{"id":1614924,"date":"2026-02-18T15:00:10","date_gmt":"2026-02-18T20:00:10","guid":{"rendered":"https:\/\/observer.com\/?p=1614924"},"modified":"2026-02-25T12:49:57","modified_gmt":"2026-02-25T17:49:57","slug":"new-york-city-energy-reform-winter-storm-fern","status":"publish","type":"post","link":"https:\/\/observer.com\/2026\/02\/new-york-city-energy-reform-winter-storm-fern\/","title":{"rendered":"New York\u2019s High Energy Costs Are a Hidden Affordability Crisis"},"content":{"rendered":"
\"People
Winter Storm Fern underscored how aging infrastructure and policy bottlenecks are driving up costs for New York businesses. Photo by Craig T Fruchtman\/Getty Images<\/span><\/figcaption><\/figure>\n

Winter Storm Fern brought snow, arctic temperatures and sharp energy cost spikes across the Northeast. Beyond the piles of snow still lining sidewalks, the longest-lasting impact may be on electric bills. For New York businesses that have watched their energy bills climb steadily for years, Fern was yet another cold reminder of the high cost of doing business in the city.\u00a0<\/span><\/p>\n

Mayor Mamdani has made affordability his central message of his administration, and rightly so. Lifestyle expenses like housing costs, grocery prices, transportation and childcare are squeezing New Yorkers from every direction. But there’s a less visible aspect to the affordability crisis that rarely makes the headlines: the cost of energy for New York businesses.<\/span><\/p>\n

Commercial and industrial electricity rates in New York City rank among the highest in the country, and they’re continuing to climb. And for businesses that keep our economy moving, energy has become one of the largest and least controllable line items on their books. Unlike labor or rent, energy costs are volatile, opaque and increasingly shaped by forces outside a business owner\u2019s control, from aging grid infrastructure to extreme weather events and rising peak demand.<\/span><\/p>\n

Those costs don’t stop at the utility meter. They flow outwards into prices, employment decisions and long-term investment in the city\u2019s economy. When a restaurant pays more to keep the lights on, menu prices go up. When a manufacturer’s energy bill spikes, so does the cost of what they make. When building owners face higher utility costs, rents rise. When hospitals pay a premium for power, it shows up in the price of care. High business energy costs aren’t separate from the affordability problems facing ordinary New Yorkers\u2014they’re part of the same problem.<\/span><\/p>\n

A structural problem hiding in plain sight<\/b><\/h3>\n

What makes this situation especially frustrating is that New York\u2019s high energy costs are, in large part, structural. The city relies on an aging transmission system, constrained generation capacity and a grid that struggles to meet peak demand during extreme weather\u2014conditions that are becoming more common. At the same time, demand is rising. Electrification mandates, the growth of electric vehicles and the rapid expansion of data centers are all adding pressure to an already strained system. Without complementary investments in distributed energy resources\u2014generation that happens closer to where power is used\u2014those pressures translate directly into higher rates. And yet, while the problem is systemic, the solutions are well understood and proven.\u00a0<\/span><\/p>\n

Technologies like on-site solar, combined heat and power systems (CHP) and battery storage can substantially reduce energy costs and emissions for New York City businesses. They lower reliance on peak grid power, reduce transmission losses and improve resilience during outages. In many cases, they also improve air quality and reduce strain on the grid during critical hours.\u00a0<\/span><\/p>\n

Deploying these technologies, however, faces significant structural barriers. The permitting process is slow. Interconnection with the grid is opaque and unpredictable. Projects that should take six months routinely stretch past 18. Incentive programs are often misaligned with real-world project economics. And the policy frameworks often treat these solutions as afterthoughts rather than integrating them as core solutions alongside the push for electrification and the more prominent demand increase from data centers.<\/span><\/p>\n

A moment of leverage<\/b><\/h3>\n

This is where Mayor Mamdani\u2019s administration has real leverage. Energy policy isn’t as visible as housing or transit, but for the businesses trying to stay in New York\u2014and for the customers and tenants who ultimately absorb their costs\u2014it matters enormously. A few targeted reforms could deliver tangible energy cost relief that would ultimately reach workers, tenants and consumers.\u00a0\u00a0<\/span><\/p>\n

Start with combined heat and power.<\/b> CHP systems generate electricity on-site while capturing waste heat for heating, hot water or cooling. By using fuel far more efficiently, CHP systems routinely achieve total efficiencies of 70 to 80 percent, compared to roughly 45 to 50 percent for conventional grid electricity paired with separate heating equipment. For facilities with steady heating and cooling loads\u2014hospitals, hotels, universities, large residential buildings, industrial buildings\u2014CHP is one of the most effective tools available to simultaneously lower operating costs and emissions. It also enhances resilience, allowing critical facilities to operate through grid outages.\u00a0<\/span><\/p>\n

Despite these benefits, CHP remains largely overlooked in clean energy policy discussions. Incentives are limited, permitting is complex and regulatory frameworks often fail to credit CHP appropriately for the grid power and steam it offsets. The city could address this and accelerate adoption through a targeted CHP incentive program, streamlined permitting for installations (particularly legacy equipment replacements) and revised <\/span>Local Law 97<\/span><\/a> compliance calculations that fully account for CHP offsetting grid power and steam delivery.\u00a0<\/span><\/p>\n

Shore up solar before federal incentives disappear.<\/b> The federal Investment Tax Credit (ITC) has driven commercial solar deployment for years. As it phases down, many installations that penciled out at a 30 percent incentive won’t work anymore. Without intervention, the New York City solar industry could simply collapse\u2014along with all the future benefits those installations would have delivered.<\/span><\/p>\n

The city has options. A property tax abatement for commercial and industrial properties that install qualifying systems\u2014modeled on existing programs like the Industrial and Commercial Abatement Program but targeted specifically at energy infrastructure\u2014could partially fill the gap. To be effective, the program must be simple, predictable and long enough to matter. A ten-year horizon would provide the certainty businesses need to invest.\u00a0<\/span><\/p>\n

Even modest abatements can shift project economics. A city-level income tax credit structured to mirror the federal ITC structure would go further. Making it transferable, as the federal credit is (meaning it can be easily sold to a third party), would allow New York to become a national leader in keeping commercial solar viable.<\/span><\/p>\n

Fix the permitting bottleneck.<\/b> Ask any business that has tried to install solar or CHP in this city, and you\u2019ll hear the same story. The technical work is straightforward, but the approval process is a nightmare. Multi-agency coordination gaps, unclear requirements, conflicting guidance and extended approval timelines turn otherwise simple projects into multi-year ordeals. For businesses, each month of delay results in undue reliance on dirtier fossil fuels and peak-pricing for electricity consumption that other technologies could offset.<\/span><\/p>\n

The fix isn’t complicated: designate a single point of contact to coordinate approvals across the Department of Buildings, the FDNY, Con Edison and other relevant agencies. Publish clear timelines and hold agencies to them. Establish an expedited pathway for smaller projects that meet standard criteria. Other cities have figured this out. New York shouldn’t be an outlier.<\/span><\/p>\n

Make resilience a priority, not an obstacle.<\/b> On-site generation and storage aren’t just about cost savings. They’re about keeping the lights on when the grid fails. Winter storms, heat waves and other extreme events are testing the limits of centralized infrastructure with increasing frequency. Businesses and critical facilities that can island from the grid during outages provide value to both themselves and the city as a whole.\u00a0<\/span><\/p>\n

Yet resilience is often treated as an afterthought. That should change. A resilience-focused incentive program for critical facilities, combined with expedited permitting for systems that can operate during outages, would be a start. Coordinating with utilities and emergency management agencies to identify priority locations could further amplify the impact. Treat resilience as a factor in permitting decisions\u2014projects that enhance it should move faster.<\/span><\/p>\n

A narrow window for action<\/b><\/h3>\n

None of this is radical. Other cities are doing versions of all of it. What makes New York different is the scale of the opportunity and the urgency of the need. Local Law 97 compliance deadlines are approaching. Federal incentives are shrinking. Businesses are running the numbers on whether New York still makes economic sense.<\/span><\/p>\n

Mayor Mamdani wants to make the city more affordable, and energy policy\u2014though not the most visible lever\u2014offers one of the highest-leverage opportunities to deliver measurable cost relief for commercial buildings and industrial users. Lower energy costs for businesses mean lower costs for the New Yorkers who buy from them, rent from them and depend on them. The businesses I work with want to invest in clean energy to reduce their costs and their emissions. What they need is a city government that acts as a partner rather than a barrier to distributed energy deployment.<\/span><\/p>\n

This new administration has a chance to do something different. I hope they take it.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Catalyst Power\u2019s Gabe Phillips analyzes how Winter Storm Fern exposed a structural problem behind New York City\u2019s soaring power costs. As Local Law 97 deadlines approach and federal solar incentives phase down, he argues that targeted reforms could deliver measurable cost relief while strengthening grid resilience and accelerating clean energy deployment.<\/p>\n Read More<\/a>","protected":false},"author":177935337,"featured_media":1628768,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"apple_news_api_created_at":"","apple_news_api_id":"","apple_news_api_modified_at":"","apple_news_api_revision":"","apple_news_api_share_url":"","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"post_tag":[423982471,423995086,423809815],"company":[],"channel":[186,16897,423807100,423874676],"location":[],"nyo_column":[423982261],"person":[424004140],"nyo_post_hidden":[],"coauthor":[424008072],"class_list":{"0":"post-1614924","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"tag-energy-experts","8":"tag-energy-policy","9":"tag-weather","10":"channel-business","11":"channel-climate-change","12":"channel-energy","13":"channel-policy","14":"nyo_column-expert-insights","15":"nyo_person-zohran-mamdani","16":"style-expert-insights"},"acf":{"homepage_position":"","homepage_title":"","homepage_excerpt":"","alternative_og_image":"","headline":{"seo_headline":""},"subheadline":{"optimized_seo_description":"","optimized_social_excerpt":""}},"apple_news_notices":[],"parsely":{"version":"1.1.0","canonical_url":"https:\/\/observer.com\/2026\/02\/new-york-city-energy-reform-winter-storm-fern\/","smart_links":{"inbound":0,"outbound":0},"traffic_boost_suggestions_count":0,"meta":[],"rendered":"","tracker_url":"https:\/\/cdn.parsely.com\/keys\/observer.com\/p.js"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/observer.com\/wp-content\/uploads\/sites\/2\/2026\/02\/GettyImages-2258214636.jpg?quality=80","coauthors_byline":"By Gabe Phillips","display_channel":"","thumbnail":"\"People