New York utilities update storage plans after missing initial deployment deadline

Dive Brief:

A month after the New York Public Service Commission (PSC) adjusted the rules for the state's energy storage deployment program, five utilities have submitted revised deployment plans reflecting a relaxed timeline.
The new plans would have utilities seeking bids to install and operate at least a combined 350 MW of energy storage projects by December 31, 2025, rather than the state's original 2022 deadline. The utilities will also sign dispatch rights contracts for up to 10 years with project developers, up from the original seven-year maximum contract terms.
New York's utilities had petitioned the PSC for more flexibility in meeting a goal of deploying 3,000 MW of storage by 2030, as set out under the commission's 2018 Energy Storage Order. An initial round of solicitations in 2019 and 2020 failed to meet the state's cumulative deployment goals.

Dive Insight:

In order to facilitate New York's goal of obtaining 70% of its power from renewable sources by 2030, the 2018 energy storage order set certain targets for utilities to acquire dispatch rights for bulk-level storage systems. Under the order, Con Edison was given a target of at least 300 MW of qualified storage systems by the end of 2022, with five other utilities required to contract for at least 10 MW each.

The utilities conducted an initial round of solicitations in 2019 and early 2020, and those that did not meet their targets were expected to continue issuing solicitations until the full bulk-level storage system target was met. While National Grid was able to award two projects — a 10 MW project and a 20 MW project currently in contract negotiations — other utilities said they were unable to secure enough storage to meet the original 2022 deadline and petitioned the PSC for flexibility.

In April, the PSC responded to the petition, saying that extending the deadline from 2022 until the end of 2025 "provides a better timeframe for both the utilities and the project developers" and will allow adequate time for permitting and construction. The regulator also extended the maximum contract length to ten years to allow "flexibility in financing projects and lower utility and ratepayer cost impacts." However, the PSC rejected a request for a utility ownership model, where utilities would purchase the storage assets for a limited time.

Following the PSC's actions, several utilities have updated their solicitations, seeking projects that could be operable by the end of 2025. In a joint filing, New York State Electric & Gas and Rochester Gas & Electric proposed issuing a request for proposals from developers for projects of 5 MW or greater per location, with bids due by Nov. 5, 2021. Central Hudson likewise seeks projects of at least 5 MW, with bids due in December 2021 and winning bids notified in July 2022. In a joint filing, Con Edison (ConEd) and Orange & Rockland Utilities (O&R) said they will seek bids for projects over 5 MW by September 30, 2021, with winning bids notified by February 2022.

Each utility identified a handful of criteria for bidders, including the price, environmental benefits, high-value location and feasibility of executing the project. ConEd and O&R identified a formula to evaluate proposals, which includes net market value, distribution benefits, environmental benefits and the offer price. Under the conditions of the proposals, each utility would have the right to designate the system for the distribution needs of the utility or the New York Independent System Operator wholesale market.

An April report from the New York Department of Public Service (DPS) found that policies and incentives had "effectively accelerated" the state's energy storage market, with 1,186 MW of capacity deployed or contracted, equivalent to 40% of the 2030 goal. The report also identified 8,000 MW of storage in the interconnection queues of state utilities and the ISO, although not all of that may be constructed.