The region’s economic future hinges on an infrastructure that is reliable, efficient and economically sustainable
New York’s current energy policy has companies chasing incentives rather than compensating them for plans that reduce demand and respond to market need. It’s a fragmented reward system that hobbles economic development in the Albany region.
“Goals are great, but let’s make sure we have the macroeconomics in place,” said Dennis Elsenbeck, who leads Phillips Lytle LLP’s energy consulting services. “We should be rewarding good plans. So why, in our world, do plans chase after money?”
As New York transforms its energy sector to meet 50 percent renewables by 2030, the region’s economic future hinges on an infrastructure that is reliable, efficient and economically sustainable, Elsenbeck said.
“We have to think about economic development and energy as one,” Elsenbeck said during a June 12 panel discussion on the state’s energy infrastructure hosted by Phillips Lytle at The Century House in Latham.
New York’s current policy includes a patchwork of energy programs, each of which has different criteria and incentive/rebate schedules. A successful energy policy promotes a two-way distribution system that does not sustain solely on incentives, Elsenbeck said.
“We must ask ourselves if we’re creating an efficient system,” he said.
Motivated developers should be compensated for facilities that impact the way energy is supplied and used, Elsenbeck noted. Brownfield sites that are returned to the tax rolls should be prioritized and awarded the highest incentives. Microgrids should be encouraged, as should combined heat and power systems that provide total energy solutions.
“If a system controls demand, why is value not given to the developer as part of the incentive?” Elsenbeck said.
Moreover, the application process can be time-consuming, bogging down even the most policy-savvy site owners.
A good consultant is key to identifying the model that works best for the property owner, said Jeff Mirel, executive vice president of Rosenblum Cos.
Rosenblum installed a geothermal energy system in its newly opened News Apartments, a $24M, 101-unit mixed- use complex built in the former offices of The Record building in downtown Troy. The 15-year system investment, which includes 41 490-foot-deep wells and submetered units, was significantly higher than the return on traditional energy systems. But the efficiencies in installing smart meters and occupancy sensors, and packaging the utilities, internet and TV into a single, flat rate, makes the apartments more marketable to tenants, Mirel said.
Rosenblum has its own energy practice, but still sought help from legal and financial consultants and the New York Energy Research & Development Authority (NYSERDA), the nonprofit that administers many of New York’s energy programs, before deciding on the best model for them.
The Albany developer also installed a solar system on the rooftops of its Great Oaks office park in Guilderland when the complex was built in the 1990s. Rosenblum rejected offers to lease its rooftops, choosing instead to purchase the system, hire installers that qualified the project for rebates, and lock into a fixed price for its power. In this case, owning the system provided a greater return on investment, but every project should be weighed carefully for their merits, Mirel said.
“There’s a lot of complexity and nuance in ultimately coming up with a project that is going to work for you,” he said.
In 2016, the Center for Economic Growth expanded its business development efforts to include energy and sustainability services. One of CEG’s newest programs, SolarGen, works in conjunction with NYSERDA to find vendors, financing options and incentives for site owners’ and manufacturers’ solar photovoltaic arrays.
Additionally, CEG developed a pollution-prevention program that helps large manufacturers find end-uses for their waste byproducts and grow revenue.
“We also have advisory services to help companies through the maze of grant opportunities at the federal levels,” said Andrew Kennedy, CEG’s chief executive.
Energy providers, economic development agencies and academic institutions can help shape an energy future for New York that focuses on growth and sustainability, Elsenbeck said.
The region’s colleges and universities bring modeling and research intelligence that can guide policy. Economic development agencies know transmission needs, and which sites will bring new business to New York. Economic development councils can identify priority sites and work with utilities to bring infrastructure there proactively.
“We need to capture that knowledge and put it into the system,” Elsenbeck said.
He urged economic development agencies to engage in the Public Service Commission’s open proceedings on VDER, or Value of Distributed Energy Resources, the mechanism that compensates energy providers. VDER replaces net metering and is central to the state’s Reforming the Energy Vision initiative to bring more renewable energy and smart technologies into the state’s power grid.
“Energy policy is critical at this juncture,” Elsenbeck said. “We can’t do economic development without good, solid energy policy. And we can’t meet our goals in a cost-effective manner if we don’t have that alignment.”