Urban Green Live: Decarbonizing Con Edison’s district steam (w/ Matthew Ketschke)

John, thank you very much for having me. Really appreciate it.

Sure, John. So KED serves about 10 million people every single day, providing electric, gas, and steam service. So we serve about 3.6 million electric customers, about 1.1 million gas customers, and then about 1,500 steam customers. Our steam system, as you indicate, is the largest district heating steam system in the United States. It's larger than the next six systems combined, and it's been serving customers in Manhattan for over 140 years. And it impacts the largest buildings and spaces in New York City. Approximately every day, 3 million New Yorkers pass through, utilize or live or work in buildings that are heated with steam. Our steam customers primarily use it for heating, but also for hot water, air conditioning, humidification, sterilization of food, some processing. And we do serve some of the largest and most iconic buildings in New York City, so the Empire State Building, Chrysler Building, Guggenheim Museum, United Nations, and Grand Central Terminal are all part of our steam system. But we also serve a lot of residential customers. A number of residential buildings are served by steam, including 15 campuses that are run by the New York City Housing Authority or NICHA.

Yeah, so our steam system is pretty old. Our steam system construction began in 1881. And to put that in context, the Pearl Street generating station or the initial electrification first ever project was 1882. So our steam system and electric system are right about the same age. The first steam generating station was right around the campus of the World Trade Center, and it kind of built out in lower Manhattan. By about the 1930s, there was significant consolidation that was happening with energy companies in New York City. So in 1936, what was the New York Steam Company was purchased by what would ultimately become the Con Edison Company of New York that I work for. At the time of the purchase in 1936, there was about 65 miles of steam main running under New York City and six steam generating stations serving about 2500 buildings. Fast forward to today, the current system provides steam to about 1,500 customers. We have about 105 miles of steam main running under the streets of New York City and we serve the area basically from about 96th Street all the way down to Battery Park.

District steam today provides one of the most efficient ways to heat buildings. The coefficients under local law 97 for district steam are currently the lowest energy source for CO2 emissions for delivered energy of any energy source. So better than electric, better than gas, better than fuel oil, and that's the case through 2029. Beyond that, we are undergoing several pilots to look at how we further decarbonize steam production. And as we develop line of sight toward those different technologies, how we scale them, we will work on how we will continue to lower the carbon emissions from steam while we retain the reliable and clean source that are used for a lot of the Manhattan buildings. And we think that's particularly relevant for buildings that take steam today that are going to be hard to electrify or hard to retrofit all of the internal building systems to heat with electricity.

Yeah. So I think our approach is really thinking about how do we align the strategy for steam decarbonizations with the state's targets under the CLCPA law, Community Leadership and Climate Protection Act. That involves looking at a combination of technologies that are available today and that we think are continuing to evolve to essentially reduce the overall CO2 emissions from our system. Our system has had a pretty long history of reducing carbon dioxide emissions from production. So since 2005, our steam system has reduced scope one or direct CO2 emissions by 60%. We did that by improving the efficiency of steam production, switching to lower carbon fuels in how we produce steam. And we want to continue that trend by deploying newer technologies at the steam production level. That might be much easier to do at a power plant level than having a building try to implement those technologies back in the basement or mechanical spaces of a commercial building.

One of the things we've done in this in 2024 is we did a steam decarbonization study. And one of the main takeaways from that study is that it is possible based on available technologies and the expectation of technology development to significantly reduce the CO2 emissions that come from steam. And those are by deploying new technologies, high efficiency heat pumps that can grab waste heat from other sources or potentially from river water and use that to preheat the water that we make steam, using the higher coefficients of performance that you see out of heat pumps reduce the amount of fuel necessary to make steam, or electric boilers that would be fueled with renewable electricity that could have a lower overall CO2 impact than the current use of natural gas to make steam. So we are evaluating 24 different technologies on how we can decarbonize overall steam production through thermal storage, electric boilers, industrial heat pumps and how we can deploy that technology to improve the overall system performance and reduce CO2 emissions. Some of these things are already happening. Some of these technologies have been deployed in place in Europe and Boston, for example, in their system has begun to install both electric boilers and industrial heat pumps to look at decarbonizing their system. There are some challenges in this, you know, regulatory and new technology going be one of them. So steam is one of the energy commodities that we deliver, all are regulated by the New York State Public Service Commission. So we'll have to work with regulators to get approval to make these capital investments for the equipment necessary. And some of these are new technologies. So things like permitting for new energy sources and water use if we're looking at heat pumps are all regulatory hurdles that we're going to have to work our way through.

Well, it's probably both. It's a little bit of decarbonizing the steam production. So today most steam is made in industrial boilers where you use generally natural gas as the fuel to heat the water to create steam. There are other ways to do that. So you could use low or zero carbon emission fuels, things like clean hydrogen or bio gas that would lower the overall net CO2 emissions. You can also improve the efficiency of making steam by doing things like utilizing an industrial heat pump to preheat the water much closer to the boiling point so that all you need is that last little bit of energy either from fossil fuel or renewable gas or electricity to flash the hot water into steam for ultimate use by customers.

Well, hydrogen I think is a potential solution. I think there's a number of things to work out in the supply chain for how clean hydrogen production, transportation and storage would work. There have been a number of demonstration projects, some through the Department of Energy, some in Europe looking at using hydrogen in the fuel. And it does work. Hydrogen is combustible. The one issue is that hydrogen is much more volatile than for example natural gas. It has a much higher explosive inflammable range than natural gas. So handling hydrogen in any setting is a little bit more challenging than handling natural gas. We think that's one of the reasons that doing it at the industrial power plant level is a better place to do that than trying to do it inside a building. So if you were going to use hydrogen in a fuel source to make steam that you would ultimately use inside a building or a hospital or a transit center like Grand Central Station, it's probably better to do that in an industrial power plant setting than trying to do it closer to the end user customer.

No, we have a number of plants. So we have four of our own power plants and then one contract plant that's in Brooklyn. So we have multiple plants. The plant on the lower east side, the one that we're going to offer the Torres as part of this series, is our largest steam production facility but we have a number of facilities located around Manhattan.

So at this point we do think it's a viable technology. So most power plants, not all, but most power plants ultimately use some amount of cooling water or they use air cooling to condense steam that you produce in that process back into water. The East River generating station does currently have permits to take water from the East River and circulate it through the plant to condense steam and discharge that water back a little bit warmer into the river. The way you would use river water in this context would essentially be the reverse. You would essentially scavenge heat from the river and discharge water that was a little cooler back into the river. So using a heat pump in that setting, you have the advantage of being able to tap into the excess heat that's available in an industrial setting like a power plant and reutilize that, and then also potentially tap into river water as a source of heat, very similar to how we think about ground source heat pumps using the ambient ground temperature as a heat sink and being a little bit more efficient on the coldest winter day than an air source heat pump.

Yep. And a big piece of that was moving from using fuel oil to using natural gas for the production of steam and increasing the efficiency that we produce steam by using combined cycle co-generation to make steam with electricity being a byproduct.

That's one of the things that we're going to learn through these technology demonstrations. The study we did in 2024 said that we can really go pretty far down the stack on reducing CO2 emissions and that we think this district steam system can be a very cost-effective solution for decarbonizing buildings, particularly where retrofit of those buildings is going to be necessary. We recognize that we serve an iconic city, but some of the building stock in New York City is going to be hard to retrofit and electrify. And doing that back at the steam plant level, we think is a lot more efficient way to do it. And the studies we've done show it's more cost-effective and save customers money in the long run.

So I think there's some amount of both regulatory and technology hurdles that we still have to overcome. So I talked about that both in Europe and in Boston some of this technology is beginning to be deployed. But like any brand new technology, it's not fully commercially available yet and they're still developing it. So I think there's some technology hurdles. That's why we're looking at some introductory pilots. We'll file for three or four potential projects at a smaller scale to learn and move in the direction of decarbonization, and then there's some of the regulatory hurdles that go along with deploying new technology.

Yeah, so it's probably in two big areas. The first is we are a regulated utility providing monopoly service. So that means that any investment that we make will require regulatory approval from the Public Service Commission. So any ideas that we have about deploying new technology, we'll have to put that through a filing to the New York State Public Service Commission. It would get vetted through the regulatory ratemaking process and ultimately get their approval and concurrence before we move forward. And then the second is some of the permitting for new technology and that often falls to local and state agencies like the Department of Environmental Protection, the Department of Environmental Conservation, the Fire Department of New York. Depending on the technology, for example, if we were going to bring hydrogen into a facility, that would be some new permitting requirements and think about how we handle that safely and effectively.

So this year, we plan to propose three early deployment projects to the PSC through that process I described and look for their approval. And those three projects will help us reduce emissions in the steam system and we expect will impact the overall coefficient for steam positively starting in 2035. And then these three projects would inform us on the ability to scale and drive more projects beyond that as we move forward.

Yeah, steam's an important part of our portfolio, but we are an electric, gas, and steam company. So we take our leadership role in the delivery of clean energy future for our customers, buildings and operating, and reliable, resilient, extremely seriously. We are going to have a role in how you have to decarbonize all of the energy delivery systems if the state is going to get to its stated goal of achieving a net zero energy delivery system by 2050. So our clean energy commitment takes a holistic approach thinking about how we serve our customers and represents a blueprint to support the state and city's clean energy goals. Through that commitment, KED is looking to help enable a clean energy producer that equitably and efficiently meets New York State's goals and delivers a more sustainable grid. So that looks like investments in electric delivery infrastructure to help integrate more renewable electricity, maintain the reliability of that system, and serve an increasing electrification load. It looks like maintaining the safety and reliability of our natural gas system that serves over 1.1 million critical customers today, as customers begin to transition away from fossil fuel, but also recognizing that there's a tremendous amount of value in that energy delivery infrastructure that today delivers natural gas that can potentially be repurposed for delivering either a low carbon or zero carbon fuel like bio gas. And like we've talked about already, thinking about our steam system, particularly for hard to electrify or decarbonize buildings, how we can do that decarbonization of the energy source back at the power plant level.

Yeah. So from my seat, energy efficiency is and will remain an important piece of the energy strategy and decarbonization strategy. So in 2024 alone, KED provided over $320 million in incentives to our customers for building electrification energy efficiency programs, with more than $80 million flowing to low and moderate income buildings. The space around energy efficiency is really in transition at this point. So we're in the process of moving away from some of the measures that were the early drivers of energy efficiency programs, things like lighting upgrades and things that were generally had a high value but were simpler and easier to execute. And as a lot of those projects have been done, we're moving now towards more complicated projects that improve the overall efficiency of the building in things like building envelope, building energy management systems. So energy efficiency is evolving and becoming more complicated as you think about how do you electrify buildings and how do you make them more energy efficient. For example, if you're going to deploy heat pumps in a building for heating, you really want to look at that building envelope and making it as tight as possible so that you have the comfort and convenience for people inside the building when using heat pumps because the performance is a little bit different in a heat pump system than it would maybe be in a traditional fossil fired system.

Yep. So if you look at the AI story nationally, a lot of that story is being pegged to large power demands and big increase in power demands. A lot of that to drive load at data centers where they're doing both some of the training of these large AI models and then running the large AI models. Generally speaking, these data centers are massive compared to what I typically would have thought of as a data center. Growing up in this business, a data center was maybe it was an entire floor of a commercial building or maybe it was like a warehouse size building. These new data centers are huge. They have gigawatt scale energy demand. Given that they need a lot of land, relatively low cost energy and often need to be near trunk telecommunication lines, those factors do not make large data centers a good fit for the New York City urban environment. So most of those data centers are located outside of the New York City area. So we're not seeing a Google sized gigawatt scale data center showing up here. What we are seeing is the closer to end use of AI. So all of that processing work that's happening at the large data center maybe in Virginia somewhere becomes the end use transactional piece of it that's going to show up a little bit closer to where we are here in New York City. But AI is not the major driver for load growth for New York City. The major driver for electric load growth in New York City is going to be decarbonization of building heating and decarbonization of transportation.

Yep. So nationally I think it's a huge issue. There's a large increasing demand for electric energy across the United States both for AI, for onshoring of manufacturing, and for decarbonization of heating and transportation. As we talk about New York City, it's very important to how we think about efficiently using energy and reducing overall energy demand so they can most efficiently convert all of that other end use energy that went to heating and transportation. Energy efficiency is a major component of it. Now the technologies themselves are more efficient. If you go from even a high efficiency gas furnace to a heat pump, the efficiency of a high efficiency gas furnace to the coefficient of performance of a heat pump, heat pumps are much more efficient. So as we think about deploying electrification of heating, electrification of transportation, the end use energy of those devices as opposed to their fossil fuel counterparts goes down. It's just a much more efficient way to use energy. But we have to build out the new energy delivery infrastructure to make sure that we can meet that need.

Yeah. And the cost for both steam decarbonization and I think the energy system in general, it's a lot of the same thing. As we think about deploying decarbonization technology, we recognize there's a cost associated with that. We want to be strategic and methodical about how we make that transition. Be methodical about the investments we make to make sure that they are multi-purposed. That if we provide a solution that helps decarbonize, so for example with electric transmission, if we build out a new substation to help integrate new renewable energy sources like offshore wind, we want to make sure that substation also improves the resilience and reliability of the energy delivery infrastructure to begin with and that that provides the ability to serve new load in the future. You essentially when you make these investments, they're multi-purpose and they don't just serve one need but as many as you can. And then this is an area where we're going to be using both mature technologies and emerging technologies. So working with regulators, stakeholders and others as we go through this process. Because ultimately there is a capital cost associated with deploying all of this new infrastructure that will be borne by our customers. We have to figure out how we do that in a way that doesn't overburden customers through that transition.

Okay. Well, that facility is our largest steam production site. It actually is a steam production site, produces electricity, and is a large electric substation at location as well. So it's our largest site. It produces steam through co-generation. So there are gas turbines there that take natural gas, burn natural gas, make electricity, exhaust that hot gas into a heat recovery steam generator to make steam, and that steam provides 60% of the steam to our overall district heating system. It is not a new facility. The station is 100 years old. 2026 it'll turn 100 years old. So it's been there for a long time, constantly being upgraded and modernized with new technology, but has been there for a long time. And that will be the location kind of putting new technology in that we plan for our first industrial scale heat pump that would plug into the steam system. So it's a cool facility. It's a big facility. And it would be really great to show it off and have some people who are our customers see how we make steam.

Yep. So overall, I'm optimistic. You know, this is a transition and transitions are often hard. But we as a company really want to help enable a clean energy future and support our customers through this transition. And we really do want to support both the state and city's climate goals because these are moving at a pace and scale that's really never been seen before. So I'm optimistic, but I'm also realistic about the number of challenges we have to work through to do this. And this is a multi-stakeholder process. I think that's why we value as Con Ed our relationship with Urban Green because these are some complicated problems that our customers are going to need to solve as they think about decarbonization and how they provide more sustainable energy for their buildings and how we can work with them to make sure that that happens.

So at this point, a lot of those need to work through the regulatory and rate making process. So things like our energy efficiency programs, we need to run those through the Public Service Commission as part of overall ratemaking.

process on incentive programs that we do. Now, for customers that are looking to take steam, we do want to work with individual customers. In aggregate, things are what they are in aggregate. Often the business cases for different steam uses for different buildings are very case specific with the individual building. So that's why we really do welcome the opportunity to talk to building owners and developers about the options that steam can provide them.

Sure. So today the majority of the steam that we produce for distribution is produced at the East River Generating Station. We're going off of the tour. And that's produced through co-generation where you make both electricity and steam. So it's a combined cycle generator. So it both produces steam, produces electricity through a gas turbine. Essentially natural gas runs through what's the equivalent of a jet engine that doesn't move any place. And the hot exhaust gases that come out of that. So the jet engine spins a generator and makes electricity. The hot exhaust gases that come out of the jet engine or the combustion turbine are then run through a heat recovery steam generator. The heat recovery steam generator produces steam and then that steam can be sent out because of the co-generation process essentially using one unit of heat to make two different energy products. It means that the coefficient of CO2 emission from that is very low compared to other energy sources.

So, we have two steam power plants on the east and west side. One on the west side in the high 60s, another plant in the 70s on the east side, another one in the 60s east side, but then our major steam production facility is East River. And then we have a contracted facility that we don't own at the Brooklyn Navy Yard in Brooklyn. So the Brooklyn Navy Yard facility, that's owned by a different operator, but we are a steam output customer for them and take steam from them. That moves through a tunnel that actually goes underneath East River and comes into lower Manhattan. And then between all of those plants, both the contracted plant we have in Brooklyn with its output coming through a tunnel and the Con Ed owned plants in Manhattan, we will dispatch those and there's an energy dispatcher who works 24 hours a day, 7 days a week in our energy dispatch center making sure that it's balanced out to put enough steam production online for our steam customers. Generally speaking, the peak steam load typically happens right about in the morning as everybody's coming into work. Buildings are heating themselves up for the morning. Everybody's taking a hot shower. So, our steam peak typically happens right first thing in the morning and then trails off as the temperatures warm up through the course of the day. And depending on the day, nice 60 degree day, we'll have fewer units on and the coldest winter day, we'll have most of our generating units online.

Yep. So, the first three projects that we're looking to deploy, we're looking to get regulatory approval sometime in the course of this year. So, we'll file for them this year and then look for a regulatory approval and then to get started. The hope is that those would be in service in and around the 2030 time frame and affect the steam coefficients by 2035 and then depending on the learnings from those and where we are will continue to advance that. So today the steam coefficient for local law 97 steam is compliant and continues to be compliant for several years going forward. So our objective is to maintain steam as compliant with local law 97 or better than compliant moving forward over the next several years into the next decade.

Yeah. So, Con Ed steam system is a lot like our gas and electric systems and most regulated energy systems in the United States in that they are regulated by a regulator in New York State. That's the New York State Public Service Commission. Utilities will file their investment plans with the regulating authority. So, we file our investment plans with the New York State Public Service Commission. The staff will review those plans in a public setting called a rate case. And interveners or public members of the public and other advocacy groups will have the ability to both review those plans and weigh in on our proposals that we make as part of the investment plan. We then make adjustments to those based on a kind of a process that generally happens through a negotiated settlement for a rate plan. In New York in most cases, utilities' investment plans are settled through a negotiated multi-year rate settlement. And then any of the capital that we deploy as part of those investments to upgrade facilities or build new facilities gets recovered from our customers through our regulated rates and a rate schedule and that process would continue through the duration of a rate plan. At the end of the day, all of the investments we make are ultimately paid for by the customers that we serve under this regulated model. And that's why we always really want to be careful that the investments we make make sense. They make sense for all of our customers. They align with the state and city policy goals around energy and that they keep in mind that you know there's a limit to how much customers can afford for their energy service as we move through this transition. So we always want to be cost effective in how we do things and conscious that customers are at the end of the day footing the bill.

So based on the study we did in 2024 based on the technologies and piece of this is the expectation on the evolution of technology but yes we do see a path towards fully decarbonized steam by 2050. You have to make some assumptions along that path to get there. One of which is significant decarbonization of electric production because a lot of what we assume in this is instead of using fossil fuel as the primary energy source to move steam, you are tapping into electricity as a potential energy source to make steam. And that could be in the form of electricity to drive a motor for a high efficiency heat pump. Or that could be in the form of electricity for an electric boiler. Or that could be a form of electricity that's used maybe not in New York City or at the steam plant level, but someplace to produce clean hydrogen or another version of a zero emissions clean fuel. So to get to full decarbonization of steam, it's technically possible, but you have to make some assumptions about the decarbonization of the electric production sector as well. And then you also have to make some assumptions about how fast some of these technologies that we think are viable today but need to mature, how quickly they mature.

So I may take a little exception to the question that it was 15 years ago inaccurate, but we have made significant improvement in our steam metering infrastructure. One of the things that's important when you operate a steam system is having better intelligence about what is going on on your system, right? Because this is you have energy flows. So we've made some significant improvements in our steam metering infrastructure, including how those steam meters communicate back to the company about what's going on at customer premise. That is important not only for the billing transaction about how much steam did a customer use and getting appropriate recovery for that and having a customer only pay for what they actually used but also in how we do things like operate our system so that we can see at the customer basis what's the temperature of the steam coming in. Are there any issues with the steam trap that happens at the metering point or any issues going on on the customer side. So temperature, pressure, what's going on with traps, and volumetric usage are all things that we see pulling back through our metering system and the enhancements that we've made.

So I think that's always a risk they have to look at when you make investments. How are you going to recover those investments from your customers and how do you make sure that you don't have a customer base that's saddled with a very large burden to pay back the investments have been made because other customers have defected. So we have seen a general shrinking of our steam system really over the last 40 years as buildings have gotten more efficient. As some buildings have switched away from steam and predominantly switched to natural gas. And you know as buildings have moved to electrification. The studies we have done indicate that it's going to be very challenging for a subset of the current 1500 customers that we serve with the steam system to fully electrify their buildings. Some of these buildings are going to be very hard to do all of the interior work that's going to be necessary to convert them to electric. That's where we think steam makes sense. We do think there's a few cases where steam may make sense in, you know, new construction and we do have some new construction inquiries for interconnection for steam. But the biggest piece of this is we're not tearing down the Empire State Building and we're probably not going to easily gut and rehab all of Grand Central Station in a way that's going to be cost-effective. It's much more cost-effective to use the existing Con Ed system. But a piece of that is why we think of okay, we don't want to race to deploy technologies today and load all of those costs in. We don't want to fully deploy every one of these potential technologies. We want to take an incremental approach because steam today is still the lowest coefficient energy source for local law 97. So we want to incrementally deploy things, test them, make sure they work, drive down the coefficient for steam further and then make sure they work. If they work, go to the next phase of it.

So, I think the footprint stays about the same or incrementally grows as we reach to potentially new customers that are inside a block where we have steam nearby but maybe not directly in front of their building. We work hard to maintain the safety and reliability of that system. We've deployed a lot of new technology, things like continuous monitoring of multiple points on our steam system so that we understand where flows are going and if there are issues if we're having issues of condensation building up at a particular point in the system. So you know the continuous maintenance of that system I don't think it shrinks dramatically. I think it actually probably incrementally grows but the footprint we serve today is the footprint we serve today. I think there is a case to be made that we might expand a little bit beyond where we are. So certain customers are very good potential customers for steam. And in the earlier part of the conversation, John, I talked about the New York City Housing Authority. So, New York City Housing Authority campuses, many of them use essentially a district steam system within their campus where they will have a centralized boiler plant and then distribute steam to the different buildings on the campus. That's the perfect customer where if we did a little bit of extension and picked up, they could retire their existing fossil fuel infrastructure and take Con Ed steam and really keep all of the existing building infrastructure and in-unit heating equipment the same. That's a much simpler conversion than thinking about try to change every one of the units in a New York City housing authority building to electric heating.

Yeah. So, I think the skeptics are reasonable to be skeptical. And that this requires a bit of an incremental approach. So, if I was on here today saying, 'Hey, we're going to I want billions of dollars to fully convert our steam system by 2027 and we're going to pull out all the existing equipment and switch to all this new ideas like electric boilers, hydrogen, and high efficiency heat pumps today.' I think that's pretty reasonable. We're taking an incremental approach to this to prove out those technologies because as I said today steam has the lowest coefficient of CO2 of any energy source and we think it can stay there. And we do think that we can prove out these technologies. That said I am optimistic. For example, yeah hydrogen is volatile but hydrogen is something that owners and operators of power plants have hydrogen in most generating facilities. We use hydrogen in industrial application today. It's a different application to use it for combustion, but it's a whole lot easier to think about doing that in the controlled environment of power plant than across thousands of buildings across Midtown Manhattan. High efficiency heat pumps, they work, they're deploying. We need to see them deployed in practice a little bit more. But when you have a power plant that has permits to take river water for cooling of industrial process and what you want to do is evolve those permits a little bit to allow for now the scavenging of some of that waste heat and maybe the discharge of slightly cooler water back into the river. That seems like not a complete leap of faith that you could deploy that technology reasonably effectively.

Yeah, so we do have under a New York State Public Service Commission order to look at geothermal power. We have several proposals that are working through the regulatory process for review. It's that whole same regulatory process of stakeholder input and review by the staff on some geothermal and kind of shared source projects. We'll see. I'm still waiting to see which of those are approved. But we have evaluated some of those things on things like shared loop and shared geothermal and how they could work. I think there's a lot to still shake out in that business model and how we can make that work. There are some pilots in the New England state, particularly in Massachusetts that are looking at some of those things. The New York State Public Service Commission, I expect, will approve some pilots for New York. But there's a lot of technical learning that has to happen along those things. Our steam system has been around for a very long time at this point. So, you know, we know that business model. We know how to make it work. We know how to extend it. And we think there are things that we can continue to do on that system that will be effective in serving customers.

So, we have a number of customers that use steam for air conditioning. Typically it's through one of two ways. Either absorption chillers or it's through turning a steam turbine inside the facility. It provided significant peak load reduction for Manhattan for the electric system as you saw the steam system provide air conditioning capacity. As the efficiency of electric air conditioning has improved, we've generally seen customers as they get to the end of life of that equipment are moving some of the air conditioning load off of the steam system back on to electric. But today it does provide air conditioning for a number of buildings across New York City.

I don't have the exact coefficient in front of me. I apologize. I you know, and that's real kind of inside baseball on the local law 97 compliance numbers. It is the lowest coefficient of any of the energy sources. So it's lower than electric, it's lower than fuel oil, it's lower than natural gas right now and expected to stay there at least through 2029.

So it varies pretty dramatically depending on what the uptake is. These initial projects are in the tens of megawatts, you know. So Con Ed's energy delivery system typically peaks on the hottest summer day at about 13,000 megawatts is our peak demand. The expectation is that this equipment would be at peak output in the coldest winter day. So today we have system capacity headroom because peak steam load is on the coldest winter day typically early in the morning and peak electric delivery system load is on the hottest summer afternoon. We do think that the gap between those closes over time as you see an increasing number of customers looking to heat their buildings with electric. So we do see the winter peak coming up over time and sometime in the mid to later 2030s we think will cross back into being a winter peaking electric utility. But the capacity buildout on all of that will keep up with it. The other thing is that the steam production that we look to electrify either through electric boilers or high efficiency heat pumps, they're going to be at the power plant level which are typically located directly adjacent to substation facilities. So your ability to tap into electric coming off the transmission grid where it's more available is much easier than if you were looking to do the same application at the building level where you'd need to build out distribution system capacity to get that energy there.

Yep. So, in and around the 1990s, New York State restructured the electric utility business. So prior to the 1990s, New York was like most the rest of the country going back to the days of Thomas Edison where electricity was essentially produced by the electric company. In some cases, they even dug the coal out of the ground to burn to make electricity at the power plant. It then went to their transmission system to local distribution. So that was the vertically integrated model. That model still exists in parts of the United States. In New York State in the 90s, we restructured Con Ed sold almost all of our power plants except for the plants that are associated with our district steam system. So, we still own plants to make steam and they make electricity as a byproduct. But we don't own the vast majority of the power plants that power New York City and Westchester County. There are power plants in New York that are owned by third-party generating operators and a lot of our power comes in via transmission lines particularly from our north. So both imports from Canada and imports from upstate New York flow down those lines into New York City and we're always balancing between in-city generation. Most of which is fossil fuel driven and imports from upstate which are generally speaking cleaner because they're a combination of hydroelectric and nuclear with a little bit of fossil fuel as well. All of that constant balancing of the energy supply is done by the New York independent system operator who both runs the marketplace for the competitive generation and is responsible for the reliable operation of the inner utility transmission system. So you may still get and most commercial customers don't. Most commercial customers go to an energy service company to provide the commodity portion of their bill. But you can be a full-service customer from Con Ed, which means Con Ed will give you both your energy and delivery bill. We'll procure the energy for you. We don't make anything off that. And typically that's about a third of the energy bill is the commodity itself which is the power coming from the power plant level at a marketplace driven by the New York ISO. And we directly pass that through the remaining portion of the bill about the two-thirds is broken into one-third taxes. Con Ed is actually the single largest taxpayer to the city of New York. And then the remaining third of that bill is essentially what I do, the pipes and wires and maintenance and operation of the system.

Sure. So steam, yes, we do think it does. Now, it's probably not batteries the way people are thinking of batteries. Everybody when you think of batteries today basically thinks of lithium ion batteries and that's because every one of us is walking around with these devices and the technology for energy storage and lithium ion batteries really moved and that's the primary mode of energy storage for electric that people talk about today around energy storage systems for steam. It's probably much more likely to be thermal storage where you use energy in non-peak periods to heat up some form of a medium. That could be something like refractory or molten salt or some other medium. Heat that up in low demand periods and then tap into that thermal energy during high demand periods. So thermal storage is probably the energy storage medium that will work. That's a technology that's deployed by our customers around New York City today. So a number of commercial buildings actually have thermal storage. More typically they use it for air conditioning where they'll make ice and use that thermal storage to then redispatch make ice in the overnight period when energy demand is low and then they'll use that ice storage for air conditioning when the load is high. Although some buildings have actually figured out how to reverse that process and use that ice making as a way to heat their building as well. For your other question more broadly John around you know how does energy storage work in the broad energy transition. So energy storage is going to need to be one of the major components of how we think about the decarbonization and clean energy transition. New York State is already down that road looking to deploy 6,000 megawatts of battery storage across the electric systems in the coming years. But we will need more complex energy storage solutions than are currently available. So, as we think about decarbonizing electric production through the use of renewable energy, one of the biggest sources of renewable energy, looks like it's going to be offshore wind, onshore wind, and solar. The issue with those technologies is that they're nondispatchable. In other words, they're going to make electricity when the wind is blowing or the sun is shining. And typically we use energy in peak seasons, hottest summer day, coldest winter day. So you have this potential for significant overproduction of energy in the shoulder seasons fall and spring when energy demand is lower. So seasonal storage is the solution that the industry has not really come up with yet. How do we think about moving energy from overproduction periods in the spring and summer, particularly when you have nondispatchable renewables that could be potentially overproduced, and saving those and banking those so that you can move those into the winter or summer period. That's a technology hurdle that we haven't quite figured out yet. It's one of the challenges that as an industry and a nation, we're going to have to figure out. And that's more than just a Con Ed problem. That's kind of a national department of energy level question.

Thanks, John. I really appreciate it. Take care.