In a landmark move that could shape New York’s energy landscape for decades, state officials have taken steps to both preserve its existing nuclear power facilities and significantly expand its advanced nuclear capacity. These actions are part of a broader strategy to maintain grid reliability and meet both escalating energy demand and the state’s ambitious greenhouse gas reduction and zero carbon goals.
Renewing the Zero Emissions Credit Program
On January 22, 2026, the New York Public Services Commission (PSC) unanimously voted to extend and reboot the Zero Emissions Credit program (now called ZEC 2.0) to ensure that New York’s four upstate nuclear reactors maintain operations through 2049. The program, which began in 2016, is designed to provide revenue subsidies for legacy nuclear facilities that have been facing financial difficulties in New York’s competitive wholesale power markets. State officials have stated that the benefits of ensuring the continued operations of these reactors far outweigh the costs due to the lack of zero-emissions alternatives and the importance of ensuring grid reliability in the face of escalating energy demand from large loads like data centers.
In its order to extend the ZEC program, the PSC decided to maintain the existing cost allocation and recovery methodology that was in place under ZEC 1.0 wherein costs were allocated to Load Service Providers (LSEs), including incumbent electric distribution utilities and Energy Service Companies (ESCOs). As in ZEC 1.0, New York State Energy Research and Development Authority (NYSERDA) will essentially act as a ZEC broker, buying all the ZECs from the nuclear facilities and selling them to LSEs by assessing a wholesale per-MWh charge that is applied to each LSE’s actual wholesale load to calculate their monthly ZEC obligation payments beginning April 1, 2029. NYSERDA, in collaboration with the Department of Public Service, will then recalculate this figure for each subsequent compliance year. This obligation is applied on a volumetric basis despite proposals that a portion be allocated on the basis of demand.
As part of this cost allocation strategy, the PSC has directed each LSE to enter into a contract with NYSERDA for the life of the ZEC program. This contract requires LSEs to periodically purchase ZECs based on initial forecasts and then undergo a reconciliation process at the end of the program year to ensure that the correct pro rata share of ZECs has been purchased. Notably, there will continue to be no voluntary trading of ZECs except between LSE’s and NYSERDA during the reconciliation process. However, due to increasing interest in the formation of a voluntary market for trading ZECs, PSC has commissioned NYSERDA to submit a proposal on how a voluntary sale mechanism would work. Such a market could reduce the economic impacts of ZEC 2.0 on obligated LSEs and their customers.
Critics of ZEC 2.0 have expressed concern that the program costs will unfairly affect ratepayers who are already subject to high energy bills. Total costs could be as high as $33 billion over the 20-year life of the program although PSC estimates roughly half of that amount due to an expected rise in wholesale energy prices and a federal tax credit that will defray costs for the next several years. Furthermore, the PSC pointed to certain ratepayer protections in the program including contract performance requirements, periodic program review, and a mechanism to reduce ZEC payments should federal financial support be made available. Ultimately, the PSC found that the public benefits of ZEC 2.0 far exceed costs to ratepayers because the program incentivizes the continued operation of existing nuclear facilities, and provides New York state with zero carbon reliable power for decades to come.
Governor Hochul Promises Significant Investment in Nuclear Power
Where the ZEC program aims to ensure the longevity of existing reactors, Governor Kathy Hochul has unveiled an ambitious vision to significantly expand New York’s nuclear capacity. In her recent 2026 State of the State address, Gov. Hochul introduced the Nuclear Reliability Backbone initiative, a commitment to expand New York’s nuclear program with an additional 4 GW of advanced nuclear capacity. Combined with a previously announced 1 GW project, and the existing 3.4 GWs from current plants, the Reliability Backbone initiative aims to create a robust 8.4 GW nuclear foundation for the state’s energy grid.
Hochul’s announcement represents a nation-leading state commitment to nuclear energy expansion. This initiative is also consistent with New York’s recently adopted State Energy Plan which highlights that a least-cost path to a zero-emission future includes significant deployment of nuclear energy. Hochul has stated that nuclear power represents a stable and reliable baseload of carbon-free energy that will complement intermittent renewables like wind and solar and reduce the state’s reliance on fossil fuel generation.