Energy Storage Comes of Age in New York

We recently reported that the New Jersey BPU, which announced awards to 13 resilient renewables+storage projects in its $3 million solicitation, is considering moving to a prescriptive rebate for the next round of funding.

This month, NYSERDA announced $450,525,000 in new funding for commercial/industrial scale solar PV systems between 200 kW and 2 MW capacity. The NY-Sun Commercial/Industrial Incentive Program includes extra incentives for solar projects that include an energy storage component, so long as the system reduces energy-use intensity at the customer’s site by at least 15%. Projects located at “utility identified strategic locations” and including energy efficiency upgrades are eligible for additional incentives.

Why is this important? Because competitive solicitations, necessary as they are to demonstrate new technology and applications, are simply not incredibly useful to developers who are trying to break into new markets and grow a portfolio. Longer-term, more dependable forms of support, such as low-cost financing, rebates, and tax incentives, are more helpful in this context, but are usually reserved for more commercially mature technologies. Adding a storage incentive to a solar rebate program not only underscores the complimentary nature of solar PV and energy storage; it signals that distributed energy storage has arrived as a mature technology.

The $50,000 added incentive for storage in the NY-Sun program may not sound like much, but it just might be enough to incentivize a lot of batteries at commercial/industrial facilities in New York City. Here’s why: unlike residential customers, commercial and industrial customers pay not only for the volume of electricity they use over a billing cycle, they also pay a “demand charge.” This is an added charge based on the customer’s highest rate of demand in the billing cycle, and in New York City, demand charges can comprise up to half of a customer’s total monthly bill. By using batteries and solar for peak shaving, a C/I customer can substantially reduce the demand charge, leading to significant savings every month. For this reason, a new report from UBS identifies the commercial/industrial market as the sweet spot for the raft of new companies selling batteries in the sub-megawatt range. (See Seth Mullendore’s blog on the UBS report here.)

Of course, batteries sized for peak shaving may not be large enough to provide a significant resilient power benefit, and probably won’t be configured to continue operating in case of a grid failure. But solar+storage paired with micro-CHP (mCHP) can achieve both purposes, and more: peak shaving, resiliency in the face of grid outages, and the provision of useful heat for industrial processes or space heating.

But, that’s a topic for another blog…