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New York regulator signs off state roadmap to achieve 6GW energy storage target by 2030


The New York Public Service Commission (PSC) has approved plans to guide the state to its 2030 energy storage policy target, including solicitations for large-scale battery storage.

State governor Kathy Hochul announced last week (20 June) that the Energy Storage Roadmap 2.0 devised by staff at the New York Department of Public Service and New York State Energy Research and Development Authority (NYSERDA) has been approved.

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On the same day, Hochul also said a new large-scale competitive solicitation for onshore renewable energy resources will be held, administered by NYSERDA.

Both renewables and energy storage are considered key to achieving targets that include 70% renewable energy on the New York grid by 2030, and the deployment of 6GW of energy storage by that date.

The targets are at the heart of the state’s Climate Protection and Community Leadership Act (CPCLA), which was initiated by Hochul’s predecessor Andrew Cuomo. Shortly Hochul took office at the beginning of 2023, the storage target was doubled from 3GW to its current goal.

As well as helping New York to decarbonise towards 100% emissions-free electricity by 2040 and contributing to improved air quality, the addition of energy storage at both large-scale and distributed scales would lower electricity system costs by about US$2 billion, Hochul said last week.

As of the beginning of April, New York State had awarded about US$200 million in incentives to around 396MW of BESS now in operation, while it has contracted for a further 581MW that are moving towards construction. That however leaves it well behind national leading states such as Texas and California, the latter of which has surpassed 10GW of batteries connected to its main CAISO grid.

New York Energy Storage Roadmap 2.0

Roadmap 2.0 was published just before the start of 2023, and it included six main proposals.

Among those were plans to launch NYSERDA-led solicitations for 4.7GW of storage across the utility-scale (defined in NYSERDA parlance as ‘bulk storage’ over 5MW), commercial and industrial (C&I) and community storage (defined as ‘retail storage’) and residential systems.

Bulk storage procurement will be done through a mechanism called the ‘Index Storage Credit’, which is likely to be similar in scope to New York’s Renewable Energy Certificate (REC) scheme. Under the REC, developers bid a strike price into a reverse auction, which, once awarded, benchmarks the revenues they can expect to earn through their contracts with state counterparties.

The ‘missing money’ for energy storage has been a major barrier to attracting investment, in a state where electricity prices do not experience as much volatility as other leading markets such as ERCOT in Texas. ERCOT’s merchant market sees big price spikes in wholesale power prices, which BESS asset owners and investors capitalise on.

In other words, the state will underwrite some of the merchant risk for storage developers, but when revenues far exceed the strike price, profits will be paid back, de-risking the investment from both sides of the contract.

The Index Storage Credit has largely been welcomed by industry voices and analysts, but at present remains a work in progress. The PSC’s approval of the roadmap should means its launch later this year can proceed in earnest.

The mechanism will account for 3GW of utility-scale storage, while existing NYSERDA block incentive programmes by region will be expanded to support the development of 1.5GW of retail storage and 200MW of residential storage.

These distributed-scale incentive schemes include the Value of Distributed Energy Resources (VDER) programme, which values clean electricity resources for feeding into the grid at locations and times when it is of most benefit.    

While Roadmap 2.0 was created partly to address the challenges in encouraging large-scale BESS development, the 2018 Roadmap 1.0 was largely successful in promoting the uptake of distributed scale storage, hence the greater reconfiguration of the scheme to enable bulk storage installations, which were not as successful in gaining traction.

The roadmap also provides for 35% of overall programme funding to go towards deployments that benefit disadvantaged communities and target reducing the use of fossil fuel-power peaker plants.

Not only are peaker plants polluting and expensive to run, with some of New York’s fleet running on kerosene, fuel oil as well as natural gas, but they have historically often been built in or close to disadvantaged communities. Health and safety conditions in low and middle-income communities and communities of colour have, therefore, been disproportionately affected by the siting of these power stations. The good news is that battery storage systems of 4-hour duration are considered by many an effective means of mitigating the use of peakers in New York.

Electric utilities will also be ordered to make more comprehensive studies on the value of investing in energy storage as a ‘non-wires alternatives’ (NWAs) to costly transmission and distribution (T&D) network upgrades, research and development (R&D) in areas including long-duration energy storage (LDES) will be a bigger priority at state level.

Finally, workers on projects of 1MW or over in size qualifying for state programmes will need to be paid prevailing wages, under the terms of Roadmap 2.0.

Shortly after it was first published, Dr William Acker, executive director of the trade association and technology development group New York BEST (NY-BEST), told the new roadmap would create “a very, very strong market for energy storage in the state”.

New York’s relatively slow start to life as an energy storage target market has been furthered hindered by a spate of fires that occurred at BESS projects during 2023. The state’s response to growing fire safety concerns has included the formation of a working group made up of state agencies that examined all incidents and installed projects.

A set of 11 recommended changes to state fire codes that emerged from the group have been published in draft form, and further guidance is expected in the coming weeks, following a period of consultation that has since taken place.

“Expanding energy storage technology is a key component to building New York’s clean energy future and reaching our climate goals. This new framework provides New York with the resources it needs to speed up our transition to a green economy, while ensuring the reliability and resilience of our grid,” Hochul said.

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