The Best News Yet for Energy Storage in New York
The governor’s pledge to build 1,500 megawatts of storage by 2025 opens a new chapter in New York’s clean energy history book.
Cuomo kicked off 2018 with a series of clean energy proposals, including a groundbreaking energy storage pledge: to deploy 1,500 megawatts by 2025 as the state works toward 50 percent renewable energy by 2030. The target came just a month after he signed a bill to create a storage deployment program.
That’s a bigger target than California’s trend-setting 1,300-megawatt mandate, although it comes due five years later, when storage will be much cheaper and less bleeding-edge. New York’s goal aims higher than the 200 megawatt-hours Massachusetts proposed and makes Oregon’s 5 megawatt-hour goal look puny.
“New York intends to be a leading state for energy storage deployment,” said Alicia Barton, president and CEO of the New York State Energy Research and Development Authority (NYSERDA), which will disburse funds for storage projects and oversees an ongoing storage roadmap process. “This helps us put a stake in the ground to say New York is a market where you should be spending time.”
The eye-popping number marks a coup for energy storage, which had been largely left out of energy policy developments under New York’s four-year effort to overhaul its grid. Cuomo launched his clean energy mandate in the summer of 2016, but grid assets to store the influx of intermittent energy didn’t factor into that plan.
In the months after the storage bill passed the legislature, Cuomo’s energy czar Richard Kauffman voiced concern about how a top-down storage mandate would fit with New York’s commitment to promoting clean energy through sustainable, market-driven mechanisms.
The administration has found a path forward that satisfies its concerns. New York will not require its utilities to procure 1,500 megawatts, in the way California compelled its investor-owned utilities. Instead, the target directs the state’s energy bureaucracy to clear out the hurdles that have thwarted the development of a storage market thus far, and signals to industry members that New York wants their business.
The administration is already putting money behind the aspiration: $260 million will flow from NYSERDA to jump-start energy storage activity, which Cuomo hopes will one day produce 30,000 jobs for New York. The state will also take steps to crack down on the local and greenhouse gas pollution caused by fossil-fueled peak power plants, opening a potential role for storage to take their place.
Cuomo’s target stakes a claim on energy storage leadership, but it’s important to parse exactly what those 1,500 megawatts mean.
It’s not a legally binding mandate like California’s, but it’s being embedded into New York’s energy market redesign. The storage legislation signed last year calls for a firm target pegged to 2030, which coincides with the renewables mandate; the latest announcement sets an interim checkpoint for the state to hit on the way to that point.
“It instills a sense of urgency to our work and a clarity about that urgency,” Barton said. “It puts regulators and implementing agencies like NYSERDA on notice of the target we need to be aiming for in our work.”
The target is separate from the means to achieve it, Barton added.
Picking a number out of thin air doesn’t make an industry materialize. Instead, structural changes to energy policy and regulations allow storage providers to compete and make money for the services they provide. Those changes could include wonky items like pinning down the locational value of storage on the distribution grid and streamlining the fire-safety approval process.
“If the market signals were working correctly now, we’d see projects going forward at a more rapid pace than they have so far,” Barton said.
The interim target strikes a crucial balance of ambition and achievability, said Polly Shaw, VP of regulatory affairs and communications at commercial storage provider Stem, which is active in New York.
“We’re poised to ramp up our activity in the state once the target and funding are translated into real commercial opportunities for the customer-facing sector,” she said.
The success of the 2025 target will hinge on whether it spurs state agencies to clear out the regulatory barriers in a timely manner. If the industry can operate profitably on its own, it could deploy well beyond the aspiration of 1,500 megawatts.
“The size of the market for energy storage in New York is probably a lot larger than that,” said William Acker, executive director of the New York Battery and Energy Storage Technology Consortium. “These targets are not setting a number that indicates the market; it’s catalyzing the industry and stakeholders to go and make it happen.”
Money to spend
To back up the commitment to energy storage as a newfound pillar of his energy policy, Cuomo earmarked a few hundred million dollars to get things started.
NYSERDA’s Green Bank will invest $200 million to ramp up financing for energy storage projects. The Green Bank’s role is to open up private investment in clean energy by addressing barriers to financing, and with storage it will have its work cut out.
The combination of technology risk, emerging business models and the inherent complexity of batteries performing multiple jobs at once gives financiers a headache. The Green Bank may be able to serve the need for capital while other lenders get more comfortable with storage.
NYSERDA’s Clean Energy Fund will disburse a further $60 million, allocated in buckets: soft-cost reduction and business model pilots; product development and field testing; and grid modernization and resiliency.
The destination of these funds, plus the governor’s reference to 30,000 potential energy storage jobs, reframe this grid asset as an economic driver.
“That is a really important recognition of the fact that doing the right thing for the environment and for the efficiency of the grid can create great economic development opportunities for the state,” Acker said.
Peakers put on notice
The governor’s missive explicitly recognizes the harm done by peaker plants, in terms of both greenhouse-gas emissions and local pollutants.