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March 17, 2023

NYS Public Service Commission Modifies Energy Storage Solicitations

On March 16, 2023, the New York State Public Service Commission (PSC) granted an order extending the in-service date for energy storage resources and the maximum length of contracts for storage procurements by major utilities in New York State. 

In December 2018, the PSC issued an energy storage order directing these utilities to competitively procure dispatch rights for bulk-level energy storage systems, with Con Edison required to contract for a minimum of 300 MW of qualified energy systems and the other utilities required to each contract for a minimum of 10 MW of these systems. The 2018 order also established an in-service date for these storage systems of December 31, 2022. In October 2020, the PSC modified its earlier order by extending the in-service date for these energy storage systems to December 31, 2025, and extending the maximum contract duration from seven to 10 years.

Yesterday’s order is in response to a petition by these utilities requesting: (1) a further extension of the in-service date for procured energy storage systems from December 31, 2025, to no later than December 31, 2028, and (2) a further extension of the maximum contract duration from 10 years to 15 years. The utilities explained in their petition that after two rounds of competitive solicitations, they (with the exception of National Grid ) have been unable to meet the PSC’s contract goals. However, the utilities further asserted that several changes in the energy storage industry will impact future solicitations and facilitate a more successful deployment of energy storage in New York State, including the federal Inflation Reduction Act of 2022, providing tax credits of 30 percent or more for energy storage expenditures, and a new rate-setting adopted by the utilities that lowers the cost of charging for energy projects. 

The PSC granted both extensions requested by the utilities but further required the utilities to file updated implementation plans that detail the direct solicitation and procurement process within 30 days of the order. Additionally, utilities are to file tariff revisions, as necessary to realize the cost recovery of the contract costs, which will become effective on June 1, 2023. 

In yesterday’s order, the PSC concluded that its grant of the extensions was intended to increase the likelihood of future successful solicitations to help New York State achieve its energy storage goals, stating: “[r]eal world experience in developing storage projects continues to help inform Commission policy and program requirements…it is important to continually assess the state of the storage market and make programmatic changes as necessary.” 

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; Paige Beyer, associate, at pbeyer@barclaydamon.com; or another member of the firm’s Regulatory Practice Area.
 

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