Overcoming the 3 Hurdles to Successful Battery Storage Deployment in New York
Battery storage systems are emerging as a key solution for successfully integrating high shares of wind and solar renewables in global power systems. Energy storage deployment is set to increase by over 40% each year in global markets until 2025.
New York City ranks among the most energy-intensive urban environments worldwide, and Con Edison’s service territory’s peak summer load reaches up to 14 GW of demand. That’s nearly a quarter of the peak demand in all of California. Moreover, the New York City area consumes approximately 60% of the state’s electricity while generating a mere 40%. This urban grid supplies energy via an underground network, making the maintenance and management of the system a challenging and expensive endeavor to continue and meet with the rapidly growing peak load. We’ve built this primer as an introduction to doing business in the NYC market.
Key Drivers for Energy Storage Uptake
Understanding the factors driving energy storage adoption is essential to understand the constraints that NYC imposes.
Performance and cost improvements: Related to lithium-ion batteries, driven by growing electric vehicle markets and associated manufacturing economies of scale, performance improves while costs are dropping.
Global movement toward renewables: Massive support for emissions reduction and renewable energy is increasing the adoption of battery storage solutions, particularly within the public and corporate sectors.
Grid modernization: The progress of battery storage solutions depends on grid modernization efforts, including the transition to smart grids. Batteries unlock the unlimited potential of smart technologies.
Involvement in wholesale electricity markets: Battery storage balances the grid and enhances power quality, irrespective of the generation source. Almost every country is revamping its wholesale market structure for allowing batteries to offer capacity and ancillary services.
Financial incentives: Many countries like Italy, South Korea, and other nations continue to increase the availability of financial incentives for storage investment, reflecting the growing awareness of policymakers.
Self-sufficiency: Incentives for investing in storage systems are not just financial. For example, in Germany, resiliency, independence from utilities, ecological motives, and technical curiosity are considered motivations.
Net Meeting or Phase-outs of FITs: Reduction of FITs or feed-in-tariffs net metering payments serves as a driver of behind-the-meter battery deployments.
National policy: Several countries opt for renewable energy storage to enhance their systems’ reliability and resiliency and reduce dependence on energy imports to move toward decarbonization and environmental and targets.
Now let’s look at the three most common hurdles to successful battery storage deployment in NYC.
Common Hurdles to Battery Storage Deployment in NYC
Since NYC has a dense population, it is crucial to deliver an inherently safe solution. Consequently, NYC’s FDNY sets the bar for the most rigorous safety standards in the country.
Apart from the standard industry certifications needed for electrical equipment, NYC has the added requirements for large scale fire testing under UL’s 9540A testing methodology.
Using test results in conjunction with local fire protection engineers, it is possible to devise a solution that complies with all NYC requirements through a combination of proper system design and the proper balance of plant design.
Interconnection Feasibility & Economics
The market economics that support the deployment of storage typically align with utility zones facing capacity constraints.
Con Edison has various incentive structures designed around offering relief in these congested areas, most recently through the deployment of a variety of Non-Wires Solutions programs.
Due to this congestion, there are challenges with unknown and hefty interconnection costs and timelines that may complicate the deployment process. Understanding the market dynamics and experience in the locale is critical for the successful execution of a project.
Installation Feasibility & Economics
The physical footprint comes at a premium in the city. Looking at the practical and safety considerations around current technology, locating a site conducive to battery energy storage can be challenging.
With current technology & regulations, storage systems are largely relegated to outdoor installations. Given the incredible weight of these systems, installation other than ground-mounted becomes economically infeasible.
Given that the areas that would benefit the most from storage tend to be locations with high or rapidly expanding population density, outdoor ground mount physical footprint can be a major limiting factor in executing these projects.
Recent innovations with Lithium-Ion technologies allow for a much greater energy density in kWh storage per square foot, allowing projects that would not have been feasible several years ago.
More Challenges in Battery Storage Deployment
Common barriers to storage deployment go back to the rate at which battery storage technologies and their applications evolved and the flexibility and diversity of battery storage. These include:
False Perceptions of Cost: Since costs continue to drop quickly, key decision-makers may possess outdated information about systems’ costs. They may have a false perception of the batteries’ cost, thinking they cost the same as a year or six months ago.
Lack of standardization: Generally, participants in early-stage markets must deal with diverse technical requirements and various policies and processes. Since battery suppliers are no exception, lack of standardization can be a roadblock to further deployment.
Outdated market design and regulatory policy: As the case with all emerging technologies, regulatory policy lags behind current energy storage technology. Apart from wholesale market rules, there is a need to update retail rules, especially as commercial, residential, and industrial interest develops.
Incomplete definition of energy storage: Surprisingly, energy storage can have an identity crisis. Policymakers and stakeholders around the globe may struggle to define the actual meaning of fast-acting battery storage.
New York is a densely-populated market in continuous growth and needs innovative technologies to resolve the evolving energy challenges. Battery storage systems are critical tools to overcome these challenges and a sustainable solution to increase renewable deployment. Overcoming the common hurdles to successful battery storage deployment will provide an effective store and discharge power. Thanks to their size, batteries are discharged closer to the greatest demand, thereby reducing the need for new transmission lines.