THE ENERGY GANGS OF NEW YORK

07/14/2016 05:10 pm ET Updated Jul 15, 2017

It's not surprising that Governor Andrew Cuomo's "50 by 30" goal - 50 percent of New York's power will come from renewable sources by 2030 - has caused a stir among the energy cognoscenti that is now beginning to seep into the mainstream media. Keeping lights on, factories humming, and people entertained - a.k.a. electric power -- is a huge business in New York and the Governor's ambitious climate-saving program will move profits around from the old to new energy businesses.

Hence it's not surprising that the Governor's energy czar, Richard Kauffman, has had a pointed exchange with New York's electric market operator (the New York ISO, or NYISO) about the cost of New York's Energiewende (the energy transformation, a word coined by the equally ambitious Germany). On Tuesday, the ISO warned in a letter to the New York regulators (the Public Service Commission) that it had "concerns over how the Commission is developing and planning to implement the CES to achieve the 50% by 30 objectives." Specifically, the NYISO estimated that the goal could require nearly 1,000 miles of new bulk power transmission. The next day, Politico reported that "in a sharply worded rebuttal, Richard L. Kauffman, who chairs the New York State Energy Research and Development Authority, called the NYISO filing 'misleading, incomplete and grossly inaccurate,' saying that technology and 'simply smarter markets and operations allow the system to easily accommodate renewable resources.'"

This is an understandable exchange. NYISO is doing its job by raising questions, and Kauffman is doing his by challenging the NYISO to think outside the box (while keeping the lights on). For those of us deep in the belly of the electric whale, 50 by 30 is an exciting and challenging opportunity. We love to paraphrase John F. Kennedy's statement about going to the moon: "we do it not because it's easy; we do it because it's hard." On the inside, many of us deeply believe that Kaufmann is right: that the advances of power technology (on both the demand and the supply side) are so remarkable - especially the development of microgrids - that 50 by 30 can be achieved without compromising reliability and without raising the overall cost of electricity.

During this process, however, we do need NYISO and the electric utilities to continue to serve as the platform on which all this innovation happens. New York's regulatory apparatus - called REV for Reforming the Energy Vision -- is being reshaped to allow this to happen. From the inside, we see three essential activities that New York has to enable simultaneously to implement the Vision. First, the rules of the game have to be amended to enable distributed energy (including efficiency and demand management) to thrive. Second, the grid does need to be strategically expanded to bring bulk clean energy from the places it exists (upstate, neighboring states and provinces, western New York, and offshore) to where it's consumed (most of it naturally is consumed downstate). Third, and seldom discussed, the grid needs to be better optimized with modern technology and better software.

If electricity were only lightly regulated, this would happen naturally. But it remains heavily regulated and one of the heaviest hands on it is that of the New York ISO. It's the gatekeeper of what is allowed to be installed into the grid. If it is too heavy-handed, there will be a rebellion from the cleantech innovators, who in the long run command the political power in a progressive state like New York. If NYISO is too permissive, the lights will go out more often than society can tolerate. It's a tough assignment. NYISOs natural propensity is probably to be too conservative. Kauffman's letter is a shot across the bow to nudge it to be more accommodating.

Governor Cuomo's 50 by 30 is a worthy goal for a state like New York. He was indeed channeling his inner JFK when he first proposed it. The NYISO and the rest of New York's powerful old power elite need to come onboard. While 50% of the power in 2030 will come from renewables, they should remember the other 50% will still come from a leaner and more efficient fossil fuel industry.