New York PSC mandates grid-scale storage projects for investor-owned utilities

With the mass proliferation of energy storage capacity, New York regulators have mandated investor-owned utilities deploy energy storage systems by the 2018.

The state Public Service Commission (PSC) issued an order last week requiring each individual utility to have energy storage projects “deployed and operating at no fewer than two separate distribution substations or feeders.”  In addition, the projects should address at least two grid functions, such as boosting capacity or reducing peak load.

“With advances in energy storage technologies, utilities should be using energy storage as part of their normal course of business,” Commission Chair Audrey Zibelman said in a statement. “Now is the time to determine the best locations, technologies, and uses for energy storage, and today’s order will accelerate the utilities’ deployment of this technology.”

The order also instructs utilities to create online portals to provide information to help distributed energy resources (DER) developers interconnect with the grid, adopts a standard for sharing and protecting aggregated customer data, and requires utilities to propose standards for the evaluation of energy efficiency in buildings.

The order was part of a busy day for energy policy in New York.  In addition to requiring utilities to develop grid-scale storage projects, the PSC also adopted a new “value-stack” pricing mechanism to provide more accurate compensation for solar and other DER.

The new pricing system would replace existing DER models based on net-metering, which is a billing mechanism that credits owners of DER systems, such as rooftop solar panels, for the surplus electricity they add to the grid.  The PSC called such models “inaccurate mechanisms of the past that operates as a blunt instrument to obscure value and are incapable of taking into account locational, environmental and temporal values of projects.”

“By failing to accurately reflect the values provided by and to the DER they compensate, these mechanisms will neither encourage the high level of DER development necessary for developing a clean, distributed grid nor incentivize the location, design and operation of DER in a way that maximizes overall value to all utility customers,” the PSC said.

The new structure will apply exclusively to new large DER systems known as Community Distributed Generation, which include community, commercial, and industrial solar and other DER projects.  The system will begin with a transition period whereby projects currently in advanced stages of development will receive compensation under existing net metering rules, but only for their first 20 years.

The pricing mechanism is expected to create a new framework for New York’s growing community solar market, and over the long term should increase access to community solar by adopting regulatory certainty.