By Hannah Lindqvist
BUFFALO, N.Y. — National Fuel Gas has the state’s permission to build a $61.4 million network of pipes in downtown Buffalo that would heat and cool a dozen affordable apartment buildings and a municipal building with warmth pulled from sewage and the ground. It is one of only two such projects the state approved out of 11 proposed. The commission’s own analysis also shows it would cut carbon at about three and a half times the cost of putting heat pumps in each building.
The state Public Service Commission authorized the Buffalo pilot on Oct. 15, along with a $50.1 million project in the Rockland County village of Haverstraw, according to the commission’s announcement. It declined to advance nine other utility proposals that together sought more than $1 billion from ratepayers.
What the network would do
The Buffalo design is a four-pipe system, with separate hot and chilled water lines, run from a central plant. Its main heat source is wastewater flowing through the sewers; geothermal boreholes are a secondary source. The commission says the project will displace hot water boilers that are part of the existing Buffalo District Energy System and serve “a disadvantaged community in downtown Buffalo.”
A June 2024 feasibility study that LaBella Associates prepared for National Fuel shows where the idea started. It found that a 96-inch sewer main could supply most of the heat, preheating the water returning to two existing natural gas boilers that serve three municipal buildings. It called for 97 boreholes drilled 500 feet down to serve the housing. The study’s system diagram lists addresses on Delaware Avenue, Franklin Street and West Eagle Street, plus 65 Niagara Square, which is City Hall, and an existing boiler plant on Court Street.
Commission Chair Rory M. Christian called the decision a turning point. “Today marks an important milestone with the approval of two innovative projects that will meet New Yorkers’ heating and cooling needs while lowering building emissions and creating good paying jobs,” Christian said.
The cost of a ton of carbon
The commission compared each proposal against simpler options, and the slides from its Oct. 15 session lay out the numbers. Over its life, the Buffalo network would cost about $4,342 for each metric ton of carbon dioxide it avoids, compared with business as usual. Putting individual air-source heat pumps in the same buildings would cost about $1,263 a ton.
The gap shows up in other measures too. The commission’s figures put the Buffalo network’s capital cost at 2.9 times that of individual air-source heat pumps, and its operating cost at 1.9 times. The network does better on energy: the slides estimate it would cut energy use 65% from business as usual, against 50% for individual heat pumps, and trim winter peak electric demand by 17% compared with that option.
By the commission’s yardsticks, Buffalo was also one of the cheaper networks on the table. Its cost per ton of avoided carbon was the second lowest of the 11 proposals, behind only a Con Edison project at Rockefeller Center, and well below a Con Edison proposal in Chelsea that came in at $15,804 a ton.
A price that has grown
The estimate has risen since National Fuel first studied the site. The 2024 LaBella study put the gross cost at about $43.4 million, or $39.9 million after an assumed federal tax credit. The commission’s slides now list $56.5 million in capital spending within the $61.4 million total budget. National Fuel had spent $2.26 million on the project through August.
The emissions math has also shifted. The 2024 study projected that the pilot customers’ carbon emissions would fall from 2,423 metric tons a year to 1,252, a cut of about 48%. The commission’s October slides put the Buffalo network’s greenhouse gas savings at 88% compared with business as usual. The documents The Buffalo Chronicle reviewed don’t explain the difference, which may reflect a design that changed between the two filings.
The 2024 study was candid about one choice. Weighing whether to connect part of City Hall, it noted that doing so would raise the cost per ton of carbon reduced, but that “including the high profile building has inherent benefits from the perspective of public relations.”
Who pays
Most of the money is coming from the state. About $93 million of the $111.5 million for the two approved pilots is to come from the state’s Sustainable Futures Program. The remaining roughly $18.5 million, split between the two projects, is to be recovered from National Fuel and Orange & Rockland customers through a surcharge. For National Fuel, that surcharge is capped at 1% of its annual gas revenues.
Before construction, National Fuel must file a customer protection plan within 120 days of the order, meet enrollment requirements and secure every permit, approval and land-use agreement the project needs. The 2024 study counted 12 agencies and other parties with a say, from the Buffalo Sewer Authority to the state Department of Environmental Conservation.
Supporters say the pilots are worth their price because of what they will teach. Allison Considine, New York director of the Building Decarbonization Coalition, said in a statement released by the Upgrade NY coalition that the two projects “will help deliver union careers in building decarbonization, and generate valuable data and learnings on how thermal energy networks can support efficient decarbonization and economic development, lower energy costs, and make communities more resilient.”
Roger Downs, conservation director for the Sierra Club’s Atlantic Chapter, framed the cost question the other way around. “We applaud Governor Hochul and the PSC for recognizing that the most expensive energy option for New York is keeping the status quo,” Downs said.
What to watch
The commission has asked its staff to gather lessons from the pilots for a statewide Thermal Energy Network Roadmap, and the order calls for monthly financial and status reports. Those filings will show whether the Buffalo project holds to its budget, how many of the 13 buildings sign up, and whether a sewer-heated network downtown earns its premium over simpler heat pumps.
The Buffalo Chronicle has asked National Fuel and the Department of Public Service about the cost comparison, the change in projected emissions and which buildings have agreed to connect, and will update this story with their responses.
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