New York is well on its way to meeting the state’s goal of having 1,500 MW of energy storage by 2025 and 3,000 MW by the end of the decade, and the ‘value of distributed energy resources,’ or VDER, mechanism gets part of the credit, according to a report released by state utility regulators.
The state had deployed or contracted for 706 MW of storage by the end of last year, equaling about 47% of the 2025 target and 24% of the 2030 target, the New York Public Service Commission said in a report released April 2.
The New York Independent System Operator (NYISO) has about 9,780 MW of storage projects in its interconnection queue, the commission said, noting that not all projects will be built.
“Due to the technology’s declining costs and the ability to pair with solar photovoltaic (PV) and capture additional revenue streams, energy storage is increasingly being used to augment the existing pipeline of utility-connected solar PV projects being developed in the state,” the commission said in its first annual report documenting how New York is doing in reaching its storage goals.
Partly, the strong energy storage development is being spurred by the state’s VDER payment mechanism, which makes it easier to obtain project financing, the commission said.
VDER preferred by solar developers
The VDER mechanism pays distributed resources based on how they benefit the grid and reduce customer costs. The value stack is based on a utility’s avoided costs plus other benefits a distributed resource may bring like demand reduction and environmental values. The commission approved the methodology in 2017 and updated it a year ago.
VDER is the most common payment mechanism chosen by storage developers, and coupling energy storage with renewable generation allows developers to maximize their payments in many cases, according to the commission
Increasingly, developers of larger solar projects have been splitting them into smaller parts to qualify for VDER compensation, which is capped at 5 MW, instead of interconnecting to the grid at the bulk system level and receiving payments in NYISO’s wholesale markets, the commission said.
Energy storage installed costs remain relatively high, but are falling, according to the report.
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