With an ambitious energy storage target, well-established incentives, and favorable economics, New York’s energy storage market shows great promise.
In 2018, New York became the fourth state to establish an energy storage target, aiming for 3,000 megawatts (MW) by 2030 with an interim target of 1,500 megawatts by 2025. This solidified growing market interest for both behind-the-meter and front-of-the-meter energy storage projects.
Battery energy storage economics are favorable in New York. Through the Value of Distributed Energy Sources (VDER) value stack, a battery owner is paid for the battery’s energy, capacity value, and the relief it provides to the distribution system. Major utilities also offer time-of-use (TOU) retail rates that create an opportunity for system owners to save via energy arbitrage. Lastly, New York State Energy Research and Development Authority (NYSERDA) offers funding for both bulk and retail energy storage projects. Much of this funding has been allocated, reflecting strong energy storage development in the state.
Currently, there is 8,000 MW of energy storage capacity that is scheduled to come online in 2022 in the New York Independent System Operator (NYISO) interconnection queue. However, energy storage projects incur hefty interconnection costs and developers must go through multiple bureaucratic hurdles before projects can be operational. This has led to congestion in the interconnection queue and delays in capacity growth.
Despite the state’s relatively low deployed energy storage capacity of 115.5 MW, stakeholders are confident that this number will skyrocket in the coming years. While projects often face challenges in the interconnection and development process, the current NYISO queue and market conditions indicate that the state is on track to achieve its interim goal of 1,500 MW of energy storage capacity by 2025. It is anticipated that New York will continue to be a national leader in energy storage over the next decade.
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New York Storage Market Report
The DG+ New York Storage Report includes the latest on state legislation, market sizing, utility policies, and market share data.