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Power & Pipes

FERC, CFTC, and State Energy Law Developments

The New York State Public Service Commission (PSC) has issued an order establishing a statewide goal of 3.0 GW of energy storage deployments by 2030—with an interim target of 1.5 GW by 2025—and related reforms to encourage that development.

The order is the latest step in a broader plan being implemented by state authorities to dramatically boost the presence of energy storage in New York. In November 2017, the state legislature enacted a law directing the PSC to establish a statewide energy storage goal for 2030. In January 2018, Governor Andrew M. Cuomo announced a target of 1.5 GW of deployed energy storage by 2025. In mid-2018, PSC staff and the New York State Energy Research Development Authority (NYSERDA) jointly developed the New York State Energy Storage Roadmap (Roadmap) to provide the PSC with recommendations on the policies, regulations, and initiatives needed to meet those targets.

The PSC’s latest order meets the legislature’s directive by formally adopting a statewide goal of developing 3.0 GW of energy storage by 2030, along with the governor’s interim target of 1.5 GW of storage deployments by 2025.

The order adopts many of the recommendations from the Roadmap to further stimulate energy storage deployment across the state and address market barriers, including

  • $310 million in bridge incentives to provide revenue certainty for, and thereby accelerate, the energy storage market, which is in addition to $40 million of planned funding under an existing NYSERDA program for hybrid solar and storage projects;
  • a directive to the state’s investor-owned utilities to hold competitive procurements for bulk-level energy storage systems within their service territories in accordance with minimum requirements set by the order; and
  • initiation of a study to evaluate older peaking generators to determine which units are potential candidates to be replaced or repowered economically with energy storage without threatening reliability.

Beginning in 2020, the PSC will conduct a triennial review to track the state’s progress towards achieving those goals. The commission suggested that the triennial reviews could also be used to implement any corrective actions or adjustments necessitated by unfavorable market conditions that slow down energy storage deployment efforts.

As the PSC noted, its reforms complement other state initiatives addressing renewable energy adoption and energy efficiency in New York. For example, the Roadmap originally recommended that storage resources be eligible for compensation under the PSC’s ongoing Value of Distributed Energy Resources (VDER) proceeding, which aims to increase distributed energy resource penetration by developing pricing for those resources that reflects the actual value they create for the system. Noting that it has already adopted, or is currently evaluating, changes to VDER policies, the PSC declined to adopt energy-storage specific recommendations in the order, but nevertheless committed to continue collaborating on further VDER policy recommendations to support valuable compensation for storage resources. The PSC also remarked that adopting the Roadmap’s recommendations will advance a number of other state clean energy targets by 2030, including commitments to source 50% of consumed electricity from renewable energy sources (the “50 by 30” goal) and reduce GHG emissions by 40% from 1990 levels.

The order also reflects the PSC’s continued efforts to ensure the reliable operation of storage resources that offer services at the distribution level and in wholesale markets. That challenge has taken on a renewed focus following the Federal Energy Regulatory Commission’s (FERC’s) mandate in Order No. 841, which directed grid operators, such as the New York Independent System Operator (NYISO), to develop wholesale market participation models that remove barriers to energy storage resource participation. Those models are currently pending review by FERC. To that end, the PSC declined to issue any prescriptive directives regarding energy storage participation in wholesale markets, but reaffirmed its expectation that storage resources providing reliability services must give first priority to customer reliability, second priority to distribution system reliability, and then last priority to bulk system reliability.