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Friday, 24 June 2016 13:47

The Current State of Power: Grid and Growth in Saratoga

By | News
SARATOGA COUNTY — When people reach for a light switch, they assume the lights will turn on. They want the air conditioner working through the summer, heat in winter, and the dishwasher all year long. The dismay is genuine if the cell phone and laptop cannot charge. Personal reliance on the electrical grid is but one piece of the demand for power. Businesses lose money every minute their lights don’t run. Manufacturers the size of GlobalFoundries can use as much power as can feed 150,000 homes. The demand on today’s grid is great, but with two economic development agencies and other stakeholders working to bring more manufacturing to Saratoga County, are we ready for future demand? “That’s the question. I don’t know,” said Dennis Brobston, president of the Saratoga Economic Development Corporation (SEDC). “There are a lot of factors that go into that. The beauty of this thing, and thing that makes you mad, is the grid is always shifting. It’s a living organism. People are building homes over here, a factory over there, putting in a new dam over here and something else over there – all this growth has to be engineered through the utility for transmission and distribution.” Here, in the third fastest growing county in New York State, SEDC and National Grid and other stakeholders and regulators are constantly measuring and predicting demand. Patrick Stella, National Grid’s U.S. Digital Communications Manager, said, “We have a very robust economic development team in upstate New York. We work hand in hand with a lot of economic development agencies to spur on growth in the area. We do that with our engineers putting in new lines and beefing up infrastructure but also with water, sewer, roadways and those types of things. We were very involved in the last decade or more of a lot of the growth in Saratoga County, and we’ve invested in two major transmission lines on both the east and west side of Saratoga to keep up with that growth.” Brobston gives plenty of credit to National Grid and the other stakeholders involved, but on his economic development wish list is more land zoned appropriate for industrial use and power lines, as well as a transmission tower at 345 kilovolts (kV) rather than the typical 115 kV. Getting the approvals to triple a tower’s kilovolts can take up to ten years, said Brobston. “Everything feeds into the line, all the small hydro dams and other power generation sources. We see the grid continuing to be built out in concentric circles,” said Brobston. “So we’re getting there, but we’re not getting there fast enough. That’s the issue. We’re not running out of power, we’re stopping other growth from coming in.” As an investor, Louis Schick, Partner at NewWorld Capital Group, LLC on Madison Avenue in New York City, is not as worried about the role of National Grid or manufacturers such as GlobalFoundries as he is concerned about the other people at the table. “They can make it stop or go slowly,” said Schick, “and I have no assurance that will not happen. It’s large sums of money and long lead times with numerous stakeholders that will have something to say about the project, so as an investor I have no confidence it won’t all fall through. And it’s that confidence (that you cannot see it through to the end) that makes me nervous.” NewWorld Capital Group is a private equity firm investing in the Environmental Opportunities sector, including providing project finance for Environmental Infrastructure projects. Schick said that with deregulation, utilities like National Grid had to give up ownership in generation and transmission. That was given to independent power producers. It is the New York Independent System Operator (NYISO) that operates competitive wholesale markets to manage the flow of electricity across New York—from the power producers who generate it to the local utilities that deliver it to residents and businesses. Utilities are just responsible for distribution, operations, and the maintenance that goes from the connection at the grid to the meter. “We told all those utilities that they were not allowed to own generation,” he said. “So a new system was set up so power producers would competitively sell their power. The utility would buy enough energy to supply their end users. What that means now is I can build a power plant if I want to, and get permits and permissions to connect to the grid.” And that’s what Schick and other investors do. Third party financiers build power plants; they can build anything from a hydro plant to an array of solar panels. “We at NewWorld Capital have financed the construction of solar power installs or wind turbine projects,” said Schick, “but no matter what we look at, there is nothing in New York we can finance, and the reason we can’t build renewables in New York is the interconnect and permitting costs are very high. And worse than that, they are unpredictable.” According to Schick, it is unpredictable because there are too many people who get to say no to a project at any point along the way from the very beginning to near the end five years down the road. Federal, state and local processes include many stakeholders who can comment on impact to the community, environment, historical factors, and more. “The effect of this is that you can feel like you’ve got 90 percent of the paperwork done,” said Schick, “but no confidence that it is just about to finish. I’m not saying it’s impossible, but we’ve not seen any projects in NYS that we’ve been able to do.” Brobston understands where investors like Schick are coming from. “For the type of investment we’d like to do here,” said Brobston, “it’s harder to do here with the regulation and length of time to get things done. Much easier in Texas or Florida, where they’ve partnered with utilities and other stakeholders.” Currently, NewWorld Capital is investing in projects in Massachusetts, Wyoming, California and Ontario. Brobston spoke about the approval processes to get a 400-megawatt substation in at Luther Forest in preparation for the semiconductor industry. “The State and National Grid paid for it. We ran the project,” said SEDC. “That substation is not operating at 400 MW because we don’t have enough power going to it. We needed 200 MW to start and it runs about 250 to 280, but for future growth, we have to get it to 400 MW. If Luther Forest can put a generating plant in there on their own, that would solve that and future needs, but we don’t have enough natural gas to do that. But that’s another story.” Brobston said that once GlobalFoundries decides to expand again, it will take about three years to build it, and that State and utilities have committed to making sure that there’s a way to make it happen power-wise. The electric grid will be substantially beefed up for what GlobalFoundries will need to do within five years. Stella emphasized, “We want to expedite these projects. As a business, it doesn’t make sense for us to delay this. We want the regions that we serve to do well.” “We don’t do what we do in a vacuum,” added National Grid Regional Executive Laurie Poltynski. “We work in partnership with local and state economic development agencies and companies and find ways to break down barriers so these companies can find the least costly solution and invest here and grow here locally.” Brobston agrees, but says the real question is beyond 2020. “The plans we have in process do work, they take more time than we’d like, but they do work. Technology is changing enough that we may see better ways to generate electricity, more solar more wind or other new tech. We’ll always need to generate more, but we can be more efficient at it.” “One of the things we are looking at here is modernizing the grid,” said Stella. “We call it distributed generation. Any sort of alternative energy, it’s something we’re focused on more currently, how to connect those things into the existing grid. It’s built to have large power stations in certain locations. We’re trying to configure the grid to accommodate other location sources. We’re looking at smart grids, micro grid systems in smaller areas, we have a demonstration project in Potsdam right now, and a community solar type of thing in Buffalo.” Stella said the average person can help by staying informed, going to public hearings, and asking questions. Schick agrees and added that is especially important to ask candidates for office these questions, too. “It is a complicated issue, and it frustrates me how little voters get a chance to weigh in,” he said. Stella said utilities are in a unique spot to help create the future, regardless of whether it is wind or solar or something not yet invented. “Whatever it is, we have to adapt,” he said. “We are still the conduit and it’s an exciting time.” For more information about NewWorld Capital Group, LLC, visit www.newworldcapital.net. For more information about SEDC, visit www.saratogaedc.com. For more information about National Grid, visit www.nationalgrid.com.
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Property Transactions

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