New York State Must Address Affordable Housing’s Electrification Challenges

A 150-unit affordable and supportive housing project on a busy Buffalo thoroughfare has proved to be the canary in the coal mine for the affordable housing industry, revealing a looming — and expensive — problem for new construction in the coming years.

At issue is whether New York’s aging power grid can accommodate growing demand as electrification requirements necessary to meet the state’s ambitious clean energy goals take effect. In Buffalo, the developer, DePaul, discovered only after work on its Pan-American Square Apartments was about 30 percent complete that there wasn’t sufficient grid capacity at its 11-acre Delaware Avenue site to meet the project’s needs. 

DePaul faced the daunting prospect of footing the bill for a $6.2 million power upgrade that wasn’t factored into the project’s original development budget of $82 million. The situation was complicated by a mandate from the state Division of Housing and Community Renewal (HCR) that all new affordable projects not use fossil fuels, which significantly increased Pan-American Square’s electrical power needs. 

Thankfully for DePaul, HCR and another state agency, the Office of Temporary and Disability Assistance and the state Office of Mental Health, which have oversight over the supportive piece of this project, stepped up to help finance this unexpected additional expense. As a result, Buffalo is on track to get high-quality, sustainably constructed units that will both help address its ongoing housing crisis and advance the state’s ambitious clean energy goals.

The challenge facing the DePaul project is not unique, and addressing this problem on a case-by-case basis is neither efficient nor cost effective. What the state needs is a comprehensive strategy to offset the daunting costs affordable housing developers face as electrification mandates drive energy demand higher and the power grid is struggling to accommodate the growing need. 

At the New York State Association for Affordable Housing’s recent annual upstate conference, DePaul President Mark Fuller said that, had he known in advance the grid could handle a smaller version of the Pan-American Square project, he would have downsized it. This underscores the challenge at hand: Because New York desperately needs more units to build its way out of the affordable housing crisis, we cannot afford to let hurdles that might slow or even altogether disincentivize new development go unaddressed. 

To avoid costly and potentially project-ending surprises like the one DePaul experienced, it’s imperative that studies about the grid’s ability to meet the needs of new development are completed before ground is broken. These studies can run well into six figures, and it’s one area where the state’s involvement — perhaps through creation of a revolving fund — would be welcome.   

To be clear, the affordable housing community is leading the way in helping the state meet its clean energy targets, recognizing that the built environment is responsible for about one-third of statewide greenhouse gas emissions. Though the All-Electric Buildings Act, which requires most new buildings to use electric heat and appliances, doesn’t fully take effect until 2029, the state HCR is already requiring that all new affordable housing development is fully electric, and developers are rising to meet this challenge. 

But New York’s energy crunch is only going to tighten as the clean energy transition continues and the generation and transmission systems struggle to keep up. The New York Independent System Operator, the nonprofit responsible for maintaining the state’s electric grid, has warned that reliability margins across the state are thinning, due to a combination of electrification, high-demand economic development projects, resource retirements, and renewable project delays.

The state is investing millions of dollars to address the affordable housing crisis, focusing both on preserving existing housing stock as well as building new units. For upstate cities, the 2024-25 state budget allocated $80 million to create pilot programs to address these cities’ housing challenges.

To maximize these investments and enable affordable housing projects across the state to advance on schedule, Albany must address the challenge presented by electrification in the coming 2025 legislative session. Failing to do so could undermine both current and future progress on two of the biggest challenges we currently face: combating climate change and ensuring New Yorkers have affordable, high-quality housing for years to come. 

Jolie Milstein is the CEO and president of the New York State Association For Affordable Housing.