Far From Home, Con Edison Unit Builds Renewable Generation

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Consolidated Edison Incorporated (NYSE:ED) (New York, New York) is a well-known name in New York's five boroughs and the close-in suburbs of Westchester, Rockland and Orange counties. The company's utility affiliates have supplied customers in those areas with electricity, natural gas and, in some areas, steam, for a century or more. But increasingly, Consolidated Edison is a name popping up in far-off markets like Pennsylvania, South Dakota, Nebraska, Nevada, Montana, Texas and California, where the company's Clean Energy Businesses (CEB) unit has built, and is still building, solar and wind generation.

To date, the CEB unit has been a modest part of Consolidated Edison's overall portfolio: it had revenue of about $694 million for 2017 while consolidated revenue for the company that year reached about $12 billion. While Consolidated Edison's main emphasis is on its regulated New York utility operations, it appears to have high hopes for its CEB unit.

Consolidated Edison expects to invest about $400 million annually in its CEB unit over the 2018-2020 timeframe, according to its first-quarter earnings call held with investors May 3. That level of investment is new this year. Meanwhile, the company's utility units expect to have capital budgets of slightly more than $3 billion annually for the 2018-2020 period.

Click on the image at right to see Consolidated Edison's past and future capital budgets.

The CEB unit now has large renewable facilities in 17 states, representing a $4 billion investment, Consolidated Edison's Chairman and Chief Executive John McAvoy told shareholders May 21. The company's investments in renewable energy have made it now the fifth-largest solar producer in North America, he added.

Closer to Consolidated Edison's New York home, the utility units are investing in advanced technology and electric and gas efficiency programs, as capacity on gas pipelines and electric transmission lines into the New York area remain constrained. Rather than try to build more pipelines or buy space on a pipeline, the utility is trying to convince its gas customers to use less gas during peak periods. The company's peak natural gas demand is up 30% over the last six years, and McAvoy said there are uncertainties about future supply.

On the electric side, Consolidated Edison also is seeking non-traditional approaches to meet customer needs. As one example of how the company is using new and evolving technologies, Con Edison is installing a 12-megawatt hour battery system on company-owned land in Ozone Park, Queens. The company will charge the batteries when demand for power is low and then discharge that power at peak times, taking pressure off the grid. The batteries can discharge one megawatt for 12 hours or two megawatts for six hours. A megawatt is enough to power up to 1,000 homes in that area.

The company has invested $1.5 billion in its overhead and underground systems in New York City and Westchester County to ensure reliable electric service this summer. Con Edison's investment in technology upgrades and reinforcements includes 18 network transformers and 74 overhead transformers. The company also is replacing or upgrading 37 underground feeder sections, it said last month. The heavy spending is driven, in part, by expectations of record or near-record electric usage this summer. Con Edison projected peak demand for electricity will reach 13,300 megawatts this summer. The utility's all-time peak electric demand is 13,322 megawatts, set in July 2013.

The company also is investing in technologies that improve safety and reliability. It has installed 1,000 devices in manholes to detect heat and gas in underground structures. By detecting that buildup, the company can make a repair before a cable fails. Con Edison also takes infrared images of underground cables to look for hot spots that might indicate a repair is needed.

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