After years of
regulatory proceedings and planning, and following the New York Public Service Commission (the “PSC”)’s
June 2024 Order Establishing Updated Energy Storage Goal and Deployment Policy (the “June 2024 Order”), New York is on the precipice of launching its redesigned bulk battery energy storage program to deploy six gigawatts (“GW”) of projects by 2030. On October 18, NYSERDA filed its
Bulk Energy Storage Implementation Plan Proposal (the “NYSERDA Proposal”), the last document needed for PSC approval before NYSERDA puts its new program on the street.
The NYSERDA Proposal was issued for public comment in the New York State Register on November 13, with comments due January 10, 2025, in PSC Case 18-E-0130. The PSC will likely issue an order approving the Plan at its February 13 public session. NYSERDA’s first solicitation for 1,000 MW of energy storage projects will then be ready to issue, likely in Q2 2025.
NYSERDA’s Proposal. The Proposal would have NYSERDA conduct solicitations in 2025, 2026 and 2027, with the aim of contracting for approximately 1,000 MW of bulk energy storage capacity with each procurement.
Federal Support. While the implications of the federal elections on the energy industry continue to sink in and conjecture swirls, uncertainty is in the air with respect to the outlook for storage. Some analysts are suggesting that the new administration’s policies may pose risks for the storage sector—in particular, concerns have been raised with respect to potential tariffs on imported battery materials and faster phasedowns of Inflation Reduction Act tax credits that benefit a wide swath of clean energy technologies, including storage. Whether the state can or should cover this downside risk as part of its program design may well be a topic of discussion in comments presented, but the new administration’s actions in these respects likely won’t be known until after the Commission is asked to consider approval of the NYSERDA Proposal and NYSERDA’s first solicitation is designed.
Solicitation Timing. The NYSERDA Proposal explains that the three procurements will each target projects scheduled to enter commercial operation by the end of 2030 (though NYSERDA may extend deadlines where developers encounter delays beyond their control). The RFP for the 2025 solicitation (targeting deployment in 2027-28) will be issued in Q2 2025, and awards will be announced in Q3 or Q4 of the same year.
The Index Storage Credit. Much like NYSERDA’s existing Large-Scale Renewables program, in which NYSERDA contracts with project developers to purchase RECs or ORECs, the June 2024 Order and NYSERDA’s Proposal describe the purchase of “Index Storage Credits” (or “ISCs”) from energy storage projects. NYSERDA first introduced an index-based credit as part of its initial offshore wind solicitation to provide a legally compliant economic hedge against volatile wholesale energy and capacity prices. The indexing feature enables lower ISC costs for NYSERDA and more predictable revenues for facility owner-operators and finance providers.
Storage project developers seeking a NYSERDA ISC contract will include in their bids a “Strike Price”; successful bidders will contract to sell ISCs to NYSERDA for the difference between the Strike Price and the Reference Price. The Reference Price will be calculated by NYSERDA from indices of wholesale market prices (namely, for 4+ hour projects, the difference each day in the average of the top four and bottom four hours in NYISO’s hourly day-ahead energy market pricing, as well as the results of the monthly NYISO ICAP spot auctions) to approximate the market revenues that would be available to a storage facility operator. NYSERDA clarifies that awarded projects will not be required to participate in the wholesale markets.
Scoring of Project Bids. In a first-of-its-kind weighting formula, which may be a preview of coming attractions for the state’s Clean Energy Standard (“CES”) programs, NYSERDA proposes to assign a weight of 60% to each bid’s Strike Price (less than the 70% generally assigned to price in CES programs); 20% for project viability (more than the 10% generally assigned under the CES); 10% to electricity system value (including peaker displacement potential and renewables integration potential) at 10%; and 10% to “societal and economic benefits,” a new category of scoring for NYSERDA. NYSERDA notes that some criteria will serve as “minimum threshold” criteria, which projects must meet, while others will represent additional value and generate bonus points for scoring purposes. Both criteria and weighting will be developed with an eye to the geographic minimums set out in the June 2024 Order and the Climate Leadership and Community Protection Act’s requirements for disadvantaged communities.
Project Duration. Recognizing pricing and system value differences among storage technologies that provide different durations, NYSERDA suggests creating separate procurement categories for 4+ hour and 8+ hour storage duration. In line with requirements set out by the PSC in the June 2024 Order, NYSERDA proposes to procure 200 MW of 8+ hour-duration storage capacity in each 1,000 MW solicitation, which otherwise will only require a minimum 4-hour storage duration. Resources entering the 8+ hour solicitation will be evaluated separately (and according to “similar” non-price factors, though NYSERDA proposes to retain the flexibility to vary criteria or weighting “as deemed necessary” across the two procurement categories). Additionally, if an 8+ hour-duration project with a capacity greater than 200 MW is bid, NYSERDA proposes to retain the flexibility to consider awarding the project.
Geographic Distribution. Per NYSERDA’s Proposal, NYSERDA will comply with the PSC’s directive to procure 35% of capacity awarded under the Program in the NYISO’s G-K Capacity Zones (comprising the Hudson Valley, Westchester County, New York City, and Long Island; see map here), and specifically to procure 30% of capacity in Zone J (which includes New York City). However, NYSERDA indicates in the Proposal that these procurement targets will be pursued on a program-wide basis, and each procurement may not comply exactly with these goals.
