The New York State Energy Research and Development Authority is proposing $350 million in incentives to support the state’s retail and bulk energy storage markets.
In mid-December, the New York Public Service Commission adopted a goal of adding 3,000 megawatts of energy storage by 2030, with an interim target of 1,500 MW by 2025, as part of the state's effort to cut its greenhouse gas emissions.
At the same time, the PSC authorized NYSERDA to spend $310 million on energy storage incentives and directed the state's investor-owned utilities to launch solicitations for 350 MW of large-scale storage.
NYSERDA’s implementation plan, filed March 11 with the PSC, offers $130 million in retail incentives, including $40 million in previously authorized funding for combined photovoltaic and storage projects. The plan also includes $150 million bulk-system incentives.
NYSERDA has an additional $70 million it wants to direct towards projects the agency believes have the greatest potential to build a self-sustaining storage market.
Separately, NYSERDA’s board has approved spending $53 million on storage projects on Long Island from Regional Greenhouse Gas Initiative funds, according to the implementation plan.
The incentives are set to be offered in the second quarter this year and scale down through 2025. “Market segments are expected to become sustainable without incentives as costs decline and revenue opportunities expand,” NYSERDA said.
NYSERDA’s plan aims to take advantage of existing rules. “Existing tariffs and market signals will be leveraged to the extent possible to encourage desired grid benefits, reduce peak demand, increase grid flexibility and resiliency, and time-shift cleaner generation to displace higher emitting generation sources,” the agency said. “NYSERDA aims for this incentive design to provide sufficient long-term confidence so that developers are able to invest in establishing or growing their New York operations.”
NYSERDA is proposing a set of incentives for retail projects under 5 MW and bulk storage projects.
The retail incentives will be offered on a first come, first served basis in three declining blocks, which NYSERDA said will increase certainty and transparency around their levels.
NYSERDA is proposing two sets of retail incentives: one for New York City and one for investor-owned utilities in the rest of the state. The incentives start at $350 per kilowatt-hour and in the third block fall to $240/kWh for New York city and $200/kWh for the rest of the state.
The proposed retail incentive will be provided for each of the first four hours of a system’s duration and fall to 50 percent for the fifth and sixth hour, with no incentive beyond six hours, according to NYSERDA.
The proposed bulk storage incentive is for systems larger than 5 MW that mainly provide wholesale market energy, ancillary services and/or capacity services, NYSERDA said.
“These proposed incentives are designed to compensate for benefits accruing over a 20-year life of the storage asset such as cost savings resulting from reducing soft costs and accelerating the cost decline curve, environmental benefits such as carbon savings (peak/off-peak arbitrage by charging from cleaner energy off-peak to displace the need for more emitting fossil-based generation during peak periods), hosting capacity improvements, and improving system resiliency,” the agency said.
Incentive levels for projects under 20 MW start at $110/kWh this year and fall to 450/kWh by 2025. For larger projects, the incentive starts at $85/kWh and drops to $75/kWh, likely in 2021.
NYSERDA said it might adjust the retail and bulk incentives as the market evolves.
The agency said it intends to push other ways to improve project economics, including financing options through the New York Green Bank which has committed to deploying at least $200 million on storage projects in New York.
NYSERDA developed the implementation plan after getting comments from stakeholders, including the Long Island Power Authority.
NYSERDA unveils battery energy storage system guidebook
Meanwhile, NYSERDA on March 13 announced the release of its new Battery Energy Storage System Guidebook to assist local permitting authorities and the energy storage industry across New York State in navigating the siting and review processes for the development of battery energy storage projects.
NYSERDA said that the guidebook “represents the first comprehensive set of guidelines for reviewing and evaluating battery energy storage systems and is an important first step in protecting public and firefighter safety while promoting the safe deployment of battery energy storage.”
Last April, NYSERDA worked with the City University of New York (CUNY) Smart Distributed Generation Hub, Fire Department of New York City, the New York City Department of Buildings and technical consultant DNV GL to develop a guide for installing exterior lithium-ion batteries in New York City.
The guidebook builds upon that work to “present a comprehensive compilation of code and best practices to help municipalities across New York State understand and develop battery energy storage system permitting and inspection processes for both exterior and interior installations,” NYSERDA said.
The guidebook is available here.