Partner content by ING: Powering the city that never sleeps

Every inch matters when you're burying a line. You can't skip over problems. You have to make sure you've done it right every inch of the way.

It's the most powerful project you might never actually see. New York State's transition from fossil fuel to clean energy by a fully buried transmission line to power New Yorkers into the future with clean, renewable hydropower. And just in time, too, as new laws require New York to be powered by 70% renewable energy by 2030. The line's expected to be fully operational in the spring of 2026. But in order to do that, Champlain Hudson Power Express had to get the funding to make it happen. And that involved jumping through some major hoops to prove that in every way possible, this was a sustainable transaction. I'm Katie Prescott, technology business editor, This podcast is to showcase how some incredible business projects were created sustainably and the challenges that come with that. Today's episode tells the story of how one company is transforming New York's energy. This is Uncovered Sustainability. I'm joined by Brian Quebec from TDI, developer of Champlain Hudson Power Express, and Sven Welluck, from ING. Brian, if I can start with you, tell me something about the size of this project.

It's pretty incredible when you think about it. You begin in Lake Champlain where we connect with Quebec and water, then we head down the Hudson River. When we're out of the river, we're on railroad tracks, but then we come back in the river of the southern end of the route where we then go to Harlem and East River, or we come back on land and Astoria, Queens. That's where our converter station is. It's actually the first transformation of a site used for fossil generation to a clean energy site in New York City. First major site. We're putting up a state-of-the-art renewable facility there.

I mean, it sounds quite extraordinary just hearing a summary of it and something that's never been done before. How did you even begin to get it off the ground?

That development process was over 10 years of public hearings, stakeholder engagements. And I'm not exaggerating when I say countless sort of kitchen table meetings where you talk to people affected by the line. Getting that feedback, community meetings, et cetera, and then putting that all together to make sure you optimize the line. Transmission lines, as not everyone understands, require massive investments, really badly needed in the US to connect where the power can be sourced from where it's really needed. You said before, every inch matters. When you're burying a line, you can't skip over problems. You have to make sure you've done it right every inch of the way.

It's a sort of, it's a funny catch-22 in some ways, isn't it? Because you're trying to build something that provides clean energy, but as you say, there are environmental concerns in doing that. And I imagine the way it looked very different to your original plans was extraordinarily complicated and trying to juggle all of those different needs.

And one of those instances that was to completely avoid a sturgeon spawning habitat. We've also done other major steps with communities that are, that draw their drinking water from the Hudson. We designed a mock cable installation test where we physically went to the river bottom to simulate installation of the cable, and we monitored everything, and we're happy to report that that demonstrates zero impact on the community's drinking water. So we've all different types of challenges, and that all took us from a route that looked one way in the beginning and looks quite a bit different now.

When you had those conversations, were they in the main positive? I mean, did people understand what you were trying to do?

Yes, I think again, you have to, we've told the story so many times, we have to remind ourselves that it's new to other people even though it's old for us. As with any project like this, there's a little bit of envy, not in my backyard. Like it's a hassle. I'd rather somebody else have to deal with the hassle than me. But I think like I said, overwhelmingly people understand the benefits of what we're doing.

This is a massive undertaking just from a physical perspective, but I can imagine it's just as tricky from a financial perspective as well.

On the financing side, this was the largest green loan ever. ING was the green loan coordinator. They were an early and very significant hedge provider for us. In the period leading up to the financing, interest rates were just skyrocketing. So it was really helpful to have somebody step in and help us hedge that exposure.

Sven, listening to that context, was it quite a difficult decision to get involved?

It wasn't really. We had been following this project for the last 2 years, but often with these large projects, there are some caveats. Here, the focus was really on ESR, environmental and social risk. And in many cases, what really matters is how the various stakeholders were treated in the process.

And I guess for you, Sven, your concern here would be you really need to nail down that this does tick all of your sustainability targets. I mean, you can't just label anything green and just presume perhaps because it's hydropower that it does meet those targets.

Absolutely. And that was a major focus point for us in our due diligence process. And ultimately, you know, we were able to confirm that that this met our standards. Many financial institutions have similar objectives and KPIs, and so a deal that has been vetted as green, and in this case we called it a green loan, we structured it as a green loan, will be more appealing to many banks because they're, you know, equally behind promoting and supporting new green transactions.

The mind boggles about what you must have had to consider when building something this big. Where did you even begin?

Your construction plan, your design needs to make sure you minimize the impact on the environment and it needs to make sure you minimize the impact on stakeholders. If you're crossing and you need a corner of somebody's land, they need to understand, even temporarily, they need to understand why, why is this here? What is this project doing? So you have to sort of go back to basics every mile, every inch of the line and explain to people, this is what we're doing and this is why. And then take that feedback, 'cause sometimes they say, hey, this would be a better way to do it, and incorporate that feedback into your design.

Sven, this is something that ING got involved with as well, wasn't it, in terms of looking at the sensitivities around this project?

Yes. See, sustainability is at the core of what we do now. It's part of the initial screening process in the commercial discussions that we have internally. It is a major focus in the credit approval process with a risk discussion and climate change analysis, and it's a collective KPI of the bank. So, when we look at these deals, our interest and our focus is aligned, and we're all pulling in the same direction.

And Brian, you have to really keep sustainability in front of your mind. But it does always help as you get closer to the finish line to have somebody come up and ask you questions and say, hey, how did you do this? Did you do it the best way? Is there anything else to consider here?

Let's move on to talking about regulation, because I think it's quite easy just to think of hydropower as clean energy and perhaps the challenge being what we just discussed with the kind of cultural and environmental issues of building a cable. Of this length over such distances through where people live and the environment. But actually, I imagine there was a huge amount of regulation involved as well, Brian. Is that right?

For sure. Yeah, there are a lot of regulatory challenges here in the US. A lot of those are driven by the fact that we have local regulations, state regulations, and federal regulations all trying to protect against the same issue. Each one requires its own study and its own set of workflows. I think New York State really dealt with that well. They hit the issue head on in the contract. First thing they did is say that absolutely none of the power that will be supplied by this line can come from new hydro projects. It all has to come from existing excess hydro. And then secondly, they mandated a growing contribution from wind projects. Some of it will come from wind and it will be firmed up by hydro so that the final product is for renewable energy here in New York City.

The amount of work on every different level that you need to consider when you're looking at infrastructure like this, both the practicalities of putting it in place, the physical practicalities, but also the regulation around it, and not least bringing everybody around you on board. Were there any points where you thought, I'm not sure this is actually going to happen?

Certainly. Yeah, absolutely. For instance, New York City. Super, super tough negotiator, but I always believed that we would get there because I knew they believed in the project and its benefits. Some things came out of left field, right? After we got the contract, but before we got regulatory approval, inflation skyrocketed. Global supply chain constraints really became a huge problem and interest rates were going up and all of that. It was pushing huge impacts, huge economic impacts on us after we signed the contract and while we were waiting for the regulatory approval. So that was, frankly, for me, that was probably the biggest stress.

And what have been the supply chain impacts on you? I mean, I hear that a lot from the construction industry, but certainly nothing on the scale that you are dealing with.

For sure. I mean, there's really, for us, it was primarily focused on the electrical components. With the renewable buildout, especially offshore wind, offshore wind almost always connects to shore using HVDC cables. So all of a sudden, in a very short amount of time, you have a ton of demand for these cables that go underwater, and the manufacturing capacity wasn't able to keep up. But then it keeps going, uh, down the line— transformers, equipment needed for our converter station, etc. So it was, it was, and continue to be a huge challenge.

So they haven't gone away, those supply chain issues?

Not at all. If anything, getting more complicated.

What was it like from an ING perspective? Were there moments when you thought this just isn't going to get over the line?

I don't think we ever doubted the project would be successful. I think New York State's objective to achieve 70% clean energy by 2030 really is dependent on these projects getting constructed and starting operations well before the 2030 timeline.

The scale and impact of this project meant there were plenty of opportunities for things to go wrong. Looking to the outcome of this project, can you tell us what's happened?

Sure, we're in construction. This is, this is really happening. Raise the funds and we're, we're out there working. This is how I explain it to my kids: 1 out of every 5 lights here in New York City going to be powered by renewable energy because of this project. And when I When I think about that and take a step back, I look out the window and just think about the impact that one single project is going to have. It's all going to come from renewable energy. It's, uh, it's pretty mind-blowing.

Connecting New York with a new clean source of power was never going to be easy. But as you've heard, there were legal and time pressures to get it done. Sustainability is often made out by some to be a straightforward choice. But it's not yet. Here it's proven that even the biggest of projects can be done through literally digging into the finest detail. But what do you need to keep going? Well, maybe it's the fact that making the most detailed human designs a reality are actually hundreds of mini conversations of honest persuasion and inclusion. Thanks to Brian from Champlain Hudson Power Express and Sven Wellock from ING. We'll see you next time. On Uncovered Sustainability. Society is transitioning to a low-carbon economy. So are ING's clients, and so is ING. It finances a lot of sustainable activities, but still more that's not. See how the business is progressing on ing.com/climate.