Consolidated Edison Inc. emitted 3.4 million metric tons of carbon dioxide and other greenhouse gases last year. Just about everyone agrees this isn’t sustainable. Even Con Ed’s new chief executive, John McAvoy.
To demonstrate his utility’s commitment to cleaner energy, one of Mr. McAvoy’s first acts as CEO was overseeing the installation of 200 solar panels on the roof of the 100-year-old building that is Con Ed’s headquarters near Union Square. The $270,000 project—about half of which was paid for with a federal government grant—will lower the utility’s own electric bill by $7,000 a year.
“I’m excited about this; this is the right thing to do,” said Mr. McAvoy, who replaced Kevin Burke as Con Ed’s chief at the end of last year. “This takes us forward to the next decades of energy technology.”
Con Ed’s panels produce a tiny amount of power—about 40 kilowatts, or enough to light up two floors in its headquarters. And solar accounts for only 0.3% of the more than 13,000 megawatts of energy that flow at peak times through Con Ed’s wires and pipes. Still, the alternative-energy figure is growing fast, and Mr. McAvoy said his utility is committed to making it easier for New Yorkers to convert to solar power if they want it.
“There’s a natural link between running a transmission and distribution system and helping customers get clean-energy technology,” he said.
Talking up clean energy is good public relations, but Con Ed is also putting its money where its mouth is. Since 2011, it has invested a half-billion dollars in 17 solar-energy projects that collectively produce 292 megawatts of power sold to other utilities. An additional 50 megawatts are in development.
For comparison’s sake, PSEG Long Island, the former Long Island Power Authority, has 125 megawatts of solar capacity and an additional 150 in development, a spokeswoman said. The nation’s largest renewable-power player, Florida-based NextEra Energy, operates or is developing 789 megawatts of solar power, according to Jim von Riesemann, a utilities analyst at CRT Capital.
“Con Ed is legitimately a major player in solar,” Mr. von Riesemann said.
If it sounds odd that a 120-year-old utility would embrace solar energy, it helps to understand that Con Ed sold most of its fossil-fuel-powered plants back in 1999 and the Indian Point nuclear plant in 2001. Now it doesn’t matter so much to Con Ed what source of energy its 3.4 million customers prefer so long as they continue to plug into its grid, which includes 130,000 miles of electric cables and wires and 4,200 miles of gas mains.
But Con Ed is also extolling the virtues of solar because any energy that commercial or residential customers can generate on their own rooftops will help ease the pressure on the utility’s network during heat waves. Peak demand is expected to grow by about 3% this summer, to a record 13,675 megawatts.
When everyone cranks up their air conditioners, powers up their computers and turns on their flat-screen TVs, the strain on Con Ed’s grid may be especially tough, considering regulators recently froze rates while also demanding the utility spend $1 billion during the next few years to protect against major storms.
The rate freeze is one reason why Con Ed’s normally reliable stock has underperformed in the past 12 months, falling by 4%, compared with an 8% increase in its peer-group index. Still, in January, the utility raised its dividend for the 40th consecutive year.
While Con Ed preaches the benefits of solar energy, Mr. McAvoy, a Con Ed lifer with a degree in mechanical engineering, acknowledges that the economics of conversion remain challenging and will likely remain so for at least three years. For starters, although solar-panel prices have fallen considerably in recent years, the cost of installing them hasn’t declined much.
Even with government subsidies, it still costs about $250,000 to install panels on the average Manhattan office-tower rooftop, said Natural Resources Defense Council energy-policy analyst Pierre Bull. Those upfront costs are a heavy lift, even though Mr. Bull said solar-generated electricity costs between 12 and 15 cents per kilowatt-hour. That’s below the average commercial rate in New York of 16.4 cents per kilowatt-hour this past January and the residential rate of 19.5 cents, according to the U.S. Energy Information Administration.
Another hindrance is that some office and apartment rooftops in New York are too small to interest solar-panel installers. Most developers want to build systems that generate at least 100 kilowatts—more than double the size of Con Ed’s rooftop project. That requires about 20,000 square feet of roof space, said Rory Christian, New York clean-energy director at the Environmental Defense Fund.
“A lot of rooftops here have lots of vents and air conditioners that make installing solar panels a challenge,” Mr. Christian said.
That said, the city’s solar capacity has grown to 40 megawatts from essentially zero a decade ago, and government officials have made further increases a priority. The Cuomo administration recently launched a so-called Green Bank that’s intended to use private and public capital to finance solar-conversion projects. The state is also developing an incentive plan called NY-Sun, modeled after a successful public-private program in California, the NRDC’s Mr. Bull said.
City’s solar-friendliest locales
As for Con Ed, the utility company is working with the City University of New York’s Sustainability Project along with city and state officials to streamline the permit process in parts of the city where adding solar capacity would relieve the most pressure on the utility’s grid. Potentially solar-rich locations include much of Manhattan’s East Side below 31st Street, Brooklyn’s Cobble Hill neighborhood and northern Staten Island.
So far, Mr. McAvoy said, 2,000 residential and commercial customers have installed solar equipment. He’s not worried about customers abandoning the utility in large numbers: The sun simply doesn’t shine enough here to generate adequate energy for most people.
“Solar provides power several hours of the day,” Mr. McAvoy said. “We provide the others.”