Notwithstanding New York’s aggressive efforts to lead the way in renewable energy and carbon reduction, New York’s programs have been relatively anemic when it comes to encouraging energy storage. In 2015, New York launched the NY-Sun Commercial / Industrial Incentive Program, which offered performance-based incentives for large-scale solar photovoltaic (“PV”) systems, and provided a $50,000 additional incentive for projects that integrated energy storage. Most recently, the New York Public Service Commission adopted a mandate requiring that each individual New York utility deploy two separate energy storage projects at two separate substations or feeders by the end of 2018, which spurred the utilities to file a number of Requests for Proposals to address deficiencies on their networks.

It is widely known that energy storage is critical to meeting the New York State Energy Plan—namely its goal of generating 50% of its electricity from renewables by 2030 and the companion goal of reducing carbon emissions 40% by 2030. These goals cannot be met without massive investment in both supply and demand-side resources that can accommodate intermittent wind and solar while avoiding the “California Duck Curve”—a phenomenon that occurs when high levels of wind and solar are added to the grid, exacerbating the peaks and troughs of the electricity load profile which strains the system. Energy storage is a critical piece of the multi-pronged strategy to control generation/demand, flatten the duck curve, and ultimately enable high penetrations of intermittent renewables.

On June 19, 2017, in response to the need for energy storage in a market with rising wind and solar power generation, the New York State Legislature passed the Energy Storage Deployment Program (“ESDP”) bill (S. 5190/A.6571), which now awaits Governor Cuomo’s signature. If enacted, the bill would require the Public Service Commission (“PSC”) to commence a proceeding to establish an “Energy Storage Deployment Program” within 90 days of enactment and make a determination by the end of 2017 to establish a 2030 target for installation of “qualified energy storage systems” and programs to enable the state to meet the target. This would be a critical “fourth” 2030 target in conjunction with the existing goal of 50% renewables by 2030 (50/30); a 40% reduction in greenhouse gas emissions by 2030 (40/30); and a 23% reduction in energy consumption in buildings by 2030.

While leaving the details of the ESDP to the PSC, the bill outlines the basic factors to be considered by the PSC in designing the program, such as the minimization of peak load in constrained areas and the opportunity to avoid or defer costs associated with transmission, distribution, or capacity. Unlike most other states that have sought to establish storage targets, such as Massachusetts and Nevada, which passed bills requiring their respective utility commissions to investigate whether a storage target would be prudent and within the public interest, New York’s ESDP program streamlines the prudency determination process by affirmatively requiring a storage target to be established by the end of 2017. If the ESDP bill is signed into law, New York may leapfrog other states that are still considering the prudency of storage, giving New York the competitive advantage to attract significant investment in a rapidly growing industry.

In crafting the ESDP, the PSC may draw on the experiences of other states. The PSC may consider adopting proposals such as Nevada’s decision to allow energy storage dispatched at peak times to count double for the Renewable Portfolio Standard, and will have to address whether and how storage should be incentivized to go in front of the meter, putting it in the hands of utilities, or behind the meter, putting it in the hands of residential and commercial customers. The PSC will also need to address the how Distributed Energy Resource providers can incorporate storage into their products and services to provide value-added benefits to a diverse range of customer classes in the transactive digital energy marketplace. In order to answer these crucial questions in the next six months before the ESDP program goes into effect, the PSC will require the input and advice of energy storage stakeholders.

Additional Assistance Phillips Lytle Associate, Kevin C. Blake, was assisted in the preparation of this article by Matthew J. Fitzgerald.