New York State Climate and Environment

AI Isn’t Coming to Crash New York’s Electric Grid. Yet.

Major new tech facilities are not expected to overload the state’s grid — but New York City could fall short of power in the early 2030s without creative solutions, according to a key study.

Colin Kinniburgh · November 1, 2024

Data centers could put a lot of strain on the grid in the coming years — but in New York, there's no need to panic yet, a new report suggests. | Transmission grid map: New York Power Authority. Illustration: New York Focus

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ai is coming — and the grid isn’t ready.

That story has dominated headlines in the energy world for much of the past year as artificial intelligence breakthroughs have fueled a boom in energy-hungry data centers.

The resulting surge in electricity demand has led power companies to pursue scores of new fossil fuel plants across the country, while long-running plants — including coal plants — are being kept open for longer than planned. Even Texas, which has built more wind, solar, and battery power than any other state, created a new state-backed loan program last year to support the construction of gas plants.

But in New York, there’s no need to hit the panic button, according to the latest draft of a key report from the New York Independent System Operator, or NYISO, the nonprofit that operates the state’s grid.

Despite mounting pressures due to the state’s climate law and a burst in new manufacturing and tech facilities, New York has enough power plants operating or planned to meet statewide demand over the next decade, NYISO found.

Only a few months ago, the grid operator circulated an initial forecast warning of a possible shortfall — meaning a risk of blackouts — at the state level. If confirmed, that finding would have triggered immediate efforts to close the gap, possibly by keeping certain dirty power plants open longer than planned.

But that prospect has now dimmed, mainly because some of the biggest energy users seeking to get onto the grid — new cryptocurrency and hydrogen facilities — tell NYISO they can temporarily shut down when the grid is stressed.

Bitcoin mining is inherently energy-intensive because there are a finite number of digital coins, and each one requires more computing power to mine than the one before. The Energy Information Administration estimates that the industry could be using as much as 2 percent of all electricity nationally.

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But crypto miners also have more control than many other large energy users over when they power up and down. That could prove valuable in New York, where crypto miners have flocked to take advantage of cheap hydropower and cool weather upstate.

The power industry isn’t taking a victory lap just yet. Richard Bratton, director of market policy and regulatory affairs at the trade group Independent Power Producers of New York (IPPNY), noted that some of the scenarios NYISO studied still show risks of blackouts within the decade.

For example, in a high-demand scenario where more big energy users plug into the grid and electrification of buildings and transportation actually meets state climate targets — something NYISO does not assume in its baseline forecast — a shortfall could occur by 2032.

If one of the state’s large aging gas plants were to shut down, New York City and Long Island could face a gap as soon as next year.

Even if the baseline forecast holds true, New York City will likely face a power shortfall in the early 2030s if electrification efforts proceed as expected and the New York Power Authority closes its remaining gas “peaker” plants by their 2030 deadline, NYISO found.

Kevin Lanahan, NYISO’s vice president for communications, said the forecast gave him “some pause,” particularly looking toward the mid-2030s. But “the statewide issues are on the margins,” he said, meaning it would take an extreme situation to risk a blackout.

Lanahan said the report could still be tweaked. But barring major last-minute changes, it suggests that New York has so far dodged the pitfalls that have led many other states to start firing up more dirty plants amid the AI boom. New gas plants are still off the table, for now.

New York will nevertheless have to contend with a rapid increase in power demand: about 12 percent over the next five years, according to a recent survey from the energy consultancy Wood Mackenzie. That’s the second-steepest increase in the country.

In New York, so-called “large loads” — energy-hungry tech and manufacturing facilities — are expected to drive up power demand by roughly the same amount as electrification of heating and transportation. Much of the increase will come from just one project: Micron’s $100 billion chip manufacturing hub outside of Syracuse. The company’s first two plants — due to be complete by the end of the decade — are expected to use as much electricity as roughly 1 million New York homes.

Data centers look small by comparison. New York is not among the top 15 states for data centers announced since last year, and the facilities are only expected to account for about a tenth of new power demand in the state, Wood Mackenzie found.

Hydrogen diagram in front of a power plant

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There is one clear alarm bell in NYISO’s latest forecast — but it’s not about large loads.

Starting in 2033, power demand will outstrip the energy supply available to the five boroughs, which are virtually cut off from the upstate grid due to a lack of transmission lines, according to the study.

There are two main factors to blame: electrification of heating and transportation and the closure of the New York Power Authority’s small gas “peaker” plants.

The finding will force NYISO to solicit plans to close the gap, which may include keeping the plants open for longer than planned. (Last year’s legislation setting the 2030 deadline allows NYPA to hang onto the plants if closing them would jeopardize electric reliability.) A similar finding last year led the state to grant an extension to two privately owned peaker plants, which were due to retire by 2025 under pollution rules.

Hanging onto old plants is just one option. NYISO’s report said solutions could also include new transmission lines, something industry and climate hawks largely agree on. Environmental justice advocates also want to find ways to make it easier for consumers to use less power — particularly at peak times — rather than just building more infrastructure.

“Looking at supply is insufficient,” said Daniel Chu, senior energy planner at the New York City Environmental Justice Alliance and coauthor of a new PEAK Coalition report on the city’s grid. “We need to look at demand.”

The coalition proposes traditional energy efficiency measures, like home insulation and up-to-date appliances, but also a suite of technologies and incentives that allow households and businesses to spread their power use throughout the day. Those might include “smart” residential thermostats and water heaters; electric vehicles that can charge at off-peak hours and feed power back into the grid when it’s needed; and incentive programs that encourage consumers to shave their power use when the grid is strained.

These strategies could add up to a more flexible grid and “flatten the curve” of electricity demand — if grid operators can figure out how to piece them all together.

State regulators and utilities have already started testing those approaches. Environmental justice groups want them to pick up the pace.

One reason? Relying less on peaker plants could save money.

The Gowanus Generating Station in Brooklyn seen through a chain-link fence

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According to the US Department of Energy, developing a more flexible grid could meet peak power needs at less than half the cost of the aging plants. (These plants charge millions of dollars a year to stay open — even if they rarely run — in exchange for serving as a backstop for the grid.)

The PEAK Coalition notes that New York’s largest electric utility, Con Edison, lags behind peers in places like Chicago and even Indiana in enrolling customers for programs to reduce peak power use. (ConEd did not respond to a request for comment.)

But behind the scenes, regulators have been preparing for a wider sea change. Traditional rooftop solar — a core component of the decentralized approach — is the one area where New York has outpaced its climate law targets. And just last week, the state began looking for consultants to kick off larger upgrades to the grid allowing it to communicate with the technologies plugged into it.

NYISO said it’s on board with the effort, too. It is already counting on energy efficiency, alongside small-scale solar and batteries, to keep the grid balanced over the next decade. But Lanahan, NYISO’s communications head, said the grid operator wants to encourage more.

The biggest caveat in NYISO’s latest study, as with all forecasts, is the uncertainty around its underlying assumptions. Major projects that have been announced — like the state’s Empire AI center — can’t be incorporated into the grid operator’s models because their scale has yet to be determined. Nor can huge offshore wind projects that don’t have contracts yet, even though the state is still counting on them to meet its climate targets.

And when it comes to data centers, even the companies building them don’t know the full scale of what’s ahead, said John Wilson, vice president of the energy consultancy Grid Strategies.

“There’s a lot of technical planning and a lot of economic planning that is going on right now, trying to sort out what is needed and what can be built and what should be built,” Wilson said.

“I don’t think you’ll find anybody who’s got the secret model in their computer that actually has the answers to those questions.”