As New York Governor Kathy Hochul's commitment to renewable
energy has been challenged both by Washington and by her own
Administration's evolving priorities, she has embarked on a new
strategy to elevate the profile of nuclear energy in the state.
While a nuclear strategy will not solve New York's immediate
need for new sources of energy, particularly in New York City and
Long Island—or even close the long-term capacity
gap—the Governor's nuclear announcement last month begins
a serious discussion about the future role of this historically
controversial, emission-free source of power.
At a June 23, 2025 press event at the Niagara Power Project,
flanked by government officials, labor and industry
representatives, Governor Hochul directed the New York Power Authority
("NYPA"), in coordination with the New York State
Department of Public Service ("DPS"), to develop and
construct "at least one new nuclear energy facility,"
which will be "a zero-emission advanced . . . power
plant" with a total capacity of "no less than one
gigawatt" of electricity by 2040. The directive makes tangible
some of the commitments to increasing the role of nuclear power in
New York made by Hochul in her January 2025 State of the State Address and by New York
State Energy Research and Development Authority
("NYSERDA") in the 2025 Blueprint for Consideration of Advanced Nuclear
Energy Technologies released that same month.
New York State has delegated to NYPA major responsibilities for
expanding and advancing New York's energy infrastructure in the
past, including the 1961 Niagara Power Project and the 1968 James
A. Fitzpatrick nuclear plant, among others. While Hochul's
announcement follows in this historic vein, the NYPA endeavor will
force New York to confront anew questions about developing new
nuclear resources, including the siting process and the ways in
which NYPA will look to partner with others to realize the
state's aspirations.
Further, NYPA's work will be only one leg of New York's
nuclear stool, with NYSERDA slated to release a "Master Plan" in
late 2026 for "Responsible Advanced Nuclear Development",
and DPS (which serves as staff to the Public Service Commission
("PSC")) required to consider the future of the
state's aging nuclear fleet, which accounts for more than 20%
of the state's existing generation capacity.
Because nuclear power cannot satisfy the near-term demand for
zero-emission energy in New York, the State must amplify its
commitment to deploying wind, solar, and transmission resources,
notwithstanding challenging recent changes in federal policy.
Nonetheless, the Governor's announcement is a notable milestone
in the State's support for nuclear power technologies. In 2021
the State encouraged the shut-down of the last operating reactor at the
Indian Point facility in Westchester County, due to safety
concerns. At the time, it seemed far-fetched that New York would
announce the development of a new nuclear facility just four years
later. Whether Hochul's "no less than" one-gigawatt
plan results in only a single facility, or instead emerges as a
vanguard project that catalyzes a future New York nuclear market,
will depend on an extraordinary level of complex legal, commercial,
and political work in the months and years ahead.
Partnerships, Procurements, and Public-Private
Coordination
Governor Hochul's announcement did not specify how NYPA should
proceed in development and construction of the new facility, but
she did hint at private-sector involvement. NYPA will be called on
to lead the initiative, Hochul said, in "coordination with
[DPS] . . . either alone or in partnership with private
entities." Further, she directed NYPA to "secure the key
partnerships needed for the project."
Clearly, we should expect the involvement of some number of
non-NYPA entities, and the nature of their potential involvement
(and the manner of their selection) is likely to play out in the
coming months—potentially through a competitive solicitation
for certain aspects of the project's development, including
siting, facility design, and construction.
The State's existing relationship with Constellation Energy
Corporation ("Constellation") may serve as a model.
Constellation is the operator and majority owner of all three of
New York's currently-operating nuclear power
facilities—Nine Mile Point, Ginna, and Fitzpatrick—and
the operator of twelve other nuclear plants in the PJM, ERCOT, and
MISO balancing areas. In fact, Gov. Hochul's press release
reads in part: "This initiative also builds on the State's
ongoing financial support to Constellation to pursue an early site
permitting process for a new project at its Nine Mile Point Clean
Energy Center[.]" Constellation not only is the nation's
largest producer of clean energy, but also is well-known both to
NYPA and to New York State regulators, sports a nearly $100 billion
market capitalization, and, as of recently, has experience assembling the funds and
expertise to restart the Three Mile Island nuclear facility.
The "Specs" Question: Choosing the Right
Technology for NYPA's Project—and Beyond
Hochul's announcement that NYPA will develop an "advanced
nuclear" facility suggests a technological departure from the
state's legacy nuclear fleet. While "advanced
nuclear" could mean a fusion reactor (a technology which has
not yet been commercialized) or a radioisotope system (a technology
primarily used in spacecraft), the term in this context almost
certainly refers to a next-generation (i.e., Generation III, III+ or IV) fission reactor.
(The Nine Mile Point, Fitzpatrick, and Ginna facilities, along with
other legacy nuclear facilities across the United States and
Canada, are classified as Generation II fission reactors.)
Advanced fission reactors' comparatively simple designs allow
them to be built with fewer components and require less frequent
maintenance. Notably, they are designed to be safer than legacy nuclear
facilities, generally featuring "passive" safety systems
in which gravity, natural convection, and the use of existing
pressure differentials within the reactor serve to shut down and
cool the reactor in the event of an accident without human
intervention.
Consider the addition of Units 3 and 4 to Georgia Power's Plant
Vogtle facility in Burke County, Georgia. For the new units,
Georgia Power and its partners selected the Westinghouse AP1000
reactor, a Generation III+ pressurized water reactor
("PWR") technology with a net power production capacity
of 1,117 MW. The new units commenced commercial operation in 2023
and 2024 respectively and are the first utility-scale nuclear
reactors built in the U.S. in over 30 years.
Keeping in mind Hochul's specification that the NYPA facility
be of "no less than one gigawatt" in capacity, the
Westinghouse AP1000 PWR may hold the pole position for technology
type should NYPA elect to build a single PWR; it's the right
size and – with Vogtle – U.S. firms have shown they
construct and operate them, an advantage no other advanced reactor
model can claim. However, whether the Generation III+ PWR compares
favorably to alternative advanced fission technology types,
especially on the basis of cost, is a question muddled by the
myriad hiccups that led to the Vogtle project's extraordinary cost overruns. By the time
construction was completed, total project cost had exceeded the
initial budget by $17 billion and drove the reactors'
manufacturer, Westinghouse Electric Co., into bankruptcy. The
Vogtle experience will provide valuable lessons to any commercial
nuclear power developer in the United States in the coming years,
including the concept that building multiple units as part of a
single project will drive down the cost for each successive unit
built and lead to a lower total project cost overall (though this
claim is contested with respect to its applicability to
the Vogtle saga). But that lesson in particular may militate in
favor of selecting for the NYPA project a different technology type
entirely: the small modular reactor, or "SMR."
Believed by some industry observers to be the
future of nuclear power in the United States, SMRs trade facility
size (ranging from 60 MW to 300 MW, compared to the 600 MW to 1,500
MW typical of Generation II facilities) for lower upfront capital
costs, siting flexibility, and the potential cost- and
speed-of-deployment advantages that come with modularity, all of
which suggest significantly higher deploy-ability than larger
facilities. In theory, SMRs could be deployed on smaller parcels
than larger facilities, and due to their relatively lower power
output, SMRs could avail themselves of a broader range of physical
grid interconnection opportunities.
SMRs may soon be deployable in the United States. At least two
firms, Holtec International ("Holtec") and TerraPower,
claim to be able to build SMRs right now. Holtec has units under development on the site
of the existing Palisades nuclear facility in Michigan and public
ambitions of building 10 GW of SMR capacity in the United States by
2040. And TerraPower, which became the first developer to
submit an SMR license application to the Nuclear Regulatory
Commission ("NRC") in 2024, recently announced supplier contracts for its
"Natrium" project in Kemmerer, Wyoming. Additionally,
since 2019, the U.S. Department of Energy has partnered with NuScale Power, which became
the first developer to receive NRC approval for its SMR design in 2020, and Utah
Associated Municipal Power Systems to construct a proof-of-concept
SMR facility at the Idaho National Laboratory, with hopes of
completing the project by 2030.
Hochul's at-least-one-gigawatt goal could be fulfilled by
building a small fleet of co-located SMRs, an approach that could
capitalize on the cost advantages of building multiple units as
part of a single project. Moreover, enthusiasm at the federal level
for SMR development has survived the 2025 presidential
administration transition, and that enthusiasm may be more likely
to convert into financial support if Washington is pleased with
NYPA's technology type selection.
Lessons from Other First-of-a-Kind Energy Projects in the
Northeast
Whether NYPA elects to build a multi-SMR facility or a larger,
single-unit advanced fission facility, all parties involved –
NYPA, NYSERDA, DPS/the PSC, and the Governor – should look to
the lessons learned from other first-of-a-kind, proof-of-concept
deployments in the Northeast, and ask how the NYPA project can
serve as a stepping-stone to the selection and construction of
future nuclear power facilities. By using the NYPA project to lay a
path for development of other facilities in the future, the State
can gain traction not only on its 100%-by-2040 zero-emission
electricity system requirement under the Climate Leadership and
Community Protection Act (2019) ("CLCPA"), but also on
the CLCPA's broader requirement to reduce greenhouse gas
emissions 85% from 1990 levels by 2050.
Though Hochul's announcement does not include mention of a
"pilot project," first-of-a-kind generation projects
historically have played a crucial role in proving out technology
and related development strategies, driving down costs and setting
the stage for future deployment.
The successful development and operation of the Block Island Wind
Farm off the coast of Rhode Island in 2016, and the South Fork Wind
Farm off the cost of Montauk, New York in 2024, for example, paved
pathways for permitting, contracting, procurement, and new
technology construction for the offshore wind industry in the
United States, encouraging investment and market participation in
the United States from the world's offshore wind development
giants. Though comparatively smaller (30 MW and 130 MW
respectively) and more expensive ($244/MWh and $160/MWh,
respectively) than follow-on offshore wind projects, those early
smaller projects unlocked a new market and trailblazed a path for
the larger and more economical offshore wind projects that
followed.
New York itself has recently kicked off a proof-of-concept effort
to deploy the state's first long duration energy storage
("LDES") facilities. In June 2024, NYSERDA and the PSC authorized several LDES demonstration and
pilot programs that "utilize a variety of technologies
including iron-air batteries, zinc alkaline batteries, and hydrogen
storage" to "best position New York to timely develop and
deploy LDES assets when the electric power system requires
it." NYSERDA is seeking to award 20% of its upcoming bulk
energy storage procurement to LDES resources, and other states and utilities have initiated similar LDES
demonstration projects to jumpstart that nascent market.
In short, New York State and the northeast markets more broadly
have significant recent experience with supporting early-stage
clean energy development projects, and myriad examples of how to
ensure that such early-stage support leads to effective leveraging
of private sector investment in order to reduce ratepayer costs,
spur new economic development, and position the state for
significant private investment.
New York's Climate Law and Related Regulations: How
Does New Nuclear Fit In?
The CLCPA makes no specific mention of the potential
contributions of nuclear power to decarbonizing the state's
energy resource mix, and defines the State's 70%
renewable-power-by-2030 goal explicitly with reference to
"renewable sources," a category in which nuclear power is
not included. The CLCPA's 2040 zero-emissions target, on the
other hand, does not explicitly disclaim a role for nuclear
facilities.
On the other hand, the Climate Action Council's (the
"CAC") Scoping Plan (2022) (the "Scoping
Plan")), the State's implementation plan for the CLCPA, does discuss possible avenues for developing
nuclear power, contemplating that the advanced nuclear power
facilities may be developed in the state in order to achieve the
2040 zero-emissions target – all in furtherance of the
CLCPA's 2050 85% emissions-reduction target – and
specifically hypothesizing a role for SMRs.
The Scoping Plan is due to be updated in 2028, and revisions would
have to squarely contemplate the role of nuclear power in the
State's power supply plans and emissions-reductions efforts. At
the least, the next iteration of the Scoping Plan would have to
describe in detail how DPS should proceed in designing funding
sources for new nuclear facilities (whether it be a revised
Zero-Emissions Credit, which we discuss below, or some successor
mechanism)—if the State determines that it should provide
such a funding source at all.
Relatedly, the State Energy Plan ("SEP"), which is now
under revision, should signal clearly to the CAC and to the private
sector how State authorities are thinking about the issues involved
in, and the role of, the development of the NYPA facility. Although
the in-progress draft of the SEP is not publicly available,
materials made available for the June 25, 2025 State
Energy Planning Board Meeting suggest that NYSERDA is considering
whether new nuclear power could substitute for new natural gas
generating capacity that may be needed by 2040 to satisfy the
state's energy needs; whether the State should engage in
multi-state collaboration related to new nuclear development; and
whether the State should pursue additional deployment opportunities
"in parallel with ongoing initiatives" like the NYPA
project.
NYSERDA officials commented at the June 25 meeting that a draft SEP
is likely to be released this summer. Because New York State
agencies are required by law to implement the SEP, parties
interested in the NYPA nuclear announcement and the potential for
further nuclear development should pay careful attention to the
final SEP, currently slated to be released in December 2025.
Compensation: New York's
"ZECs"
Related to questions about the CLCPA and the Scoping Plan is the
problem of fairly but adequately compensating the new NYPA facility
and other "new" and "advanced" nuclear
facilities, all while balancing the Governor's focus on
reducing energy costs for New York ratepayers. The State has a
legacy mechanism for allocating out-of-market revenue to nuclear
power producers: the Zero-Emissions Credit ("ZEC"). Like
a Renewable Energy Credit ("REC"), but for nuclear power
facilities, a ZEC represents the environmental attributes of one
megawatt hour of zero-emission nuclear generation. Under the
program, NYSERDA procures ZECs from nuclear facilities and in turn
sells them to load-serving entities. Because the ZEC's value
consists of a base incentive representing the social cost of carbon
that decreases if wholesale electricity prices rise, it provides
revenue certainty for the existing nuclear fleet, ensuring those
plants can operate over the long term and obtain financing for
construction and maintenance.
However, the ZEC was not designed to support new nuclear
facilities. Rather, the ZEC was originally incorporated into the
State's 2016 Clean Energy Standard, through orders of the PSC,
to ensure the continued operation of existing facilities, which
have different capital needs and challenges than facilities in the
early stages of development. Moreover, the ZEC program as it exists
now will sunset in 2029, and the Scoping Plan now in-progress calls
for the State to consider whether support beyond that time will be
necessary to keep New York's existing nuclear fleet
operational.
In order to provide appropriate market signals and time for
Constellation to invest the funds needed to keep the existing fleet
safe and operating as it continues to age, the State will need to
determine well ahead of the ZEC's current sunset date the right
mechanism (continuation of the ZEC as designed, or otherwise) that
balances its clean energy needs and ratepayer costs. That set of
considerations sits on top of quickly changing federal policy in
the energy industry, and in the context of an upstate New York
energy system that continues to take on new solar and wind
capacity.
A number of alternative funding sources may be available to support
New York's existing and future nuclear fleets. First, the
Inflation Reduction Act of 2022 ("IRA") made existing
nuclear facilities eligible for Section 45U zero-emission nuclear
power production credits for electricity sold before January 1,
2033. Though the credit begins to phase out once a reactor's
gross receipts exceed $25/MWh, and though the recently passed One
Big Beautiful Bill Act ("OBBBA") implemented certain
additional foreign entity of concern requirements, Section 45U
credits remain otherwise available. New York's fleet has been
unable to take full advantage of Section 45U credits, because,
inter alia, the credits' value is reduced if a facility
receives ZEC payments or comparable payments under a state program.
Accordingly, if New York allows its ZEC program to expire, the
existing nuclear facilities could potentially offset that loss of
revenue by obtaining higher-value Section 45U credits to support
their continued operation—or, if the State chooses to support
the facilities through a different mechanism, then the tax credit
may be able to be maximized.
Second, electricity and capacity prices are expected to rise in the
near and medium terms due to data center development and beneficial
electrification. Wholesale electricity prices in Northeast markets
are rising year-over-year and are expected to
continue to do so; meanwhile, capacity prices in
supply-constrained, data center-heavy balancing areas like the PJM
Interconnection are soaring. While legacy nuclear facilities
have sometimes struggled to clear capacity auctions, a number of
factors may position the next generation of nuclear facilities to
collect capacity revenues more reliably, including growing overall
demand for power, increased market penetration by variable
renewable resources, retirements of fossil-fired generators (who
typically set the clearing price in capacity auctions), and the
reduction in available hydro imports from Ontario and
Québec, who have long supplied Northeast markets with cheap
dispatchable power, as those provinces address their own demand
growth.
And lastly, while likely not a solution for ensuring a nuclear
project's near-term contribution to the State's clean
energy goals, the appetite for private-sector offtake has
increased. For example, Constellation's Clinton Clean Energy
plant in Illinois signed a twenty-year power purchase agreement
with Meta Platforms, Inc., rather than continuing to operate in the
region's competitive wholesale electricity markets as
Illinois' own ZEC was set to expire; and in Pennsylvania, Talen
Energy's Susquehanna Steam Electric Station facility is now contracted to supply nearly two gigawatts
of power to Amazon Web Services, Inc.'s data center campus
nearby.
Siting New Nuclear in New York and the Role of the
NRC
Where the new NYPA facility will be located is an open question. As
mentioned above, Hochul has stated that sites under review include
Constellation's three existing facility sites. It's also
possible that the State will explore the possibility of using
federal land such as Fort Drum, located in Jefferson County, to
host the facility. Regardless, the siting process and the
involvement of pertinent State and federal authorities will present
challenges that the State has never faced before. New York State
and federal authorities – namely the NRC, which exercises
jurisdiction over certain elements of the siting process –
have not approved the siting of a new nuclear facility in the State
since 1974. This fifty-year hiatus, and the fact that the
underlying applicable state law has changed fundamentally during
that period, makes it hard to predict how the siting process for
NYPA's facility will unfold.
The NRC licensing process proceeds roughly as follows. The
developer of a nuclear power facility may choose to obtain
an early site permit ("ESP") from the NRC. ESPs remain
valid for 10 to 20 years from the date of issuance (and can be
renewed beyond that period), and though ESPs are not required in
order to proceed with developing a nuclear facility, they give a
developer certainty that they may build on a particular site even
before selecting the reactor technology to be used. Notably, in
January 2025, Constellation and NYSERDA announced a grant proposal to the Department
of Energy ("DOE") seeking funding to support an ESP
application as Constellation explores the possibility of
constructing one or more SMRs at the Nine Mile Point
facility.
A developer must, however, obtain from the NRC either (i)
both a construction permit and operating license (pursuant to 10
C.F.R. Part 50) or (ii) a single "combined license"
(pursuant to 10 C.F.R. Part 52) in order to break ground on a
project and operate it. Whichever licensing path the NYPA facility
follows, the NRC will review the license application for: site
characteristics (including descriptions of surrounding communities
and of local seismology, geology, and hydrology); planned responses
to hypothetical accidents; plans for plant operations (including
the operator's technical qualifications); radiological
effluents or discharges from the plant; and other application
elements.
However, it is possible that the NRC licensing process will look
different by the time that NYPA seeks its own license. In a May 23,
2025 Executive Order, President Trump called on the NRC to "undertake a review
and wholesale revision of its regulations and guidance
documents" in the interest of streamlining and accelerating
the issuance of licenses. It is too soon to say whether the
resultant process will in fact be faster or more straightforward,
or whether the divisions between federal and state jurisdiction
will be made more or less clear—or even whether the new
regulations will be finalized before NYPA begins the licensing
process.
On the state level, Article 10 of the New York Public Service Law
("PSL") governs the siting of large or repowered
electric generating facilities that are not wind- or solar-powered.
However, the text of the statute and the regulations clearly imply
that the Article 10 regime was never intended to control, and
perhaps cannot accommodate, (i) the siting of a nuclear-powered
facility (as compared to, for example, a natural gas-fired
facility, which the statute and regulations clearly contemplate) or
(ii) a siting process over which jurisdiction is shared with a
federal authority. Nevertheless, the process for obtaining a siting
certificate under Article 10 calls for much of the same information as the
NRC process (as that process stands today). An applicant must
submit a pre-application preliminary scoping statement describing,
among other things, potential environmental and health impacts of
the facility, and the application itself must detail: site
characteristics (surrounding communities, maps, geology,
seismology, etc.); anticipated emissions and effluents;
environmental impacts and safety implications; safety measures and
emergency contingency plans; analysis of the facility's
compatibility with New York environmental justice laws and
regulations; evaluation of possible alternative locations; and
other application elements.
If the State intends for NYPA's facility to be sited under the
Article 10 regime, it would likely be necessary to pass legislation
directing the PSC to develop new regulations for the siting of
advanced nuclear facilities, or for the PSC to commence such a
process on its own, or issue a declaratory order interpreting the
jurisdictional interplay; in any event, the State's siting
process would need to be augmented and/or clarified, including by
taking into account existing (and likely preemptive) federal
requirements.
Nuclear Power and the Trump Administration
For all its irrational hostility to wind and solar technologies,
the Trump Administration has signaled that it intends to usher in an
American "Nuclear Renaissance." Some of the
Administration's energy-related policies so far announced
– by executive order, through the OBBBA, and via public
proclamations by leading officials – have focused on
extending the lifetimes of existing nuclear facilities, while
others have promised support for quickly deploying new advanced
nuclear facilities, with the aim of standing up 300 GW of new
capacity by 2050. Under its new Secretary Chris Wright, DOE has re-launched a Biden-era program to award
$900 million to promising efforts to commercialize SMRs, and disbursed a $57 million loan to restart the
Palisades nuclear facility in Michigan. Additionally, the OBBBA did
not modify the IRA's Section 45J credits for electricity
produced by new or upgraded advanced nuclear facilities, and as
discussed above, largely preserved the Section 45U credits for
existing facilities.
Will this Administration's support for nuclear power actually
spur the deployment of new capacity? As mentioned previously,
President Trump's May 2025 Executive Order indicates at the very
least a strong interest in speeding up the development cycle for
nuclear facilities, and Secretary Wright's comments that he intends to repurpose the DOE
Loan Programs Office ("LPO") – the office through
which the Biden Administration committed over $100 billion in debt
capital to the clean energy sector – to accelerate the
"Nuclear Renaissance," may bode well for the sector as it
moves toward cost-competitiveness. On the other hand, the way in
which the NRC's regulations will be reformed and the timing of
such reform remains uncertain, and the ability and appetite of
Trump's DOE's to efficiently deploy capital for nuclear
projects remains to be seen.
With that said, federal monetary support could ease New York's
financial burden in supporting a nuclear program. For example, if a
solar or wind developer has obtained LPO financing, NYSERDA's
most recent Tier 1 REC agreements reduce the REC payments that
NYSERDA would otherwise owe to that developer. Similar arrangements
for advanced nuclear – including the new NYPA facility
– could reduce taxpayer and/or ratepayer exposure.
In Conclusion
These are turbulent times for energy policy in America. Amidst the
rocket-ship launch of renewable energy over the last half-decade,
Trump returned to office bent on hammering that industry. And
he's done just that, upending hundreds of thousands of jobs and
billions in investments across the country—including many
projects in New York State. Governor Hochul's announcement that
a new nuclear facility will be built arrives in this moment of
turmoil. The process of realizing the NYPA project will raise a
number of questions of first impression for New York regulators and
policymakers—particularly if the State treats the process as
a proof-of-concept endeavor for future nuclear deployments. In the
meantime, while the Governor should press ahead, she must resist
the temptation to use the new nuclear strategy to abandon the
State's leadership position on renewable energy, especially in
the electricity-hungry downstate region. New York's economy
demands a vigorous commitment to both, regardless of the headwinds
out of Washington.
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