New York State
Existing & Future Potential Overview
Combined Heat and Power is an important generating resource in New York State. A comprehensive study of existing CHP identified about 5,000 MW of installed generating capacity at approximately 210 sites as of October 2002.
This same report concluded that there was a technical potential of nearly 8,500 MW of existing CHP within the State. Technical potential is a measure of remaining market size that is only constrained by the technological limits - that is, the ability of the technology to match customer needs.
An assessment of likely CHP adoption requires analysis of existing market barriers, consumer knowledge, capital constraints, cost and availability of financing and other investment factors. When considering all of the issues bearing on the adoption of CHP in the marketplace, it was determined that 2,200 MW of additional CHP might be in put in place over the 2003-2012 time frame. This figure incorporated a set of favorable market, regulatory and government policies. When considering maintenance of the existing market framework, the "business-as-usual" case, the amount of additional CHP invested in was considerably smaller, about 765 MW.
There is a marked difference in characteristics between the currently existing CHP in New York and the future remaining potential. The currently existing CHP is concentrated in larger sized projects that are predominantly in the industrial sector.
Going forward, the greatest opportunities for CHP project development are in the smaller size range, tend to be located in the Downstate NY region and are concentrated in the commercial/institutional area.
The most promising applications are in these 5 sectors:
Five sectors account for two-thirds of the remaining potential. Other areas within the commercial/institutional sectors that have appreciable amounts of CHP potential include Nursing Homes, Colleges and Universities, Restaurants.
The characteristics of the businesses that comprise the vast majority of the remaining potential indicate a need for targeted efforts in order to realize a substantial fraction of the economically viable opportunities.
Unlike the currently existing CHP, concentrated as it is among larger applications in the industrial sector, the future markets are characterized by much smaller sized and far less sophisticated energy consumers. These customers will typically not have the staff on-hand that can oversee complex energy technology investment decisions. They may be unaware of opportunities for reducing the total cost of energy in operating their business activities. In many instances, the consumers in this group may not fully understand how their bills are calculated and what implications of investment in new energy systems would have on energy costs.
Effective methods for addressing the needs of these customers include:
Standby Delivery Rates
In July 2003, the New York State Public Service Commission (NYPSC) voted to approve new standby rates for utilities’ standby electric delivery service to DG customers and standby service to independent wholesale electric generating plants that import electricity as “station power” to support their operations. (NYPSC Case 99-E-1470). A key consideration was for the rates to result in onsite generation running when it is less expensive than purchasing power from the grid.
Under the guidelines previously adopted by the NYPSC, standby rates should reflect a more cost-based rate design that generally avoids relying on the amount of energy consumed (per-kilowatt-hour or kWh) to determine the charges for delivery service. Instead, the new rates recognize that the costs of providing delivery service to standby customers should more accurately reflect the size of the facilities needed to meet a customer’s maximum demand for delivery service at any given time. This varies not with the volume of electricity delivered, but primarily with the potential peak load (per-kilowatt) that may be required at any particular moment.
For certain categories of standby customers, the NYPSC voted to approve a series of options for the transition to the new rate structure. Specifically, pre-existing DG customers are offered two options. They can either shift immediately to the new standby rate or continue under the existing rate for four years and then phase into the standby rate over the next four years. Because the new rates align the customer cost with the potential benefit of onsite power to the grid, there are some cases in which it is more favorable for customers to opt in to the new rates.
Recognizing the environmental benefits of certain energy sources, customers that start DG operations between August 1, 2003 and May 31, 2006, using certain environmentally beneficial technologies or small CHP applications of less than 1 MW, can choose among three options. They can elect to remain on the current standard rate indefinitely, shift immediately to the new standby rate, or opt for a five-year phase-in period beginning on the effective date of the new standby rates.
Gas Rates for DG Customers
New York customers using natural gas for distributed generation including CHP may qualify for discounted natural gas delivery rates. Gas for the CHP must be separately metered and meet certain load factor requirements. The Commission also recognized that increased gas use for DG can create positive rate effects for gas consumers by providing increased coverage of fixed costs. It ordered natural gas companies to create a rate class specifically for DG users. The ceilings for these rates are to be frozen until at least the end of 2007 so that the emerging DG industry can predict gas rates for some initial period of time. See each utility’s tariff for details.
The New York State Department of Environmental Protection has been considering updated emission rules for distributed generation. For the latest rules see http://www.dec.state.ny.us/website/regs/ch3.htm
Enacted December 1999, New York was one of the first states to issue standard interconnection requirements for DG systems. The initial requirements were limited to DG systems rated up to 300 kW connected to radial distribution systems. New York recently modified these interconnection requirements to include interconnection to radial and secondary network distribution systems for DG with capacities up to 2 MW.
A radial distribution system is the most common electric power system. In this electric power system, power flows in one direction from utility source to the customer load. Most of New York City is served by network distribution systems, which poses additional interconnection complications. See http://www.coned.com/dg for more information.
New York’s Standard Interconnection Requirements (SIR) includes a detailed 11-step process from the “Initial Communication from the Potential Applicant” to the “Final Acceptance and Utility Cost Reconciliation.” Similar to other states with interconnection standards, the New York SIR includes separate requirements for synchronous generators, induction generators, and inverters. There are also provisions for pre-certification of certain equipment. There is no application fee for DG systems rated up to 15 kW. For DG larger than 15 kW, the application fee is $350.
See the current New York SIR.
NY Utilities and Electric Tariff Links
Utility Contact Info: http://www.dps.state.ny.us/electricu.html