NYISO Faces 650 MW NYC Summer Shortfall as Offshore Wind Projects Stall
NYISO has identified potential reliability violations in New York City and Long Island beginning summer 2026. If the Champlain Hudson Power Express (CHPE) — a 339-mile HVDC line bringing Canadian hydropower to NYC — is not completed on schedule, the city faces a 650 MW capacity shortfall. Compounding the problem, Empire Wind and Sunrise Wind (1,740 MW combined) have fallen behind schedule, removing expected offshore wind capacity from the near-term supply picture. NYISO has initiated a formal solicitation for solutions, with a report expected by April 2026. For commercial buyers, NYC's Zone J capacity prices — already the highest in the state — are likely to remain elevated or increase further through 2028.
The Triple Threat: Retirements, Demand, and Delays
NYC's reliability crunch stems from three forces converging simultaneously:
- Generator retirements: Older peaking units in NYC — many of them oil- and gas-fired — are retiring without in-kind replacements. Environmental regulations, including Local Law 97's building emission caps, are accelerating the retirement timeline.
- Demand growth: Data center construction in downstate New York is pushing load forecasts higher. NYISO's January 2026 white paper specifically cited large electricity consumers as a primary driver of rising wholesale prices.
- Transmission limits: NYC (Zone J) sits behind transmission bottlenecks that limit how much power can flow from upstate generation. The CHPE was supposed to solve this by bringing 1,250 MW of Canadian hydro directly to the city.
Offshore Wind: 1,740 MW Behind Schedule
Empire Wind (816 MW, Equinor) and Sunrise Wind (924 MW, Ørsted/Eversource) were the cornerstone of New York's plan to bring new clean generation to the downstate grid. Both projects have encountered delays — supply chain challenges, permitting complications, and financial restructuring have pushed their in-service dates beyond original timelines.
NYISO's Comprehensive Reliability Plan now identifies these offshore wind delays as a direct contributor to the summer 2026 reliability risk. Without the expected wind generation, NYISO must rely on existing thermal units, demand response, and energy efficiency measures to maintain reliability margins.
⚡ Expert Insight — KilowattLogic Research
"Zone J capacity prices are already eye-watering — historically 2-3x higher than the rest of New York state. The 650 MW shortfall essentially guarantees elevated capacity costs through at least 2028. For commercial buildings in Manhattan, Brooklyn, and Queens, this translates to a $0.01-0.03/kWh premium that won't go away until new supply comes online. If you're negotiating a multi-year contract for NYC facilities, assume Zone J capacity costs stay high and structure your contract accordingly."
NYISO's Proactive Planning Shift
In response, NYISO is transitioning to a more proactive reliability planning approach. Rather than reacting to shortfalls after they develop, the grid operator is now considering a broader range of scenarios and actively soliciting new dispatchable generation, transmission upgrades, and energy efficiency solutions. A formal report outlining selected solutions is expected by April 2026.
Additionally, the January 2026 white paper on rising electricity prices has framed the conversation around tightening supply margins, natural gas price exposure, and the need for market design reforms to attract new investment. The capacity market's Demand Curve Reset process is being improved to provide more investment certainty.
Commercial Buyer Playbook
Expect capacity charges to remain 2-3x RTO average through 2028+. Structure contracts with capacity pass-through and cap provisions.
NYISO's solicitation results could signal new generation or transmission that modestly eases the supply picture. Factor timing into multi-year procurement decisions.
With tight supply margins, demand response payments in NYC are among the most lucrative in the country. Commercial buildings with flexible load should enroll.
Sources: NYISO Comprehensive Reliability Plan, NYISO white paper on rising electricity prices (Jan 2026), NYISO solicitation for solutions, RTO Insider, Smart Grid Observer, Utility Dive.