real fear that the damage caused by emissions from distributed generation could grow as the electric marketplace transforms. I recently co-authored a paper expanding on this concept, which includes some of these examples:

  • Older diesel generators can emit Nitrogen Oxide (NO x) at rates ten times greater than coal-fired power plants. Their lack of smokestacks and proximity to people can exacerbate their harmful health effects.
  • Demand response, the practice of rewarding electric customers who modify their consumption of power from centralized power plants in order to relieve stress on the grid, is an important tool for managing the electric system. However, a large share of today’s demand response is made possible by customers shifting some of their demand away from centralized generation and over to on-site fossil-fueled generators.
  • New price signals in the electric marketplace that enable participants to reap the value of distributed energy resources are likely to provide economic reasons to operate generators of all sizes that, in the past, may have been useful only for emergencies.
  • Increasingly tight emissions restrictions placed on central generating stations may increase the cost of power from those resources, potentially to the advantage of smaller pollution-emitting resources that are not subject to such restrictions.

Part 222 would regulate the emissions from some distributed generation, but would create numerous loopholes based on technology (only internal combustion is covered), engine size (minimum 200 horsepower in NYC and 400 horsepower elsewhere), and manner of use (emergency generators are excluded). Some owners of distributed generation have already asked for this special treatment to be expanded by giving some generators that do not meet the current definition of “emergency generator” the benefit of that exemption. The DEC should close as many of these loopholes as possible, and soon.

  1. Tighten the testing regime

Under the proposal, distributed generation sources that are subject to emissions rules will be tested every ten years. This timeframe is a cause for concern since pollution control devices can deteriorate over time. Owners of distributed generation need to take emissions seriously at all times, not just every ten years. The DEC can make sure this happens either by conducting spot checks of some fossil-fueled, distributed generation between mandatory tests, or by requiring tests more frequently.

  1. Manage greenhouse gas emissions

The proposed rule does not address carbon pollution – the single largest contributor to climate change. This omission is highly significant since carbon dioxide emissions from larger, centralized facilities are managed under the Regional Greenhouse Gas Initiative (RGGI), a program through which nine states work together to reduce greenhouse gas emissions. Any generation source below 25 megawatts is exempt from participating in RGGI, no matter what kind of fuel it uses or how efficiently it operates. The New York State Energy Plan calls for a 40 percent reduction in all carbon emissions by 2030 – yet we have reason to believe fossil-fueled distributed generation is already on the rise. Adopting a policy framework that allows carbon emissions from this class of resources to increase – and maybe even go undetected – could be a misstep.

Key takeaways

This proposal was many years in the making. It is a strong beginning, but can be improved to prepare for a future electric marketplace that is radically different from today’s. Ideally, the DEC will make sure the current rule positions it and its sister agencies to protect our health and our environment now and in the future. It may be many more years before we have another chance to get this right, and making choices now that fail to anticipate the future could cost us greatly. The DEC can and should act on this proposal soon, but in a manner that is fully in step with the REV transformation.

Photo source: Isabelle Silverman

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