Dive Brief:

• The New York Public Service Commission (PSC) approved National Grid’s application to operate a storage project in Oswego County in both the retail and wholesale markets as a demonstration of the dual participation model. 
• The 2 MW / 3 MWh storage unit located in National Grid’s East Pulaski Substation is designed to provide peak load reduction and avoid thermal overload on the substation’s transformer. Under the order, the company will be able to bid energy, capacity and ancillary services into wholesale markets when the battery is not needed for reliability support, with proceeds going to customer benefits. 
• Separately, the New York Independent System Operator (NYISO) responded to comments on its compliance filing with Federal Energy Regulatory Commission Order 2222, designed to promote distributed energy resources (DERs), signaling a willingness to revise its rules around dual participation restriction for distributed energy resources.

Dive Insight:

Under New York’s 2018 Energy Storage Order, utilities have a goal of deploying 3,000 MW of storage by 2030. However, most of the state’s utilities fell off pace to meet an interim goal of deploying a combined 350 MW of storage by 2022, which the state has now extended through 2025 to allow for more negotiation and understanding of how storage would work. 

National Grid, which was on pace to meet its 2022 target of deploying 10 MW, will operate the project as part of a demonstration for the dual participation model. Under the agreement, National Grid must share lessons learned through a stakeholder information session and annual reports on the project, with the first due by the end of 2022. 

“This authorization will provide financial benefits to the ratepayers that funded the projects and will provide an opportunity for the investor-owned utilities to successfully navigate the pathway to dual participation in advance of the market-based projects, which are being procured in compliance with the Energy Storage Order, going into service,” according to the PSC's approval.

National Grid Director of Distributed System Operations David Lovelady said the project will allow the utility to “maximize” the asset, which is typically only used for a few days each summer to alleviate demands on the substation. It will also help inform the utility’s plans to bid two larger third-party storage projects into the wholesale market. 

“We want to leverage this experience with a smaller project so that we can be confident when we go to larger projects and do so with this experience in hand,” Lovelady said. 

Several groups commented to PSC that the project would violate the commission’s policy to not allow utility-owned generation to participate in the wholesale market outside of a small set of circumstances. Utilities had originally petitioned PSC to allow them to purchase storage assets for a limited time then sell them above a certain price floor to offer them more certainty about revenue in the market. PSC rejected the idea, although it left the door open for future consideration. 

In a comment on the petition, Independent Power Producers of New York wrote that allowing dual participation would “create a perception of an unlevel playing field and discourage private investment.”

In the National Grid order, the commission said the East Pulaski project was built in compliance with a 2017 order and had many differences compared to projects under the 2018 Energy Storage Order, notably that it is a utility-owned demonstration project. 

NYISO remains the only entity to oversee a dual participation program, which has proven controversial in other markets because of concerns about confusion and competition.

Under its Order 2222 compliance, NYISO restricted resources from providing the same MW for “the same or a substantially similar service” in wholesale and retail programs, which would prevent it from being compensated twice for the same service. In its latest comments, NYISO said it was open to eliminating “substantially similar service” from the order to provide more clarity and allow NYISO to take a more active role in regulating dual participation.