Ramping Up Energy Storage: Are We on Track?
This past year has been characterized by New York State’s legislative action toward an emissions-free future. With ambitions for a 100% clean electricity grid by mid-century, reliable renewable dispatch will be a key challenge of the next few decades.
Achieving each of the three necessities of the energy system — security, equity, and sustainability — has historically been a balancing act for suppliers. The best chance for guaranteeing equity and security with a renewable portfolio priority is storage.
Storage has the ability to remediate the generation-demand time mismatch that is inherent to most renewables due to its intermittent nature, and in doing so it can meet the resilience and reliability criteria the power system requires.
The importance of the storage market to the success of the energy transition is evidenced by the most robust piece of NYC’s Climate Mobilization Act (CMA), Local Law 97. In LL97, storage is defined as a “(clean) distributed energy resource” which owners can leverage toward their compliance goals based on the resource’s ability to mitigate emissions, especially during peak hours.
This is a mighty undertaking for demand-side storage technology, still in early stages of development with infrastructural and financial barriers.
Surprisingly, the infrastructural challenges, while still significant, are actually becoming less pertinent in the city. FDNY’s fire codes have created space for Li-ion batteries outside of buildings, and have significantly streamlined the permitting process for medium and large operational systems. This streamlining process is expected to reduce a quarter of soft costs, which make up a formidable portion of the total costs. Battery storage is a key partner for renewables, especially solar. And with Local Law 94 mandating rooftop solar, this streamlined process will be crucial for maximizing efficiency.
Still, non-battery forms of storage are also crucial, although they enjoy less political momentum. Thermal storage has the potential to substantially reduce a) the burden on the grid during peak hours, and b) costs to consumers, fulfilling both the equity and security needs of energy. But the size of such units poses an infrastructural problem in the city’s densely built environment. Local Law 92 and previously mentioned Local Law 94 call for solar and green roofs on any major roof renovation, reducing the real estate available for thermal storage units. They will have to be situated in basements or outside buildings, posing design questions still being answered by the market.
While challenging, these infrastructural and design barriers serve as opportunities for creativity and safety on the demand side. And these technologies will ultimately pave the way for resilience, reducing ever increasing peak demand that resulted in power outages and gas moratoriums just this year.
What’s more obstructive to the market is the financial uncertainty surrounding storage, especially at the grid scale. Batteries and storage are an unprecedented market relative to the age of electricity. Who gets paid, who pays, and how much are all ongoing questions that will have to be answered in time.
Last week, GreenTech Media published an article mentioning how investors are tackling contract drafts to ensure revenues from storage projects. These investments are different from typical renewables in that they are both high-demand and high-risk projects. The high demand comes from legislative mandates requiring storage at scale like LL 248 and the executive fossil fuel infrastructure ban (EO 52). The high-risk comes from the rapid, large-scale deployment necessary to meet this demand.
The mechanisms for ramping up the storage market are rolling. Barriers are being whittled away, and incentive mechanisms exist on the state level for both retail and bulk levels.
But the pace at which normal investment in such a technology would usually happen is much too sluggish for New York State’s lofty mid-century policy goals. Case competitions like California Energy Commission Open Solicitations create innovative and timely storage integration.
The path ahead is foggy, as the state and city continue through uncharted territory. We’re headed in the right direction, integrating rapid storage deployment into our policy agenda, but actually deploying the storage capacity we need will be the challenge of the decades to come.
At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.
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