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Can New York’s energy grid handle major chip projects like the one in Central New York?

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  • Staff Report 

New York’s ambitious plan to spend up to $10 billion in tax incentives to expand semiconductor manufacturing in the state, in the name of creating green jobs, may be hindered by concerns about the strain on the state’s energy grid. Microchip plants consume large amounts of electricity, and as the state rushes to transition to renewable and emissions-free sources, industry voices are warning of possible brownouts as “reliability margins” may be stretched to a breaking point as early as this year.

Fossil fuel-powered plants that had been feeding the largest share of energy into the grid are already being taken offline faster than renewable sources can be added. This may lead to brownouts and an increased reliance on emergency energy purchases from neighboring states or regions, according to Zach G. Smith, vice president of system and resource planning at the grid’s Independent System Operator.

The state’s Green CHIPS program offers massive tax breaks for firms that agree to develop annual “sustainability plans,” but even if a plant fails to meet its milestones, companies can still be approved to shift timelines or pay “a local non-profit organization of related mission” and keep collecting the tax breaks.

Micron, which has yet to start construction on its New York facility but has already been touted as the first “Green CHIPS project,” could draw on nearby renewable power sources via energy credits, but with a finite supply of renewables on the state’s grid, its purchase of the existing resources could price out other local consumers.

GlobalFoundries, which broke ground on its original Fab 8 facility in Malta in 2009, was an early test case for New York’s microchip model. It has long had aspirations to open a second building and increase its own manufacturing capacity. While a construction logistics plan from last May for its new “Fab 8.2” did not mention Green CHIPS incentives, it did note that follow-through on the fab was “assumed to be conditional” on federal passage of the CHIPS Act.

When asked about the potential strain on the energy grid, U.S. Sen. Charles E. Schumer said he was confident the state would be able to meet the energy needs of incoming chip fabs even while pushing towards its climate change goals. “The Inflation Reduction Act has a huge investment in new energy, and clean energy, which New York will benefit from dramatically in wind and solar. There are dramatic tax breaks, we’re going to increase the production of energy many times,” Schumer said.