NY REV needs California-style energy storage mandates, industry stakeholders say

June 13, 2016 By Sudipta Lahiri

Sudipta Lahiri

At a technical conference convened May 26 by the New York Public Service Commission (NY PSC), energy storage stakeholders called for advanced modeling studies and California-style storage mandates to help achieve the goals of NY-REV.

The day included presentations and panel discussion attended by members of the New York Battery and Energy Storage Technology Consortium (NY-BEST) as well as policy experts from NYISO, and policy, sales and engineering representatives from ConEd, Tesla, GE, SunVerge, SolarCity, AES, Greencharge Networks, DNV GL and more.

New York has stated goals of 50 percent electricity generation from renewables by 2030 and 80 percent GHG reduction (from 1990’s levels) by 2050. To do this, they’ll need widespread renewable generation, particularly intermittent wind and solar resources, which presently generate only 3.3 percent and 0.5 percent of the state’s energy needs. NY REV also calls for fossil-based generation to operate more efficiently, particularly the peaker plants that operate for a fraction of annual hours to provide ramping, contingency and reliability services.

Today, the top 100 hours of demand cost New York customers $1.2 to 1.7 billion annually, among the highest electricity prices in the world. NY-BEST Executive Director William Acker and Rick Cutwright of GE Energy Storage Systems advocated 4 to 8 GW of multi-hour storage to help offset or eliminate the need for peakers and meet system performance and reliability requirements.

New Rates, Modeling, Incentives Needed

NY-BEST board member Rick Fioravanti stressed the importance of the California Public Utilities Commission (CPUC) historic mandate, which with the 2013 passage of AB 2514, set a target for California investor owned utilities to procure 1.325 GW of energy storage by 2020. “The mandate encouraged use of storage at all levels, not just on the customer side, but distribution with utilities and transmission. They targeted deployments over the sever-year period and it really started ushering in the concept of utility ownership.”

The Duck Curve is Coming

Acker and others also recommended a detailed modeling study in New York to determine appropriate storage requirements, cost-effectiveness and consumer benefits by location and application. Today, NYISO peak load persists for 6 hours or longer each day. This requires storage solutions longer than 4 hours – even as high as 6 to 8 hours. As battery costs continue to fall, with new installations seeing costs as low as $200 – $400 /kWh, the future holds promise for long duration storage technologies and applications.

Increased penetration of Solar PV and high evening loads result in the ‘duck-curve’ load shape made famous in California. Energy storage is an ideal resource to mitigate the anticipated New York duck curve by filling the troughs with excess solar output and meeting the evening peaks through stored energy discharge. Fast, flexible responses can provide ramping services for load migration periods in early morning and evening hours.

Under appropriate market structures and control impetus, storage systems do not need to be co-located with renewable resources to provide these services. Where these “geographically decoupled” storage systems help integrate renewable generation resources, they may help build the case for extending renewable-based credits to stand-alone storage. Congress has introduced H.R. 5350, the bipartisan Energy Storage for Grid Resilience and Modernization Act, which extends renewable tax credits to stand-alone storage. energy storage

Behind the Meter’s Surprising Effect

Conference attendees called for a comprehensive incentive structure to animate the behind-the-meter storage (BTM) deployments that may alleviate the high demand charges in congested metropolitan areas. As resources move to the edge of the grid, those BTM deployments deepest within the grid may yield the best value. This is already evident in California, where Pacific Gas and Electric recently canceled 13 distribution upgrade projects because distributed energy resources negated the need for the projects.

Aggregators are deploying combined customer and utility storage in Southern California Edison territory. They coordinate disparate technologies — including solar PV, batteries, combined heat and power systems, electric vehicles, thermal storage and load automation — to provide energy and demand cost savings to commercial customers. They also enable over the meter non-wires alternative (NWA) services to the utility and ramping services to the ISO. In New York, similar projects like ConEd’s virtual power plant program will aggregate 1.8 MW of residential solar and storage capacity with 4 MWh of energy storage.

Now Let’s Finance This

Storage projects present first-mover risk to potential investors. To reduce risk, it needs to be clear how a project can generate long-term revenue. In New York, this means developing structured incentive schemes and tangible revenue channels whether projects aim to deliver reliability, ramping or energy contingency services to the grid. It will be easier to define and mitigate risk as the storage industry matures and data accumulates from performance validation, testing and certification services. Focusing on these measures, particularly for newer storage technologies, may help the industry draw the third party capital to speed commercialization of the industry.

The NY PSC has stated that integration of energy storage into the modern energy infrastructure is likely as necessary as it is inevitable. Technical conference attendees last week were in consensus that to achieve its goals, the state must rapidly deploy and commercialize this emerging industry and that rate-basing storage deployment on the transmission and distribution system through utility mandates can do this. Expanding energy storage incentives for behind-the-meter systems will also help. Kick-starting such initiatives will require a thorough analytical study to evaluate storage requirement in New York and justify rate-payer savings.

About the Author

Sudipta Lahiri is a senior consultant for DNV GL Energy, where he specializes in technical, regulatory and commercialization aspects of microgrids, energy storage and advanced behind-the-meter applications.

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