New York needs to power up an energy transition

The New York Independent System Operator’s (NYISO) announcement that the competitive market failed to get enough new energy supply for New York City and Long Island next summer should concern all New Yorkers.

Last week, the Edison Electric Institute, the national trade association of public utilities, published a letter admitting that competitive wholesale markets are no longer working. EEI advocates a return to direct state oversight and utility ownership of new generation and grid investment.

As someone who has managed and regulated electric utilities and competitive markets in the United States and Australia for more than 35 years, I am not surprised. The transition from a fossil and nuclear fueled 20th century power system to a modern energy system is hard.

Affordable and reliable energy requires a distributed energy system — customer-owned distributed energy resources (DER), like rooftop solar, batteries, and smart appliances working in consort with clean, flexible, gridscale energy resources. Markets alone won’t achieve this transition -we need government leadership. .

In 2014, as chair of New York State’s Public Service Commission, I helped initiate Reforming the Energy Vision (REV). REV’s goal was to transform New York’s power sector to an affordable, clean, resilient distributed energy system. In retrospect, we were too academic and modest in our approach.

For an example on how to get there, New York can learn from down under.

In 2017, when I became the CEO of AEMO, Australia’s national grid operator, the country was polarized between advocates for traditional fossil generation and people frustrated by the slow pace of energy decarbonisation.

Now, just eight years later, approximately 40% of Australian homeowners have solar on their roofs with roof top solar representing the single largest generation resource and customers enjoying average 3.3 year paybacks — a fraction of what even the sunniest U.S. states achieve. Today the entire Australian electric industry agrees that a distributed, decarbonised power system is technically feasible and best for consumers.

The chief learning is that the Aussies love of roof top solar and support of the energy transition was the result of comprehensive government leadership over policy and execution.

The Australian governments identified and systematically eliminated barriers to customer uptake of rooftop solar. For example, customer confidence was achieved through workforce training, education and the creation of state ombudsmen to address concerns.

Complementary permit and standards reform, financing tools and supply chain support were adopted to reduce complexity and costs. Even the nomenclature, Customer Energy Resources (as opposed to DER), was designed to create clarity and pride.

The benefits of the energy transition are so apparent to ordinary Australians that the Labor Party credits its re-formation of the SEC, the state-owned entity responsible for delivering electrification and clean energy, as key to winning its last election.

Australia’s formula for systematic government led execution will work for New York. A resourced state program — let’s call it NY Power — could take us from concept to achieving. NY Power would work with the PSC to establish the regulatory reforms, including permitting reform, to assure rapid, statewide DER adoption.

NY Power would have the capacity to support developers, entrepreneurs and investors to get low cost financing and ensure fair access and affordability. NY Power would be expected to support all stakeholders, starting with environmental justice communities, for local workforce development and accountability mechanisms to prevent scammers and protect consumers.

DER will not meet all electricity demand. The state must also drive down the costs of new large scale clean energy and storage resources. International and domestic jurisdictions are finding that centralized government designed procurements offer the certainty and long term price stability necessary to attract the lowest cost capital and reduce consumer costs. It is great to see that the PSC wants new options in its ongoing review of New York’s Clean Energy Standard.

Economist Mariana Mazzucato makes the case why entrepreneurial governments are required to solve highly intricate engineering, finance and societal change. Mazzucato advocates for government-led “moonshots” to lead industry and society change to win the future.

Gov. Hochul has provided bold state leadership in support of necessary, complex, but required changes such as congestion pricing and deployment of off-shore wind. Now is the time to re-design how we produce, buy and deliver N.Y.’s energy system — it’s time for New York’s clean and distributed energy moonshot.

Zibelman is the former CEO of AEMO and former chair of the PSC. She now is a director of companies involved in the global energy transition.