New York has a new plan to get all the grid batteries it needs

New York has big ambitions to add renewable power to its grid mix, and it’ll need to store that electricity to keep the lights on. But so far, New York’s grid-storage performance is neither king of the hill nor top of the heap.

Last year, Governor Kathy Hochul (D) upped the state’s target to 6 gigawatts of energy storage installed by 2030, which would deliver enough clean energy to cover one-fifth of New York’s peak electricity consumption. That’s a crucial complement to its goal of 70 percent renewable electricity by 2030.

But since 2018, the state’s utilities have repeatedly failed to hit their own much more modest near-term storage targets. Utility regulators approved rule changes earlier this month that could unstick the utility impasse, but now a much bigger change is being debated that could unlock gigawatts’ worth of new battery construction.

State leaders anticipate a significant need for storage in the future. Power markets aren’t delivering much storage on their own, so the state is spending money now to help the local storage industry mature by the time renewables supply two-thirds of the state grid’s electricity.

How’s that going? A March press release from the state Public Service Commission says that New York has spent over $500 million to support 130 megawatts of operating grid batteries as of November 2022. That’s not a particularly heartening return on investment; individual battery projects in other parts of the country have more capacity. But there are 1,300 megawatts under contract in New York that should show up in the near future. And the 130-megawatt total may understate the situation; another state entity, the New York State Energy Research and Development Authority, counts about 300 megawatts installed.

Still, New York utilities were supposed to add 350 megawatts by now through a ​“bulk storage dispatch rights” program ordered by the regulators in 2018. Con Ed, the state’s biggest utility, was supposed to sign contracts for 300 megawatts of grid storage capacity; the smaller utilities only needed to add 10 megawatts each. All of this was due by the end of 2022.

But it didn’t work. The utilities received bids from developers, but they failed to award the necessary contracts — except for National Grid, which hit its target in the first round. There were a lot of sticking points in how the utilities framed the program, but an obvious problem was that they were only offering seven-year contracts.

That meant battery projects had an extremely tight timeframe to earn back investment; in other states, utilities signed 15- and 20-year contracts for early storage projects. Developers in New York could theoretically make money in the state’s wholesale market, but there was no track record of battery performance there. The seven-year contract design made the battery bids look like terrible deals; imagine how much more your monthly payments would be if you compressed a 20-year mortgage into seven years.

After the initial flop, the utilities did what anyone does when at first they don’t succeed: ask to change the rules. In April 2021, state regulators pushed the deadline back to the end of 2025 and allowed utilities to sign 10-year bulk storage contracts. The utilities tried again to award the necessary battery contracts; that round didn’t work either.

Then the utilities did what anyone would do if they don’t succeed a second time: They asked to change the rules again. Now, after a March 16 ruling, New York utilities have until the end of 2028 to fulfill their initial storage targets from 2018, and they can sign contracts with terms of up to 15 years.

Even if the utilities belatedly figure out their assignment, the Empire State is running short on time to realize Hochul’s 6-gigawatt ambition. 

The New York State Energy Research and Development Authority has a plan, though, which is currently working through regulatory approval itself.

The agency, along with the Department of Public Service, dropped a long-awaited roadmap in that magical period between Christmas and New Year’s Day when nobody was paying attention to 100-page reports. But the roadmap analyzes successes and failures in past storage approaches and suggests using a new ​“Index Storage Credit” to support 3,000 megawatts of new large-scale storage. A retail incentive would help build another 1,500 megawatts, and a residential program would add 200 megawatts.

Total all that up, plus the 1,300 megawatts already contracted, and the state gets its 6 gigawatts by 2030. Again, this program still needs to clear the regulatory process. If that happens, and the new policies work as intended, the state’s earlier misadventures in building storage will be rendered a quaint, distant memory.