Dive Brief:

• Continuing on with New York's Reforming the Energy Vision strategy, New York State Electric & Gas and Consolidated Edison have each released requests for proposals which focus on non-wire alternatives (NWAs) like energy storage and other distributed resource projects rather than transmission and centralized generation facilities to meet growing demand.
• ConEdison and Orange & Rockland have released a general proposal, seeking to test the "central hypothesis" that companies can make money through storage. The utilities are seeking proposals for at least 4 MWh of storage.
• NYSEG is facing down a specific issue, and is seeking distributed energy resources in the area of its Java Substation, to reduce peak load on a transformer bank to below its nameplate 5 MW.

Dive Insight:

New York utilities are continuing to seek innovative solutions — and revenue streams — when it comes to grid management.

ConEdison and O&R are calling their request an "experiment," and said they "encourage respondents to provide creative approaches, potentially ones we have not imagined."

In a nutshell, the utilities want to see the money — both in how storage can provide new revenue streams and displace traditional utility investments. And they will spend no more than $25 million funding the project, though it can cost more if the funds are found elsewhere.

The utility outlined the type of business case it was interested in: reducing operating expenses, reducing peak demand, integrating, optimizing, or scheduling distributed resources. Solutions could also target value-added services to customers, "such as enhanced power quality or improved reliability, enabling customers to better manage their bills, enabling wholesale market participation."

"Any proposed demonstration project should offer the companies the opportunity to derive significant [market-based earnings (MBEs)], and should generate sufficient information to prove whether MBE was derived and, if not, whether such MBE would be possible given a different business model or regulatory construct," they said in their request.

The concept of market-based earnings is a central element of REV initiative and seeks to push utilities to identify new sources of revenue based on market behaviors rather than relying on traditional cost-of-service ratemaking. While utilities expressed skepticism in recent filings in the REV docket as to whether MBEs could substantially displace traditional value streams in the near future, pilot projects like the ones proposed here seek to test the concept. 

Along with MBEs, the REV intiative also aims to inspire utilities to look for non-traditional alternatives to grid infrastructure upgrades. In its RFP, NYSEG said it has to find a solution at the Java station "to address the potential risk of failure of the existing transformer." Distributed generation, energy efficiency, storage, and demand response are all on the table, the utility said. But it will "not consider any existing sources of DER located within the service area."

While gas and propane solutions are acceptable, other fossil fuels are not, NYSEG said in its request.

A large and growing number of utilities across the nation are looking to identify non-traditional revenue streams to supplement cost-of-service regulation and counteract financial impacts of DER proliferation and stagnant or declining load growth. In a recent Utility Dive survey of more than 500 utility professionals, efficiency and demand management programs were the most popular emerging revenue stream identified, but offering shared renewables, electric vehicle infrastructure, green pricing programs and storage were also popular options.