Throughout the first four years of New York’s Reforming the Energy Vision (“REV”) initiative, the precise role of energy storage has been unclear. There was no energy storage goal, only sparse incentives were available to spur development, the regulatory framework remained under construction, and the relatively nascent storage applications did not seem to fit within currently existing market mechanisms.
New York is now paving the way for a robust storage industry. In December 2018, the Public Service Commission (“Commission”) adopted an energy storage goal of 3,000 MW by 2030, with an interim target of 1,500 MW by 2025 (the “Storage Order”). To jumpstart the program, the Commission ordered Consolidated Edison to competitively procure and deploy 300 MW of energy storage by 2022, and the remaining utilities to each procure 10 MW of energy storage in their respective service territories.
The Commission’s Storage Order authorized the New York State Energy Research and Development Authority (“NYSERDA”) to administer a $310 million market bridge to accelerate deployment of advanced storage systems, which is separate and apart from the additional $200 million allocated by NY Green Bank to fill energy storage project financing gaps or the $40 million available to support solar projects that integrate energy storage.
On March 11, 2019, NYSERDA published its proposed Implementation Plan to administer the $310 million bridge incentive program. The Implementation Plan is comprised of two overarching incentive programs, one for the retail storage market and one for the bulk storage market.
To support the retail storage market, NYSERDA would allocate $130 million to projects sized up to 5 MW that are either behind-the-meter or tied directly to the distribution system. The incentive would be provided as a fixed per kWh dollar figure using the declining MWh block structure. Critically, projects eligible for the retail storage program would include not only storage-plus-generation, but also standalone storage projects. NYSERDA would similarly allocate $150 million to support the bulk storage market comprised of projects sized above 5 MW that are directly tied to the transmission or distribution system.
With a Block 1 retail incentive of $350/kWh, the economics of storage applications in New York could be radically improved by this program. While storage economics vary depending on a multitude of factors, one useful reference point is the National Renewable Energy Laboratory’s 2018 benchmark study, which found the system costs of a 60MW standalone lithium-ion energy storage system to range from $380/kWh (for a 4-hour duration system) to $895/kWh (for a 0.5-hour duration system).
NYSERDA anticipates that the incentive programs will be operational and accepting project applications by the second quarter of 2019. Project applicants should be aware that NYSERDA will require comprehensive system inspections, siting and permitting approvals, utility permissions and a decommissioning plan, among other items, before awarding the incentive.
As the Commission continues to refine necessary regulatory changes to utility rate structures, carbon values, revenue streams and permitting processes, the message from the Governor’s office is clear – New York is prioritizing energy storage.
Phillips Lytle’s Energy Practice Team has extensive expertise in energy project development and Public Service Commission/Utility regulatory matters, including all aspects of retail energy regulation in New York and formal petitions to the Public Service Commission. For more information about Phillips Lytle’s energy expertise, please contact Thomas F. Puchner at (518) 618-1214, [email protected]; David P. Flynn at (716) 847-5473, [email protected]; or Kevin C. Blake at (716) 847-7082, [email protected].
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 Ran Fu et al., 2018 U.S. Utility-Scale Photovoltaics-Plus-Energy Storage System Costs Benchmark, Technical Report NREL/TP-6A20-71714, Nat’l Renewable Energy Lab., https://www.nrel.gov/docs/fy19osti/71714.pdf (last updated Nov. 2018).