Late last week, the New York State Department of Public Service
("DPS") and the New York State Energy Research and
Development Authority ("NYSERDA") issued a long-awaited
update ("Update") on the 6 GW
Energy Storage Roadmap, which was originally filed on December 28, 2022
("Roadmap") and identifies "market reforms and
cost-effective procurement mechanisms" necessary to help
achieve the State's energy and climate goals, including 6
gigawatts of energy storage by 2030. Public comments were received
on the Roadmap in early 2023, but there has been no action on the
Roadmap in nearly a year.
In the Update filed last week, DPS and NYSERDA revised the cost
estimates for the programs described in the Roadmap to reflect
inflation and wholesale capacity price forecasts. The cost
increases are demonstrated in the side-by-side comparison between
the original Roadmap and update, below. These figures do not
include administrative costs.
Program |
MW |
2022 Roadmap Estimated Program Cost (2022 Net Present Value |
Updated Roadmap Estimated Program Cost (Nominal Value) |
Updated Roadmap Estimated Program Cost (2024 Net Present Value) |
Retail | 1,500 | $438,000,000 | $100,000,000 | $488,551,975 |
Residential | 200 | $72,000,000 | $675,000,000 | $74,486,642 |
Bulk - Low Estimate | 3,000 | $474,000,000 | Not Provided | $701,452,253 |
Bulk - High Estimate | 3,000 | $1,186,000,000 | Not Provided | $1,421,798,456 |
As noted in the Update, these are the anticipated costs over the
twenty-one-year period during which the proposed programs would
make payments to projects, which would result in an average
increase of residential electric customer bills of $0.40-$0.64 per
month. The Roadmap also notes the cost of inaction – i.e.,
that achievement of 6 GW of energy storage by 2030 will
"reduce the projected future electric system costs by
approximately $2 billion, in addition to public health benefits
resulting from reduced exposure to harmful pollutants from fossil
fuel resources that would otherwise operate during peak demand
periods."
The cost increases predominately derive from updates to the
financial assumptions and sources used to estimate the program
costs. This includes a material change in the weighted average cost
of capital used to calculate financing costs (7.86% in the Update,
versus the 5.77% WACC used in the original Roadmap), as well as
increases in the assumed costs of both the retail and residential
program incentives.
The Update also provides revised deployment and procurement
schedules, with the bulk of the procurement now projected to take
place between 2025 and 2027 (instead of 2024 to 2026 as originally
proposed).
Given the significant updates to the project costs and schedules,
the Roadmap will be subject to a new public comment period (the
deadline for which has not yet been established). As a result, we
don't expect to see any PSC action on the Roadmap until at
least July 2024.
Our team is closely monitoring the state of New York's energy
storage market – which also includes forthcoming updates to
the NYISO tariff as discussed in our recent blog and rollout of the Inter-Agency Fire
Safety Working Group's Initial Recommendations – and we will
continue to provide updates on new developments.
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