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State regulators approved two “thermal energy” pilots but rejected nine others, raising questions about the future of the technology, New York Focus reports.
This story originally appeared in New York Focus, a nonprofit news publication investigating power in New York. Sign up for their newsletter here.
New York is pushing ahead with a key technology to shift homes to clean heating—but not as fast as some had hoped.
Last week, in a unanimous vote, the state’s energy regulator greenlit two neighborhood-scale electrification projects known as “thermal energy networks,” while rejecting nine others.
These networks aim to tap existing resources to heat and cool buildings instead of burning fossil fuels. Some circulate “waste” heat from sewage, data centers, subway tunnels, or other sources; others use geothermal drilling to draw on the stable temperatures in the earth’s crust.
Most, like the newly approved projects in Buffalo and the Hudson Valley town of Haverstraw, do a combination of both, and then use electric heat pumps to turn that ambient energy into year-round heating and cooling.
By recycling waste heat, thermal energy networks offer what some analysts call “unmatched efficiency,” making them a top contender to replace aging gas systems. But they remain largely untested in the US. So far, only Framingham, Massachusetts, has such a system up and running, though Boston, Denver, and other cities are racing to build their own following a wave of enabling legislation across the country.
Proponents of the systems, including environmentalists and some unions, see them as the most viable way to move New York off gas at the speed required by its climate law. The state will need to electrify nearly all homes and businesses by 2050 to achieve its net zero emissions target. Its roughly 6 million total buildings include some of the oldest housing stock in the country, making them particularly challenging to clean up. But state regulators say they need more proof that thermal networks are a cost-effective solution.
The Buffalo and Haverstraw projects will now advance to final planning and, in principle, construction, making them New York’s first major test cases. They will cost a combined $112 million and heat and cool at least 32 buildings total, including dozens of apartments as well as public and commercial facilities. Both will serve areas that the state has identified as disadvantaged.
The bulk of the upfront funding will come from the $1 billion climate fund included in this year’s state budget, meaning local customers won’t be on the hook.
As part of its decision last week, the Public Service Commission rejected nine other pilot projects across the state that utilities have spent four years and close to $50 million planning. They would have covered nearly 200 buildings total and cost $1 billion—a sum the commissioners ruled was too high to justify.
Still, thermal energy proponents largely celebrated the order, touting it as a milestone for the technology.
“It’s kind of a breakthrough step,” said Allison Considine, New York director of the Building Decarbonization Coalition. Her group helps spearhead UpgradeNY, a broad coalition of unions, environmentalists, and clean energy industry groups that led the charge for the 2022 law that spurred the pilots.
Considine said she was disappointed regulators didn’t approve more of the projects, but said the two that are moving ahead will go a long way in proving that the model can work in New York, and help bring union workers on board.
Unions have rallied around thermal energy networks because they require mostly the same skills to build and maintain as gas and other pipe systems. That means they could allow utilities to go green while keeping current union workers employed.
One union representative feels stung by the Public Service Commission’s decision to reject most of the projects, three of which would have been in New York City and six spanning from Westchester to Syracuse.
“I came away from last week’s PSC meeting very disheartened,” said Brett Thomason, political director of Steamfitters Local 638, which is part of the UpgradeNY coalition. “It felt like they were sending a message that this is not something they want the utilities to do, and I think it’s shortsighted.”
Thomason is particularly disappointed that regulators didn’t pick one of the New York City pilots, which would have offered a chance to work through the unique challenges of greening the city’s big buildings.
“The fact that they couldn’t find a New York City pilot project to go through tells me that they’re not serious about learning about this technology,” he said.
The Department of Public Service, which works alongside the commission, says its review weighed the projects’ benefits against affordability concerns.
“The two projects advanced by the Commission’s decision represent unprecedented strides toward implementing utility owned and operated thermal energy networks in New York State,” said spokesperson Kim Mashke in a statement. “Lessons learned … will establish an essential baseline to inform the evaluation of any future proposals.”
In all cases—even the ones they approved—the agency found that it would be cheaper to electrify homes in the pilot areas one by one than at the neighborhood scale the projects proposed.
Thermal networks face high upfront construction costs but also require ongoing maintenance and staffing. Privately owned ones need to pay property taxes, too, driving the lifetime cost even higher.
In exchange, the networks put less strain on the grid than electrifying homes one by one.
Proponents say the agency’s estimates inflate certain costs and fail to capture the technology’s full benefits—including creating and retaining union jobs.
“It was called the Utility Thermal Energy Network and Jobs Act,” Thomason said, referring to the 2022 law. “Jobs was in the description. And I feel like we got short shrift on the jobs aspect of it.”
New York is taking steps to advance thermal networks beyond the two pilot projects. Two SUNY campuses, in Buffalo and Purchase, are also building thermal networks with state funding. Meanwhile, under last week’s order, the commission and the state’s energy research and development arm, NYSERDA, will continue developing a roadmap for the model’s wider adoption.
Other cities around the world have shown it’s possible. Thermal networks in Vancouver, Canada—which UpgradeNY toured in 2024—already serve thousands of residents. In Scandinavia and other parts of Europe, they serve millions.
Among those cheering the state’s decision was Buffalo Mayor Sean Ryan.
“This is an opportunity to bring cleaner heating and cooling to affordable housing, modernize public infrastructure, and create opportunities for skilled workers, while demonstrating what’s possible when we invest in innovative approaches to meeting our energy needs,” he said in an emailed statement.
Spokesperson Ian Ott added that the city worked with the local gas utility National Fuel on aspects of its pilot plan. The utility itself, which has been one of the fiercest opponents of the state’s climate agenda, remains tentative about the plan.
Michael Colpoys, president of National Fuel’s distribution arm, said in an emailed statement that the company is continuing to evaluate the project’s feasibility; the PSC approval, he said, “will allow us to continue engineering analysis, engage with prospective participants and gather valuable information about the potential role utility thermal energy networks could play in the future.”
Thomason, of the pipe trades union, said New York had little choice but to push thermal networks forward.
“It was frustrating to hear the PSC talk about these pilots as though it’s unproven technology,” he said. “How are you gonna continue to provide heating and cooling to your customers? This is the most scalable way to do it.”