New York’s Energy Storage Roadmap: It’s Not Easy Getting from Here to There

New York has won praise for setting a goal to attract 1,500 MW of energy storage by 2025. But now comes the tricky part — deciding specific routes to take on energy storage roadmap.

The complexity of the journey is apparent in comments recently filed by utilities, energy storage companies, microgrid developers, solar developers, advocates and other stakeholders before the New York Public Service Commission.

Proposed in June by Gov. Andrew Cuomo, the roadmap sets a goal of 500 MW of storage in each of three categories: the bulk power market, the distribution system and customer sites. The state would achieve the goal with the help of a $350 million bridge incentive, funded through the New York Clean Energy Fund.

The proposal abides by the broad strokes of Reforming the Energy Vision, or REV, New York’s multi-year strategy to animate markets for distributed energy. For example, it limits utility ownership of energy storage to foster competition and emphasizes the value of stacking storage benefits to calculate full worth of a project.

But storage demands new thinking because it’s like no other animal in the grid’s menagerie of energy resources. It’s not generation — although it behaves like generation when it releases energy. And it’s not load — although it acts like load when it absorbs power.

Here are some highlights from stakeholders — who all like the end goal — but don’t necessarily agree on the best path forward. The commission sought feedback as a prelude to a vote on the final plan, which has yet to be scheduled. (Case No. 18-E-0130).

Northern Power Systems

The Vermont-based company says that the energy storage roadmap should incorporate the idea of resilience and microgrids, given the real world advantages they provide in emergency situations. This could come in the form of an energy storage microgrid incentive and a pilot program. Northern Power Systems sees schools as particularly suited for solar plus storage and microgrids. Since their energy use often drops in the summer, schools can offer unused solar and storage capacity to help manage the grid’s summer peak demand. If a microgrid is incorporated into the system, the school can also act as a shelter during a power outage.

Fluence

The joint venture of Siemens and AES says energy storage can help New York City and Long Island overcome an expensive peaker plant problem. The region has 3,000 MW of generating capacity that sits idle 95 percent of the time. Many of the plants are nearing 50 years old and some burn oil and kerosene. The plants exemplify “costly, dirty and inefficient energy infrastructure,” Fluence said.

“The uncertainty of future NYISO revenues makes it incredibly difficult for developers to raise the financing needed to build new projects” — Fluence

However, it is difficult to replace the plants under the compensation within the New York Independent System Operator (NYISO). While change is afoot within NYISO, it may not be enough, so the state should consider supplemental market revenues for energy storage, Fluence said.

“The uncertainty of future NYISO revenues makes it incredibly difficult for developers to raise the financing needed to build new projects,” said Fluence.

AES moved an 8-MW energy storage system away from Johnson City, NY and to Dayton, Ohio in part because of this market uncertainty.

Borrego Solar

The New York energy storage roadmap calls for utilities to procure non-wires alternatives. Borrego, a California-based solar developer, says targeted non-wires alternatives can be a good thing, but warned that they pose risk for developers and can increase storage costs. Developers may put a lot of time and effort into the bid only to not win it — so they tend to bid higher in New York to account for the risk. The company recommends that the state place less emphasis on non-wires alternatives and more on value stack tariffs or credits, making them the “workhorse” to encourage energy storage installation.

Enel

Enel strongly supports work done to date by utilities on non-wires alternatives. However, the international energy giant recommends changes in the procurement process. In particular, Enel says that utilities should let bidders know what it would cost for them to install conventional infrastructure instead of a non-wires alterantive in any given situation.

Utilities argue that revealing the information will encourage higher bids — a price just under what the utility would pay for conventional infrastructure. But Enel says that won’t happen because competition is robust in New York among energy storage companies.

“This leads the developers to sour on the New York market in general, and be less likely to bid in the future.” — Enel

Not knowing the bid ceiling forces energy storage companies to “spend significant resources to develop a bid and complete an RFP, with no idea if their bid is remotely competitive relative to the cost of the traditional solution…This leads the developers to sour on the New York market in general, and be less likely to bid in the future,” Enel said.

Joint Utilities

The utilities want funding to go toward energy storage projects designed for the distribution and bulk systems. They argue that these projects are less expensive and likely to benefit a broader swath of the grid than energy storage sited on customer premises. Priority should go to those projects, they say, that help fulfill multiple state policy objectives, such as integrating renewable energy, reducing customer bills, enhancing resilience, and maintaining system reliability.

“For example, incentives that mimic wholesale revenues can be structured as a bridge that would sunset…” — Joint Utilities

The incentives should have a clear ending date. “For example, incentives that mimic wholesale revenues can be structured as a bridge that would sunset when storage resources providing distribution services can also fully participate in New York,” said the filing from Central Hudson Gas & Electric, Consolidated Edison Company of New York. New York State Electric & Gas, National Grid, Orange and Rockland Utilities and Rochester Gas and Electric.

Sunrun

On the other hand, Sunrun pushed for non-wires alternatives that include residential installation, noting the benefits of aggregating homes that use solar plus storage. The aggregations can help utilities avoid grid infrastructure investments, reduce costs and advance clean energy goals, said Sunrun, which describes itself as the largest residential solar, storage, and energy services company in the country.

Sunrun called for regulators to consider an incentive to help residential customers lower the upfront costs of storage. This incentive should be coupled with “market participation avenues” that compensate storage for providing multiple services, such as demand response and non-wires alternatives.

Multiple Intervenors

The New York advocacy organization for about 60 large industrial, commercial and institutional energy consumers says it supports the idea of advancing energy storage, but oppose the $350 million bridge incentive proposed in the energy storage roadmap.

 “…does not support subsidizing energy storage technology on the backs of captive utility customers” — Multiple Intervenors

“Multiple Intervenors does not support subsidizing energy storage technology on the backs of captive utility customers,” the organization said.

The roadmap, however, envisions the incentive decreasing the cost of the 1,500 MW by as much as $200 million. The incentive also would help soft costs fall by up to $50/kWh for a distribution/bulk‐sited system and up to $150/kWh for a commercial site, according to the state Department of Public Service, which created the energy storage roadmap with New York State Energy Research and Development Authority.

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