New York City ratepayers shelled out $4.5 billion in capacity payments in the last decade to keep 16 fossil fuel-based peaking plants available, according to analysis by environmental justice group PEAK Coalition.

The group says the city's peaking plants run only a few hundred hours per year, when the city's electricity demand is at its highest and energy most expensive, and recommend the facilities be replaced by distributed energy resources (DER) and energy storage that would not emit greenhouse gasses.

Plant owners say much of that work is already being done.

The PEAK Coalition report is highly critical of the billions of dollars that go to support New York City peaking capacity, calling them "exorbitant payments [to] maintain an outdated, inefficient, polluting system."

The group -- which includes New York Lawyers for the Public Interest (NYLPI), NYC Environmental Justice Alliance, and Clean Energy Group -- says peakers can be replaced by a system of localized renewable energy generation and battery storage that will reduce carbon output, lower customer bills and improve public health and equity.

The resulting electric grid would also be more resilient to storms and climate impacts, the group says.

"Now is the time to invest in a renewable future and in the health of frontline communities," Rachel Spector, who directs NYLPI's environmental justice program, said in a statement. "Prioritizing replacement of highly polluting peaker plants with renewable energy and storage is a test of New York’s commitment to the equity goals in the Climate and Community Protection Act passed last year."

Passed in June 2019, the law set New York on a path towards carbon neutrality by 2050.

Owners of the plants say they are already working to add energy storage and make the facilities more efficient and concede that running them less would help improve air quality. 

Generators working to add storage

Of the 16 plants PEAK Coalition examined, 15 of them ran 15% of the time or less in 2018, according to the group. On average the plants only ran about 6% of the time and for some it is even less. But while they do not run often, the report concluded "their limited operation contributes significantly to local air pollution in the city's communities of color."

Seven of the plants are owned by private companies: ArcLight Capital, NRG Energy and LS Power Group. New York City utility Consolidated Edison, the New York Power Authority and Long Island Power Authority own the others.

"While NRG has not had time to fully analyze the report, reducing dependence on less efficient peaking plants should improve air quality," the company said in a statement to Utility Dive. 

NRG Energy owns more than 1.4 GW of the city's peaking capacity. While energy storage can play "an integral role" in supplying the city's power, "the technology is not capable of operating long enough to meet all the needs of New York City," a spokesperson said.

There is merit in PEAK Coalition's call for batteries, say the owners of some capacity resources. Multiple companies that own the peaker plants are already developing battery projects.

Eastern Generation, a portfolio company of ArcLight, owns the Gowanus and Narrows plants and says it has been developing battery technology alongside its existing generation. But the company also says batteries are not a simple replacement for all peaking units due to duration limits.

Through New York's Article 10 process, Eastern Generation has proposed replacing existing peaking units with cleaner and more efficient units capable of burning natural gas or oil. The proposal would close the Narrows generating facility, replacing 960 MW of generation on six barges with 586 MW of dual fuel units on two barges at the Brooklyn Gowanus location.

The permitting proposal includes 1.5 MW for black-starting the new units.  Separately, the company is developing grid-scale battery projects in Brooklyn and Queens, which are in the New York ISO interconnection queue and include a battery barge proposal.

Developing generation and battery systems on barges allows the units to "be moved out of New York once renewable capacity can meet the region's electricity needs," the company said.

Consolidated Edison officials say they are also working to deploy distributed resources like renewable generation, demand management programs and batteries.

"We are aggressively deploying these technologies and strategies throughout our service area and cutting emissions," the utility said in a statement. "While making this transition, we continue to invest in our energy systems for safety and reliability."

At the Ravenswood Generating station, owned by LS Power, the company installed a 316 MW battery energy storage project, which it says is the largest on the East Coast.

The battery project is "an example of how to transition to clean energy," Clint Plummer, CEO of Ravenswood Generating, told Utility Dive in an email.

Utilities may be 'pleasantly surprised' by battery affordability

Since acquiring the Ravenswood facility in 2017, the company says it has invested over $160 million in modernization and resiliency improvements "and have made binding commitments to decommission all of the simple-cycle peakers by 2023."

"We have already removed from service over 200 MW of the peakers to make space for the battery storage and other clean energy initiatives," Plummer said. "In addition to our battery project, we are also evaluating a number of other major clean energy projects at Ravenswood that will help the City and State meet their goals for reliable, cost-effective clean energy."

While batteries are being deployed in New York City and elsewhere, there are concerns about their costs. But utilities may be pleasantly surprised by how affordable the technology is becoming, analysts say. 

"It's possible that DER solutions for local reliability in dense urban areas may be challenging or expensive, but that's no reason not to issue a competitive solicitation," Mark Dyson, principal at Rocky Mountain Institute, told Utility Dive.

There are examples of utilities issuing all-source solicitations "and being pleasantly surprised at the feasibility and economic viability of DER solutions offered by innovative developers," Dyson said.