National Grid hopes to invest $16 billion to upgrade its Upstate electric transmission network over the next five years, a 60% spending increase to prepare for burgeoning electric use as New York shifts away from burning fossil fuels.
The investment, which will be paid for over time by electric customers, will help strengthen the electric grid while also promoting efforts to reduce greenhouse gas emissions, company officials said.
The New York spending is part of a $75 billion plan to beef up National Grid’s networks in its home country, the United Kingdom, and its U.S. utility systems in Massachusetts and New York.
“National Grid is committed to playing our part in achieving the ambitious decarbonization targets that New York and Massachusetts governments have set,’’ said John Pettigrew, the company’s London-based CEO, in a news release Thursday.
State law requires New York to reduce greenhouse gas emissions 40% by 2030 and 85% by 2050 from 1990 levels.
Investments in the transmission system would have to be approved by regulators before the company could proceed. State energy officials say improved transmission will help pave the way for greater use of wind, solar or other renewable power, which often must be transported long distances to urban centers.
The $16 billion plan represents a 60% increase over what National Grid has spent during the past five years. It includes a $4 billion project under way to improve 1,000 miles of transmission lines, which National Grid calls the “Upstate Upgrade.” Other projects have not yet been identified.
National Grid said it also plans to spend $5 billion improving its natural gas networks in Long Island and New York City.
It’s hard to predict how the transmission work would affect electric bills. National Grid will recover its investment over the life of its power lines and other equipment – decades, in most cases – which will minimize the effect on customer bills, said Jared Paventi, speaking for the company.
“Will there be an impact for the customer? Yes, but I believe that it’s going to be negligible based on the time period that we’ll be recovering those costs,” Paventi said.
In an order issued last year to approve $4.4 billion in new transmission lines planned by several utilities, the state Public Service Commission estimated the work could increase residential bills by about $3.50 a month, decreasing over time. The actual impact could be less or more, depending on final costs and overall electric demand, the PSC said.
To help fund the improvements, National Grid announced plans to sell about $8.75 billion in new stock to investors.
National Grid’s announcement comes as the company seeks rate increases in the United States. The company has requests pending in Massachusetts and at its downstate natural gas systems. The company has said it plans to file a new rate request in Upstate New York “before summer.”
Energy experts say the U.S. electric grid requires significant upgrades to accommodate rising demand driven by data centers and artificial intelligence. In states like New York, that pressure is multiplied by efforts to promote electric cars, electric heating systems and renewable energy in a shift away from fossil fuels.
Among those watching closely is Micron Technology, which plans to build as many as four massive chip fabs in Clay. If the entire $100 billion complex is built, it would consume more electricity than Vermont and New Hampshire combined.
Micron is paying millions of dollars for National Grid to install lines connecting the company’s Clay site to a nearby substation.
In testimony Tuesday before Congress, Scott Gatzemeier, a Micron vice president, said the company relies on a robust power grid.
“Consistent power is crucial for fabs that will run around the clock, 24 hours a day, 7 days a week, and we cannot afford to suffer even a fraction of a second of power drop which impact hundreds of millions of dollars of production at any given time,’’ he said, according to a transcript of his testimony.