A new 1 MW / 1 MWh battery is expected to come online in Consolidated Edison's territory next month, the first of several the New York City utility will roll out as part of a demonstration project that challenges the definition of energy innovation: sometimes it's a new technology, other times it's a real estate deal.
The project takes a new approach to developing energy storage for peak shaving and other grid benefits: rather than search for customers with the perfect load to also benefit and co-own the asset, ConEd tasked distributed generation developer GI Energy with finding under-utilized real estate to lease.
The utility gave GI a list of locations on its grid where batteries could provide a benefit, and the company took care of project development and customer acquisition.
"The conventional behind-the-meter (BTM) model is basically arbitraging utility tariffs," GI Energy Director of Analytics James Robinson told Utility Dive. "It works but it has some limitations."
The arrangement with GI utilizes a new type of dispatch and ownership arrangement the company says can help knock down barriers to locating batteries in some areas, particularly where real estate is expensive.
A more traditional battery solution might leverage customer-owned BTM storage assets, but that can be limiting — the utility must find the right customer in the right location with the right peak demand, in order for project economics to work out. And even then, the BTM storage assets tend to be smaller.
A new approach
ConEd's Commercial Battery Storage (CBS) project takes a new approach, utilizing a third-party to locate and lease appropriate real estate for batteries — with the utility holding primary dispatch rights.
"Our hypothesis is that if you're looking to put in more storage, if you can find a way to disconnect customer load profiles from the project's economics, and put the batteries in front of the meter ... it does a lot of things to widen the customer base," ConEd Project Specialist Alison Kling told Utility Dive. "You can have a much simpler value proposition. You don't have to find the customer with the perfect load profile that a battery can clip."
ConEd tapped GI Energy to bring the project to the grid. Plans call for four of the 1 MW/1 MWh batteries, with the first expected to come online within weeks. GI Energy developed the project, arranged ownership of the assets and sold Con Edison priority dispatch rights.
"When [ConEd] doesn't call on them, we have the ability to use them as we see fit," said Robinson.
Dispatch into NYISO
Full implementation of the plan will take more time, but the idea is for GI Energy to eventually dispatch the batteries into the New York ISO wholesale market. Ultimately, the project will create three value streams: grid benefits for ConEd, market revenues for GI and lease payments for the customer hosting the batteries.
"We do hope to participate in wholesale markets," Robinson said. "The regulatory situation in New York markets is still developing. The rules around dual participation are still being written."
Robinson said the company's ability to participate in the NYISO market will be limited, at least initially. "We'll probably be going into a NYISO pilot program," he said. "But everyone believes in the coming years we will be participating in wholesale markets, at least to some degree."
A key to the project's success is locating customers. The first site is a vacant lot in the Bronx, while the next two will be on Staten Island. GI Energy is in talks with a dry dock industrial space for the second project; a remote field at a school may be the third project. A fourth location is yet to be determined.
Project aligns with REV, storage goals
New York has a range of aggressive energy goals, and its Reforming the Energy Vision has challenged utilities to reimagine business models and grid solutions. Kling said the commercial battery project is focused on all of those fronts.
The utility-developer partnership, with its trio of value streams, is a new business model that could help the state reach 3 GW of energy storage by 2030 (there is a 1.5 GW by 2025 interim goal, as well). The CBS project was proposed as a REV demonstration.
"We hope this [model] can be replicated. That's part of what we're testing and hoping to prove out," Kling said. "This is creating a much wider customer base and could be scaled at a much more efficient pace than behind-the-meter storage."
All the projects are going through a standard interconnection process, will charge from the grid and could offer a range of benefits for the utility, from load reduction to voltage support.
"It's really exciting to have this tangible and see the actual asset," said Kling. "There's been a lot of learning through the process, getting up and running, and it is going to inform our larger strategy."
Both ConEd and GI Energy want to create something that can be scaled and replicated.
"We're trying to create a model that meets Con Edison's needs while at the same time helps us as developers," said Robinson. GI Energy is currently in discussion with several other utilities on storage projects, some of which could use similar models.
With regard to "distributed generation being used to support the distribution grid, at least in some cases a front-of-the-meter model makes a lot of sense," said Robinson, compared with BTM assets. "The project sizes tend to be a little larger, which means customer acquisition costs tend to be lower."