Aug. 18, 2020 | InBrief

Reimagining the post-pandemic energy industry in New York

New York City was ravaged by the pandemic, and it affected the energy industry in unprecedented ways. Here’s what’s next in the Big Apple.

The COVID-19 pandemic has caused widespread disruption across the globe and is expected to impact the ways in which we live and work for years to come. New York City was one of the earliest and hardest-hit cities in the United States, and in an instant a city usually exploding with cultural, social, and entertainment assets was ravaged by the coronavirus. The aftershocks continue as the city will remain closed to some extent until 2021. While most business leaders are confident the city will remain a leading financial and commercial center, it will be challenging to restart, repair, and reinvent the local economy.

Partnership for New York City, a nonprofit membership organization aimed at enhancing the economy and maintaining New York City's position as the global center of commerce, culture and innovation, brought together 14 global consulting firms to create a comprehensive report to assess the impact of the pandemic at a point in time when the city and surrounding region are reopening and defining an action plan on how to make the region healthy again. 

West Monroe supported and led the effort focusing on the impact of COVID-19  on the energy sector and strategies for recovery and reinvention. The full report covers the impact to all industries (healthcare, life sciences, financial services, etc.) across the public and private sectors in New York City.

Impact of COVID-19 on New York City

The abrupt economic downturn was multi-dimensional, disrupting every sector and every aspect of life in New York City.

  • Since March 20, the New York State Department of Labor processed more than two million unemployment applications-1.4 million in New York City alone-with payments jumping over 1,000%, from $2.1 billion in 2019 to $25 billion as of late June 2020.
  • May 2020, the city's unemployment rate reached 18.3% and is projected to average 9.8% in 2020 and 10.9% in 2021.
  • As many as 520,000 jobs were lost from the small business sector, which includes 240,000 businesses with fewer than 500 employees in New York City; about 285,000 were lost from businesses with fewer than 50 employees.
  • The New York State Division project a 7% drop in the state's GDP in 2020 and a 14% loss of pre-recession output through early 2023, substantially higher than the 2% decline after 9/11 or the 10% drop following the 2008 financial crisis.
  • The city output is projected to drop in 2020 anywhere from 6.0% to 12.9%, amounting to a real Gross City Product loss of up to $115 billion.
  • Stress on the entire healthcare system exposed the limited capacity of regional healthcare providers due to high occupancy rate (74.2%), relatively few primary care physicians (60% below national average per 1,000 residents), and maldistribution of care facilities.   

Impact to the energy sector

Through COVID-19, electric and gas utilities put their pandemic response plans to work and continued to deliver reliable energy product and services through the three-month NY PAUSE.

Transition to clean energy

In 2019, New York state passed the Climate Leadership and Community Protection Act, a commitment requiring energy used in the state to come from clean and renewable sources by 2050. Post-COVID-19, funding for these initiatives can only be sustained through public-private partnerships.

Electric and gas utilities already budgeted $20 billion to support the modernization of New York's energy distribution systems. As the city and state have set aggressive sustainability agendas, real estate developers and building owners will have to move quickly to meet these goals.

Electric Vehicles

Electric vehicles (EV) are another opportunity to reduce reliance on fossil fuels. A regional approach to transportation electrification will ensure that charging infrastructure for passenger vehicles and light duty trucks is available along heavily traveled commuter and delivery routes within the region.

Mobility Solutions

The MTA, New Jersey Transit, and the PANYNJ jointly run the country's largest mass transit system. In the face of a pandemic, transit agencies have taken extraordinary steps to reassure riders that their health will not be compromised, including closing subway service from 1 a.m. to 5 a.m. for disinfecting and thorough cleaning.

Subways, commuter rail, and private cars should not be the only mobility options as the region reopens. Ferries are an attractive but expensive alternative; they should be part of the MTA or the PANYNJ system, with synchronized connections and payment systems.

Micromobility

Micromobility is receiving broader acceptance to mitigate strain on public transit and to relieve congestion. New York is playing catch-up when it comes to biking. Electric bikes and scooters have only recently been legalized.

To expand and upgrade bike and scooter accommodations, the city should work with private companies that benefit from micromobility at their doorstep. Introducing interoperable payment and data sharing systems will also provide a comprehensive view of mobility patterns, driving better decisions about where new infrastructure can be most impactful.

Conclusion

Economic recovery will require a multi-sector approach, with leadership from business, labor, academia, civic, and community sectors. Extra-governmental partnerships should be structured to design and implement solutions to the immediate needs for job training, hiring, small business relief, affordable housing, renewable energy, and digital infrastructure.

New York has emerged stronger from past crises. Its resilience has been a tribute to the loyalty that the city commands from generations of immigrants and aspiring Americans. We don’t know if that will be enough to overcome pandemic-generated fears linked to urban living: density, diversity, proximity, social interaction, and dependence on mass transit.

Download and read the full report published by the Partnership for NYC.


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