Updated: Mar 13, 2019
Will New York end up a leader in the global energy storage industry?
New York State is quickly turning into a hotbed for energy storage, and it deserves a deeper dive from the national trends noted in my previous post. At the end of last year, the NYS Public Service Commission set the country’s most ambitious storage target of 1,500 MW by 2025, and 3,000 MW by 2030. Last week the NYS Department of Environmental Conservation (DEC) announced a new NOx emissions policy related to CT peakers, with an alternative compliance option with energy storage. And today, NYSERDA announced their Energy Storage Implementation Plan, providing over $400 million in funding for storage projects. There’s no doubt the state is entering the energy storage market in a big way.
At Telos Energy, we’re excited for these new developments in New York, our home state. We recently finished a project supporting a battery developer looking to break into the New York market. We analyzed over 500 potential battery locations across NYS and calculated potential revenues from capacity, energy, and ancillary services markets. We learned some interesting things;
Nodal analysis matters; we found that for energy market participation, some nodes were 40% more favorable than nearby nodes, even in the same zone.
High energy prices aren’t as important as price volatility. Switching from day-ahead to real-time markets could yield twice the arbitrage revenue. Forecasting and scheduling will be critical.
The capacity market, under current participation rules, is currently the biggest driver of project economics but is still subject to some regulatory uncertainty.
Ancillary markets could prove valuable, but overall size is low and risks of saturation are high.
While the New York storage market will continue to be a bright spot for the industry, it remains dynamic and rapidly changing. Several policy and market rules are still unclear. NYISO’s FERC Order 841 Compliance Filing was a good start, but intentionally silent on a few key issues:
Dual participation: currently storage built for retail services, like non-wire alternatives, are unable to participate in the wholesale market, and vice-versa. While this issue is being addressed by NYISO and other key stakeholders, this process could take years.
Aggregation: current ISO rules require storage to be at least 100 kW or larger and cannot be aggregated, per FERC Order 841 guidance. We will need to wait for separate rules related to DER to see how aggregation can be included.
Capacity market participation: currently a 4-hour storage resource gets full capacity credit in the ISO capacity markets, but this rule is currently being redesigned, likely with higher duration requirements. This could limit the wholesale market participation of battery energy storage resources.
We’ll be keeping an eye, with an analytical perspective, on this dynamic and fast changing market. Reach out to learn more.