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April 29, 2024

NYS PSC Launches "Grid of the Future" Proceeding

On April 18, 2024, the New York State Public Service Commission (PSC) launched a new proceeding under which Department of Public Service (DPS) staff will engage with stakeholders to develop a comprehensive “New York Grid of the Future Plan” (Plan).  

Overall, the objective of this new proceeding is to enable the deployment of more flexible resources, such as distributed energy resources (DERs) and virtual power plants (VPPs), at a manageable cost and the highest levels of reliability. This proceeding will build on prior programs established by the PSC in furtherance of the Climate Leadership and Community Protection Act and the state’s ambitious clean energy goals, including the NY-Sun, energy storage, energy efficiency, clean heat, and electric vehicle (EV) make-ready programs; EV-managed charging programs; and dynamic load management programs, among others, as well as the orders that established the value of distributed energy resources and value stack methodology for compensating DERs. In the order establishing this proceeding, the PSC noted that several grid-planning studies have identified that the future generation mix will require new, dispatchable emissions-free resources, ranging from 18 to 45 gigawatts of new capacity by 2040, and that DERs and VPPs have the potential to provide flexibility services that would address certain system and reliability needs and would benefit both the bulk and distribution levels of the electric system. In general, the intent of the proceeding is to identify the long-term potential for flexible resources to provide resiliency and flexibility services, improve grid reliability, and drive down costs.

More specifically, the proceeding aims to address four principles:

  1. Establish a clear set of needed grid capabilities.
  2. Establish targets for deployment of those capabilities. 
  3. Identify required investments to effectuate targets. 
  4. Identify anticipated customer benefits and savings achievable from meeting those targets. 

These four principles will guide DPS staff and stakeholders through the process of developing the Plan over the coming months and years.

Elements of the Plan

The end product of the proceeding is the Plan, which provides a roadmap for how the state will meet its climate and energy goals on time and with the greatest value for customers. The Plan has nine required elements, which DPS staff must address: 

  1. Identify Resource-Deployment Goals 

The Plan will categorize flexible resources by the grid services they provide (i.e., local or bulk capacity and/or resource adequacy services, energy-related services, etc.), and include a forecast of how much of that resource is needed by when. The Plan will also identify barriers that currently exist, and future opportunities, for deploying these resources. The Plan will also identify whether these resources will need to be obtained through deployment of certain technologies (i.e., smart thermostats, etc.) or whether new programs are necessary.

  1. Establish Key Distributed System Platform (DSP) Elements 

The Plan will assess the utilities’ most recent distributed system implementation plans (DSIPs) to determine how well the utilities’ plans will support the expected needs and innovation to optimize the evolution of the grid. The Plan may also recommend new and/or revised requirements for future DSIP content or the DSIP process as well as an improved framework for engaging stakeholders in that process.

  1. Consideration of Compensation Structures 

The Plan will consider new compensation structures, or modifications to existing structures, to ensure the best use of these new resources by customers. The compensation of flexible resources may include the value of avoided costs and increased benefits they provide to the system and incentives beyond those currently monetized through market structures. Location-specific distribution system values will also be considered if they can be identified and quantified.

  1. Identify Potential Customer Savings and Benefits 

The Plan will identify the potential for more economically efficient and customer-friendly price signals to be sent to customers through the rates and charges on their utility bills and whether additional rate options providing stronger, time-varying price signals beyond those already available to customers should be implemented.

  1. Identify Roles and Responsibilities for Market Participants 

This will include evaluating opportunities and requirements for distribution utilities and pathways to best align the New York Independent System Operator (NYISO) and other market participants to balance load and supply throughout the state’s electric system. 

  1. Account for Changing Technical and Information Asymmetries 

The Plan must account for changes in digital technology, information infrastructure, and information asymmetries to address how to best use flexible resources to react quickly to signals across multiple system levels.

  1. Apply Physical Security and Cybersecurity Protocols 

Due to the ever-changing energy and technology landscape, the Plan will result in physical security and cybersecurity recommendations, which will be integrated into existing and future security plans where appropriate. 

  1. Address the Need for Intelligent and Flexible Deployment of Resources 

The Plan will identify, characterize, and consider the significant differences expected over time between New York’s upstate and downstate electric power systems and address how to best confront these differences, including, but not limited to: transmission constraints; grid configuration (i.e., radial vs. meshed); demographics; local laws/moratoria; and the scale and placement of generation, energy storage, and load. 

  1. Consider Equitable Allocation of Costs and Benefits Among Customers 

Finally, the Plan must propose effective methods for fairly allocating costs and benefits among all grid stakeholders. 

Process for Plan Development 

First, DPS staff is directed to convene at least one technical conference during the second half of 2024 to gather input and information from stakeholders. Parties participating in the proceeding are also encouraged to identify and propose additional elements that would potentially improve the proceeding’s results during this timeframe.

Following this information-gathering period, DPS staff will conduct a grid flexibility study (study) to produce, assess, and report on the present status and future potential for flexible resources in New York State’s electric system. As part of this study, DPS staff will: 

  1. Assess the present and potential future capabilities of flexible resources 
  2. Identify, characterize, and recommend means and methods for effectively integrating flexible resources into grid planning and operations under a range of different scenarios
  3. Recommend near-term actions to better deploy identified resources

The study is due on November 15, 2024. 

Following completion of the study, DPS staff will then turn to developing the first iteration of the Plan, addressing the nine plan elements discussed above. The first iteration is due by December 31, 2024. The first iteration will then be reviewed by stakeholders. Following review and feedback, an updated Plan is due December 31, 2025. 

Attorneys in Barclay Damon’s Regulatory Practice Area will continue to monitor this and other developments affecting the renewable energy industry in New York State. 

If you have any questions regarding the content of this alert, please contact Brenda Colella, Regulatory Practice Group leader and Regulatory Practice Area co-chair, at bcolella@barclaydamon.com; Ekin Senlet, Regulatory Practice Area co-chair, at esenlet@barclaydamon.com; Dan Krzykowski, associate, at dkrzykowski@barclaydamon.com; Emma Marshall, associate, at emarshall@barclaydamon.com; or another member of the firm’s Regulatory Practice Area.
 

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