Con Edison plans to spend billions of dollars to complete eight more substations by 2017 as it tries to keep up with electricity demand, which it expects to increase 10 percent in New York City during the next decade. Yet the shortage of industrial land, rising real estate prices and opposition from neighbors are making it more difficult for the utility to find suitable locations.
To Keep Pace With Growing Demand, Con Ed Struggles to Build Substations
Substations are critical because they boost supply in neighborhoods where new apartment buildings and office towers strain existing networks. The utility, which runs 98 substations in New York and Westchester County, sometimes moves customers to less-burdened networks to avoid having to build a new facility.
But those measures may only delay the construction of a substation in fast-growing neighborhoods. Con Edison’s construction schedule, it turns out, provides a window into the city’s shifting demographics.
About five years before Con Edison hopes to begin building, planners start looking for property that is zoned for industrial use, a difficult task in Manhattan and other densely populated parts of the city. Complicating matters, substations need to face a street on three sides and require plenty of space for equipment and no deed restrictions.
Con Edison’s real estate agents then approach potential sellers without mentioning the company’s name, so as not to drive up the price. Mr. Bose said that at one recently scouted location, a sign on the fence listed a sale price of $32 million. After Con Edison identified itself as the potential buyer, the price jumped to $49 million.
Often, owners will refuse to sell, forcing Con Edison to build around a property. The Mott Haven substation wraps around a dry cleaning facility just feet from the front door.
If Con Edison thinks a seller is asking too much, it can invoke the right of condemnation, which allows it to ask a judge to set a fair value, Mr. Banks said.
Construction can take years. Large transformers are made overseas, and due to strong demand from China and India, Con Edison sometimes has to wait up to four years for a delivery, Mr. Bose said.