As New York draws closer to becoming the fourth state in the nation to implement an energy storage target, stakeholders agree on the destination, but not on how to get there.

Among the issues still being hammered out are the extent of a bridge incentive for energy storage, a contract offering requirement for distribution providers, and the possibility of a central, state-run purchasing agency for the output from energy storage projects.

New York Gov. Andrew Cuomo, D, has called for a 1,500 MW energy storage target, but when the state released its Energy Storage Roadmap in June, it became clear that the target could be as high as 3,000 MW.

Since then, Cuomo has bolstered the prospects of both energy storage and his goal to have the state source 50% of its power from clean energy sources by 2030 by making available $40 million to support projects that combine solar power and energy storage.

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The Roadmap's goals are "very achievable, provided there is certainty on how storage assets can make money."

James Mashal

Market Applications Analyst, Fluence

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Meanwhile, the state's Public Service Commission (PSC) has fielded comments from stakeholders in preparation for the expected December release of its order implementing the Energy Storage Roadmap.

Anticipating the implementation order

In filed comments, stakeholders generally applaud the governor's goals, but indicate that there are some significant issues that need to be settled before energy storage takes off in the Empire State.

Many developers of energy storage projects are concerned about their access to dual or multiple markets as a way of guaranteeing sufficient revenues to support their projects.

One of the key elements in the Energy Storage Roadmap is creating the potential for energy storage to draw revenues from both the retail market, as well as the wholesale power market run by the New York Independent System Operator (NYISO).

The Roadmap's goals are "very achievable, provided there is certainty on how storage assets can make money," James Mashal, market applications analyst at Fluence, told Utility Dive.

In its comments, Fluence noted there is currently "tremendous uncertainty about how the NYISO will integrate and compensate energy storage resources in the wholesale market."

In Fluence's view, some of that uncertainty will be resolved by studies and proceedings already in progress, such as duration eligibility for capacity market participation. But Fluence also noted in its comments that the PSC should recognize that the NYISO market may only provide "a limited and uncertain revenue stream for energy storage" and, therefore, be willing to supplement market revenues.

In a similar vein, the New York Battery & Energy Storage Technology Consortium noted in their comments that "the NYISO market may provide limited revenue stream for energy storage in the near term."

Speeding customer adoption

Developers are looking for two mechanisms in the final order that could help offset the potential of lower NYISO revenues. One of the mechanisms is a $350 million market acceleration bridge incentive (MAI) that would speed adoption of customer‐sited storage and storage sited on the distribution or bulk systems. The Roadmap proposal calls for the MAI money to be drawn from the state's Clean Energy Fund and other previously collected but uncommitted funds.

In the proposed Roadmap, staff estimated the MAI could reduce soft costs by up to $50/ kWh for distribution and bulk‐sited systems and up to $150/kWh for customer‐sited systems by 2025.

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"Historically New York is a tough place to develop assets."

James Mashal

Market Applications Analyst, Fluence

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But there is not universal agreement on how the MAI should be deployed. New York's investor-owned utilities, in a joint filing, said the MAI would be more effective and would provide "significantly higher overall benefits" if it were available to energy storage facilities on the distribution and bulk energy systems, but not for customer-sited installations. Although customer-sited installations can provide grid benefits when they are in constrained areas, installations in unconstrained networks generally benefit only the installing customer, the utilities wrote.

Solar developer Sunrun disagreed with the joint utilities, writing that their proposal does not account for the benefits that residential solar-plus-storage can provide to the grid.

"Like any new resource, there is always a need to develop a marketplace," Evan Dube, senior policy director at Sunrun, told Utility Dive. One way to do that, he said, is by the implementation of market incentives.

Long-term service guarantee

Another mechanism developers are looking for when the PSC releases its energy storage order in December is some form of assurance or long-term contract for the services an energy storage installation can provide.

Vermont-based developer Northern Power Systems recommended provisions that would allow distribution networks to procure "longer term and specific timeframe capacity" that would allow for the defined and long term revenues lenders look for when they provide financing. Northern Power suggested that market could be patterned on the state's existing Special Case Resources program for demand response. Northern Power is lobbying for the creation of "a standard, preferably a twenty-year market, but at minimum ten-year commitment for an" energy storage system.

Storage developer Hydrostor also backed the concept of direct procurement for energy storage as a means to offset the insufficiency of the current stand-alone model to value "the full suite of benefits storage can provide" and to provide the long-term revenues needed to support financing and development of new storage resources. "We agree with stakeholders that given this situation, direct procurement will be the most efficient means to cost-effectively achieve New York's energy storage goals," Hydrostor wrote in its comments.

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"I don't think it will be a one-size-fits-all solution."

Evan Dube

Senior Policy Director, Sunrun

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The idea of setting up a market for energy storage raises other issues, however. The Long Island Power Authority (LIPA) is recommending that New York consider an alternative to direct utility procurement of energy storage. LIPA would like to see the acquisition of storage through a state run central procurement agency, which would be similar to the PSC's approach for procuring offshore wind.

A central procurement agency would provide "a basis for equitable statewide sharing of the cost of such incentives, while assuring that storage is located in the most valuable locations within the state," LIPA wrote in its comments.

"I don't think it will be a one-size-fits-all solution," Dube said of the final order. And, as usual, stakeholders with different business models are proposing different solutions. Northern Power Systems, like solar developers Sunrun and Solar Park, sees the benefits energy storage can bring to the residential market.

"The solar and storage markets seem to be most addressable today based on a thriving understanding of the value to time shift solar and the tangible evidence of the market growth," Northern Power said in its filing.

Northern Power is particularly interested in the kindergarten to grade 12 school market. Energy consumption at many schools decreases dramatically during the summer. Energy storage would allow that otherwise unused energy to be time shifted or dispatched to offset summer peak demand periods.

Fluence, on the other hand, is keen on using storage to replace gas-fired peaking plants, particularly in the constrained downstate areas around New York City and on Long Island. The analysis in the Roadmap identified a total potential downstate peaker fleet of 3,000 MW, some portion of which could be eligible for retirement, replacement or hybridization without threatening grid reliability.

"Historically, New York is a tough place to develop assets," Mashal said. "We are hoping that the Roadmap will relieve some of those challenges."