Energy Storage and Transforming The Grid in New York

Posted on March 21, 2017 by Virginia C. Robbins

For those who support national and international climate change initiatives like the Clean Power Plan and the Paris Agreement, the news out of Washington is gut-wrenching.  Disengaging from these initiatives is harmful on geo-political, economic, and moral grounds.  Despite these expected actions by the current administration, there is good news in the renewables sector:  battery storage technology has the potential to be a strong contender in the fight against climate change. 

In October 2015, a leak at the Aliso Canyon gas storage facility outside Los Angeles caused it to shut down.  The leak reduced fuel supplies for area power plants.  In response, the California Public Utilities Commission (CPUC) mandated mitigation measures, including the expedited procurement of about 100 megawatts (MW) of local energy storage resources in the Southern California Edison (SCE) and San Diego Gas & Electric (SDGE) service territories.  Renewable and other types of energy stored during the day would be available when electricity demand increased in the evening, thereby avoiding the need for increased fossil fuel generation to serve that peak need. 

The CPUC order directed utilities in Southern California to identify storage projects that could be sited, constructed, and put into operation providing electricity to the grid in only a few months.  Within 6 months after the CPUC issued its order, two battery storage facilities were completed.  SDGE contracted for the installation of two energy storage projects totaling 37.5 MW.  The larger 30 MW project in Escondido is said to be the biggest lithium ion battery storage facility in service on a utility grid in the world and is capable of serving 20,000 customers for four hours.  Also, Tesla completed a battery storage facility for SCE at the Mira Loma substation capable of powering about 15,000 homes for four hours.

These California energy storage projects are providing valuable “lessons learned” about the efficiency of battery technology, its benefits and limitations.  For example, building on these lessons, New York has established aggressive goals for meeting its electricity needs through renewable sources.  New York’s Governor Cuomo established a goal for 50 percent of the state’s electric needs to be met by renewable sources by 2030.  The strategy is to transform New York’s electric industry by building a cleaner, more resilient and affordable energy system through investment in clean technologies like solar, wind and energy efficiency.  And because wind and solar sources cannot always generate power during times of high electricity demand, energy storage must be a key component of the state’s energy future and more needs to be done for system operators to understand it and to develop the business models that will work.      

In October 2016, the New York Department of Public Service issued a Staff Report and Recommendations in the Value of Distributed Energy Resources Proceeding.  The goal of the proceeding is to develop accurate pricing for clean distributed energy resources (DERs) that reflects the actual value created by technologies that produce power outside of the utility grid (e.g., fuel cells, microturbines, and photovoltaics) and technologies that produce power or store power (e.g., batteries and flywheels) as well as demand-side measures.

The staff report supports including projects that pair any energy storage technology with an eligible generation facility to receive compensation under a proposed tariff.  The report also identifies a utility-driven demonstration project supporting solar-plus-storage.  Consolidated Edison Company of New York is currently pursuing a demonstration project that combines multiple solar plus storage systems to improve grid resiliency and provide a dispatchable “virtual power plant” that Con Edison can control and rely on in real time.  Con Edison is also pursuing grid-scale energy storage through a request for information seeking to demonstrate how large-scale utility storage can improve company operations, and establish how a singular type of energy storage can offer multiple kinds of value.   

Also, at its March 9, 2017 session, New York’s Public Service Commission (PSC) enacted a new compensation structure to value DERs installed in New York.  The order establishes compensation values for the first time in New York for energy storage (battery) systems when combined with certain types of DERs.  In addition, the PSC directed the state’s utilities to significantly increase the scope and speed of their energy storage endeavors.  By the end of 2018, each utility must have deployed and begun operating energy storage projects at no fewer than two separate distribution substations or feeders.  The Commission tasked the utilities with striving to perform at least two types of grid functions with the deployed energy resources, for example, increasing hosting capacity and peak load reduction.  The Commission stated that these actions are both feasible and necessary to promote timely development of a modern grid capable of managing DERs.   

These developments promise good outcomes for the deployment of energy storage, for environmental protection and for consumers.  They may also play a role in the planned shutdown (by 2021) of the Indian Point nuclear power facility, that has the capacity to generate more than 2000 MW of electricity and that serves about 25% of the energy needs of New York City and Westchester.  At a recent legislative hearing on the Indian Point shutdown, state officials discussed making up for the lost energy by efficiency programs and by encouraging opportunities for renewable, non-polluting sources like solar, wind and hydropower.  Their focus on renewables bodes well for further investment in energy storage as a component of reliable service using a resilient distribution system.  The battery storage “lessons learned” in Southern California in resolving the gas leak crisis may be valuable to New York State in planning for the shutdown of Indian Point.