Semiconductor manufacturing expected to strain NY electrical grid
ALBANY — As some of New York’s most influential politicians celebrate the infusion of federal money to expand the GlobalFoundries Fab 8 campus in Malta, questions remain about the ability of the state’s electrical grid to meet the needs of another high-demand project.
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The project will expand the current semiconductor manufacturing plant while adding a second facility, estimated to be 358,000 square feet, that GlobalFoundries said will triple their capacity.
But the process of manufacturing semiconductors requires significant energy to power operations, with estimates that the Micron plant near Syracuse will use up to 928 megawatts by 2035. One megawatt powers roughly 750 to 1,000 households.
In 2023, prior to the major expansion’s announcement, GlobalFoundries had plans on file with local municipalities noting that its structures would run on 195 megawatts when completed. The new multi-billion dollar expansion will bring a significant jump in that required energy.
The Times Union reported in January 2023 that the growing semiconductor industry would place a strain on the electrical grid’s reliability margins.
The growth comes as the state is transitioning energy sources toward renewables and away from fossil fuels to meet requirements in New York’s ambitious Climate Leadership and Community Protection Act, signed into law in 2019. The climate law requires that 70 percent of statewide electricity come from renewable energy by 2030, and that New York’s electricity system is completely emission-free by 2040.
The New York Independent System Operator — a not-for-profit that manages the state’s electrical grid and marketplace — estimated in its Jan. 12 quarterly report on reliability that approximately 260 megawatts of large loads were installed across the state in recent years. That amount is projected to increase to 764 megawatts in 2025, reducing the reliability margin during normal operations and weather to less than 100 megawatts.
In November 2022, Gov. Kathy Hochul signed a moratorium “proof-of-work” cryptocurrency mining relying on fossil fuels, another area of large load projects, a measure that is in effect for two years. The debate over that legislation centered around whether New York should allow old fossil fuel-based plants to be brought back online and to help power the intense computer processing needed to create the “blockchains” that cryptocurrency is made of.
The Independent System Operator's comprehensive reliability plan estimated that the reliability margin could be eliminated within the decade.
“When considering the impact of proposed large load projects, the available statewide reliability margin decreases and approaches a deficiency in 2030 for higher demand scenarios,” the plan says.
The estimates face more dire predictions if New York experiences extreme weather — like a sustained heat wave of 95 degrees or higher — which is becoming more common due to the effects of climate change.
Low reliability margins, which measure the electrical grid’s “insurance policy” of extra power to be used for high demand of electricity or unforeseen circumstances, could lead to brownouts and increased reliance on emergency energy purchases from neighboring states or regions.
The increase in “large load projects” — which use significant amounts of energy to operate — is projected to be a risk to the reliability of the state’s power grid if new renewable energy resources are not introduced at a similar rate.
“This has been a concern for quite some time and now it is a red light concern,” said Gavin Donohue, president of the Independent Power Producers of New York. “We’ve gone from yellow to red.”
A study by David Brooks, an electrical engineer at Harvard University, that was co-authored with Udit Gupta and others, shows that by 2030 the computing sector will use 20 percent of electricity globally, and that chip manufacturing “accounts for most of the carbon output attributable to hardware systems,” both due to its energy consumption and its release of greenhouse gases during the process.
Gupta, an electrical and computer engineering professor at Cornell Tech, said that the computing industry already accounts for between 2 and 3 percent of worldwide emissions, which is on par with the emissions attributable to the aviation industry. Gupta, who focuses on sustainability in computing, said that working to improve the energy and environmental concerns associated with semiconductor manufacturing plays a big role in making the entire computing industry more environmentally sound.
The Fab 8 plant annually manufactures 400,000 wafers — which are later divided into computer chips — that are in demand by 60 percent of the market. The current factory employs 2,500 workers, with the expansion expected to bring in 1,500 more jobs.
The expansion is receiving $1.5 billion in federal funding from the CHIPS and Science Act to upgrade and expand its manufacturing plants in New York and Vermont. The grant comes from the $52 billion federal commitment to aid the U.S. computer chip industry to expand manufacturing capacity and the supply chain amid growing economic and technological threats from China. GlobalFoundries was the first chip manufacturer to be awarded a CHIPS grant under the program, which is overseen through the Commerce Department.
GlobalFoundries is also getting a loan of federal money along with state and potentially local government subsidies to help pay for a $12.5 billion investment at Fab 8 and at its chip factory in Essex Junction, Vt., outside of Burlington. An additional 9,000 construction jobs paying union wages will also be created by the projects in both states.
New York’s Green CHIPS program, which was signed into law by Hochul in 2022, will provide $575 million in tax credits to GlobalFoundries for the expansion.
The company is required, as part of the program, to meet community benefits and sustainability requirements, including using at least $60 million for workforce training and other community investments. Empire State Development, which runs the Green CHIPS program, will also commit $15 million in workforce development funding to the GlobalFoundries project.
The Green CHIPS program also requires that GlobalFoundries enter into a “sustainability plan” with Empire State Development to use fully renewable energy for the site’s electricity with “potential onsite solar energy infrastructure and onsite battery storage systems.”
GlobalFoundries already receives a discounted 15 megawatt allotment from ReCharge NY, a program run by the New York Power Authority. That allotment is expected to increase after consideration at NYPA’s board of directors meeting in March, in addition to the authority’s $30 million investment in the expansion.
ReCharge NY incentivizes businesses and nonprofits to stay in New York with 7-year contracts providing access to discounted hydro and market energy sources. In 2023, high-load businesses like GlobalFoundries saved an average of $250,000 per megawatt compared with market rate.
The program sources 455 megawatts of power from hydro-electric sources in Western and Northern New York, while procuring 455 megawatts from market sources. ReCharge NY currently has 66 megawatts of unallocated power, Paul DeMichele, a spokesperson for NYPA, said.
GlobalFoundries currently uses only the hydro-electric portion of their allotment, in alignment with their expansion requirements of 100 percent renewable energy sourcing.
Empire State Development cited the project as proof that Green CHIPS is successfully attracting “sustainable manufacturing and good-paying, green jobs of the future” to New York.
“Green CHIPS ensures that companies like Micron and GlobalFoundries abide by nation-leading environmental standards and Empire State Development will continue working with employers to help them reduce their energy demand and advance clean and renewable energy as part of our broader commitment to the state’s climate goals,” said Kristin Devoe, a spokesperson for Empire State Development.
The Independent System Operators most recent annual report showed that two years ago, 22 percent of the market was from hydro-electric power, 21 percent was from nuclear power, 4 percent from wind and less than 1 percent from solar, while more than 51 percent came from oil and gas.
The strain of the “large load project” is expected to narrow the reliability margin as a project is brought onto the grid through an interconnection process.
Kevin Lanahan, a spokesman for the Independent System Operators, said that the pace of new renewable energy sources is not matching the pace of retiring fossil fuel-based energy leaving the grid, leading to an overall decline in the total megawatts available on New York’s grid.
Donohue, who is also a member of the New York Climate Council, which was tasked with developing a scoping plan to meet the goals of the climate act, said that New York needs “honest assessments” about how energy-demanding projects can be brought to the state while prioritizing the reliability of the electrical grid.
“The pace of promises in New York does not keep up with the pace of play,” Donohue said. “New York is a very difficult state to build anything and even more complicated when it’s an energy infrastructure project, regardless of the fuel source. ... At the end of the day, reliability is paramount.”
By Molly Burke
Molly Burke is a Hearst fellow covering state politics for the Times Union. She is from Davis, Calif., and previously covered breaking news for the Sacramento Bee and the Denver Post. She previously worked as a data reporter for the Bay City News through the Dow Jones News Fund. Molly graduated from Northwestern University in 2023 with a major in journalism. Reach Molly at Molly.Burke@hearst.com.
GlobalFoundries project brings more load to New York's electrical grid (timesunion.com)
CNY still waiting for NY’s $100 million nanotech investment to pay off (Editorial Board Opinion)
Published: Jan. 14, 2024
EDITORIAL
NexGen Power Systems operated a semiconductor plant in this building in DeWitt until the company shut down in December 2023. (Rick Moriarty | rmoriarty@syracuse.com)Rick Moriarty
It's been two and a half years since Gov. Andrew Cuomo resigned, but the former governor’s speculative wasteful investments continue to haunt central New York.
Just before Christmas, the semiconductor company NexGen Power Systems closed its doors and laid off its employees. Syracuse.com's Rick Moriarty and Brad Racino reported that NexGen could not persuade venture capital investors to keep the company going any longer while it struggled to produce gallium-nitride microchips in a high-tech factory in DeWitt.
NexGen is the buildings second tenant to fail. The first, a startup company called Soraa, never even moved in. The Soraa deal was the Cuomo administration's original sin.
New York State spent $90 million in taxpayer money to build the factory for the manufacturer of LED lightbulbs.
Soraa was supposed to create 250 manufacturing jobs, plus spur another 170 spinoff jobs at vendors and suppliers.
Soraa backed out of the deal after state officials declined to spend tens of millions of dollars more to equip the factory. That's when we all found out that Soraa’s job promises were not enforceable, that it had invested none of its own money, and that it defaced no penalty for simply walking away.
The building next door also turned out to be a terrible investment of taxpayer dollars. New York paid $14 million to build a "film hub" that was supposed to attract big-game TV and movie productions to the region. The state ended up selling the film hub to Onondaga County for one dollar. It’s still in use but never lived up to the hype.
At the time he announced them, Cuomo's investments in Soraa in the film hub, together known as the CNY Nanotechnology Hub, made little sense.
What did nanotechnology have to do with films, or with Syracuse?
That only became clear later, during a series of federal corruption trials. The projects were handed to a Syracuse construction company that made big donations to Cuomo and colluded with a disgraced lobbyist (who later pleaded guilty to felonies) to land the contract. The convictions didn't stick – but the damage was done.
To salvage its investment in Sora, Empire State Development enticed NexGen – a startup with no track record and no customers – by paying another 13 million to furnish the factory. The company committed to create 290 jobs by the end of 2025. This time, the company received aid on condition of meeting specific hiring targets which the company mostly met, the state says. NexGen still failed.
Now, New York is marketing the building for the third time. Conditions may be more favorable for success. It has clean room facilities – and that should be attractive to companies that want to be near Micron and its proposed $100 billion chip tab in the town of Clay.
Some still don't believe micron will deliver on its promises to bring thousands of direct jobs, and tens of thousands of spinoff jobs. You can draw a straight line from that skepticism to the failed nano tech projects in DeWitt.
But the comparison doesn't hold up.
Soraa/NexGen in the film hub were blessed because Cuomo's "If you build it, they will come" strategy got it exactly backward. New York State made huge bets with taxpayer money on companies without a history of performing, without proven technologies and without enough of their own money at risk.
By contrast, microbe has a long track record, proven expertise in memory chip manufacturing and a pledge to invest $100 billion of its own money in the Clay complex. Yes, the company also is in line for billions in federal, state and local taxpayer incentives, depending on how much it builds. For example, New York State's offer of $5.5 billion in tax credits will go to micron only if they hire all the people they say they will – not before.
State taxpayers, the Central New York economy and the people who lost their jobs continue to wait for the benefit from that failed investment. New York, it seems, learned its lessons from the failed projects in DeWitt.
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