State Governor Andrew Cuomo has set a target to generate 50% of New York's electricity from renewable sources by 2030.
The power grid investment aims to support the city's energy storage and renewable power goals.
“One of the most critical components in our fight against climate change is the modernisation of our electric grid,” said Governor Andrew Cuomo.
“I encourage entrepreneurs and clean energy companies to join in New York’s mission to lead the nation in protecting the planet by investing in renewable energy and help make our system more resilient against whatever Mother Nature throws our way.”
The grid modernisation initiative is being administrated by the New York State Energy Research and Development Authority (NYSERDA) and the funds will come from New York’s $5.3bn Clean Energy Fund.
The investment aims to develop a high-performing smart grid that can accommodate a range of clean energy generation resources and has enhanced grid performance.
It also aims to enable customers to reduce their energy costs, energy consumption and environmental impact.
"Integrating clean, renewable energy into a more efficient, high performing grid is critical to New York meeting it's ambitious energy goals, but we can't do it alone,” added Alicia Barton, President and CEO of NYSERDA.
“Governor Cuomo's vision for modernizing our electric grid, reducing costs for customers, and providing clean and efficient energy for New Yorkers can only become a reality with the help of innovative and forward-thinking ideas from industry participants."