Dirty “Peaker Plants” Remain Essential to NYC’s Power Grid

The clean energy revolution is coming to New York slower than expected. As New York City’s demands for energy grow, the state’s investments in cleaner energy aren't keeping up.

Filling the gap are peaker plants, smaller power plants that use oil or natural gas to generate energy when demand is high. When energy demand is high—often in the summer months—those peaker plants kick on to produce energy at a premium. But they also pollute more in the process.

The city’s peaker plants rely on more polluting natural gas and oil fuels compared to some of the city’s other power plants. They also tend to run less efficiently, resulting in more waste and fuel used. That’s why they are a backup. But with the New York State Independent System Operator projecting energy demand to rise 50 to 90 percent by midcentury due to economic development and decarbonization policies, kicking the nasty habit will prove more difficult.

Peaker plants' ability to flip on and off quickly makes them unique. They respond to by-the-second changes in the demand and price for power, switching on within seconds when the live market for power reaches a certain threshold. 

Most peaker plants are used under 10 percent of the time. New York State’s landmark climate law, the Climate Leadership and Community Protection Act (CLCPA), which passed in 2019, was intended to help phase out peaker plants. But decarbonization goals are contributing to rising demand as people switch to electric home heating and electric vehicles become more popular. New York energy consumers are already facing a potential double digit rate hike, currently being deliberated by the state's Public Service Commission, which sets rates. Con Edison says its bills are going up due to property taxes and improving energy efficiency to comply with the CLCPA, among other costs.

While some peakers were slated to close this year, clean energy generation has not taken off fast enough, so they will stay operational longer than expected. Downstate natural gas consumption increased from 77 percent of consumed energy to 89 percent between 2021 and 2022 after the decommissioning of the Indian Point nuclear plant in Westchester County.

Peaker plants were built in two big waves: first during the fifties and sixties when home energy demand surged and home appliances became popular. The second round of peaker plants were built at the turn of the century during the dot com boom when Wall Street switched to all electronic trading. The ISO projected that the peak energy demand would come in the winter by 2037 due to conversion to electric home heating. Experts also worry that new industry like the revolution in energy-intensive artificial intelligence computing could further strain the power grid.

Peaker plants tend to be located on the fringes, according to Cullen Brown, an energy expert, and Untapped New York tour guide who leads ferry tours of New York City's waterfront power infrastructure. When they were built, peaker plants were on the rivers and islands, away from wealthy neighborhoods. They tended to be built in poorer communities in the South Bronx, Lower East Side, Williamsburg, and Astoria. 

For example, residents of the Queensbridge Homes, one of the city's largest public housing developments, are exposed to emissions from the most polluting peaker in the city at Ravenswood as well as the nearby Vernon Boulevard peaker plant. The Bronx’s infamous “Asthma Alley” is located at Hell Gate and Harlem River Yard, two of the city’s most used peakers at over 10 percent capacity, where residents also contend with poor air quality from nearby expressways.

The socioeconomic geography of New York has changed dramatically since the mid-19th century when many peaker plants were constructed, shifting the burdens of peaker plant pollution as the city seeks to reopen much of its waterfronts away from industry and toward public use.

Another handful of peaker plants are located at New York City hospitals, where they are used both as an emergency backup and for increasing peak capacity. When the grid is strained, Con Edison will pay hospitals to generate their own power so they don’t draw from the limited supply, in an offset called demand response.

In 2020, New Yorkers sent $4.5 billion to peaker plants in their energy bills, making peak energy in New York City some of the most expensive in the country, according to the Peak Coalition. Peak energy can be up to 13 times more than the average cost of electricity in New York at some peakers. Even though operating a peaker can be expensive, it can be cheaper than bringing energy to New York City from elsewhere, Brown suggests. Transmission lines to the city only have so much capacity.

Eventually, the state hopes to replace some peaker plants with battery storage for renewable energy that can switch on when needed. However, tariffs on precious metals from China used in batteries are making battery construction more challenging. And offshore wind projects have taken a hit from the Trump-initiated pause, further delaying the generation of renewable energy replacements. The Champlain Hudson Power Express project, set to power 1 million downstate homes with 1,250 megawatts of clean hydropower from Canada, is underway and expected to be completed in 2026.

Electricity demand is only projected to rise in New York, as the state tries to keep up with an aggressive climate mandate and a new building emissions law in New York City comes into effect this year. As buildings move away from fossil fuels towards electric power and heat, demand will increase year round, creating new peaks in the winter, experts project. 

Powering NYC: East River Ferry Tour

Tripadvisor Review from Jean in NYC: The tour was simply amazing. Small group, and very comprehensive insight into the infrastructure that supports city life. I really liked that past, present and future were all covered. The use of public transportation (fare included in the price of the tour) is a great idea. Cullen, our guide, was very knowledgeable and, perhaps more importantly, a lot of fun!

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Next, read about exploring an abandoned power plant in Yonkers and consider taking a power infrastructure ferry tour of NYC!