- Utilities in New York that failed after two rounds of bidding to come up with at least 350 MW of energy storage dispatch have won more time from the state Public Service Commission.
- A March 16 order responded to a request in November from six utilities by extending the required in-service date for resources to no later than Dec. 31, 2028, from a previously set deadline of Dec. 31, 2025. It also extended the maximum dispatch rights contract duration to up to 15 years from a maximum of 10 years.
- Central Hudson Gas & Electric; Consolidated Edison; New York State Electric & Gas; Niagara Mohawk Power, or National Grid; Orange and Rockland Utilities; and Rochester Gas and Electric sought the changes they say will result in more bids and awards.
The utilities conducted a first-round solicitation and with the exception of National Grid, were unable to reach their targets, the PSC said. Only 120 MW of storage projects — 20 MW in National Grid’s service territory and 100 MW with Con Edison — have executed contracts, falling short of the 350 MW initially to be in service by the end of last year, the PSC said.
The utilities cited uncertainty about the amount of revenue they’d receive in the merchant market. And they say New York ISO market rules for energy storage may change and do not currently provide enough revenue to “enable a robust storage market,” the PSC said.
If a third-round solicitation is completed with contracts awarded to bidders by the end of 2023, the projects would likely not be in service by Dec. 31, 2025, particularly if the project is required to enter the New York ISO’s Class Year process or if the project has complicated permitting requirements, the utilities said, according to the PSC.
Increasing the maximum contract length to 15 years would allow for a longer amortization period and result in lower annual contract costs, improving the chances of the next solicitation to achieve the storage goals, the PSC said.
Other factors are at play, the PSC said. The federal investment tax credit established in the Inflation Reduction Act of 2022 provides tax credits of 30% or more for energy storage spending and the utilities adopted a new rate setting to reduce the cost of energy storage charging in December.
Joe Jenkins, director of media relations, said Central Hudson will use the additional time to increase its chances to identify contracts that will pass the cost-benefit analysis and result in a successful solicitation.
New York State Electric & Gas and Rochester Gas & Electric, subsidiaries of Avangrid, said the PSC’s decision is “another improvement to meet the state's aggressive energy storage and clean energy goals.”
Representatives of the other utilities did not respond to a request for comment.
“Real world experience in developing storage projects continues to help inform commission policy and program requirements,” the PSC said.
It’s important to “continually assess” the state of the storage market and make changes as necessary, it said. Changes proposed by the utilities are intended to increase the likelihood of “future successful storage solicitations,” it said.
In an article published by the National Law Review, Joel Meister, a Foley & Lardner attorney, said developers facing a tight calendar will “certainly breathe a sigh of relief that they have a few more years to develop and construct projects.”
“It remains to be seen how the industry may respond to contract terms of up to 15 years,” Meister said. “Solar and wind developers certainly benefited from long-term power purchase contracts to attract financing. But storage presents unique operation and maintenance challenges by comparison, which will vary by use case.”
Despite rapid growth in deployment, storage is still a relatively new sector with “comparatively modest operational histories for investors and lenders to draw upon with independent engineers,” Meister said.