New York State Public Service Commission Approves the Retail and Residential Energy Storage Program Implementation Plan
On June 20, 2024, the Public Service Commission (Commission) issued the Order Establishing Updated Energy Storage Goal and Deployment Policy (2024 Order), establishing an increased goal of deploying 6 gigawatts (GW) of energy storage by 2030 (up from 3 GW), with 1,500 megawatts (MW) of retail energy storage and 200 MW of residential energy storage, and additional bulk storage.[1] The New York State Energy Research and Development Authority (NYSERDA) submitted a Retail and Residential Energy Storage Program Implementation Plan (Plan), which was approved by the Commission with modifications on February 14, 2025 (2025 Order).[2]
Residential Energy Storage Program (Residential Program)
The Residential Program will be allocated $100 million for incentives, from the $1.2 billion program budget authorized by the 2024 Order. NYSERDA proposes the following incentive block: (1) a 10 MW/25 MWh capacity and energy target with an incentive rate of $250/kWh and total funding of $6.25 million for Con Edison Block 1; and (2) a 10 MW/25 MWh capacity and energy target with an incentive rate of $200/kWh, with total of $5 million for Block 1 for Rest of State.[3] NYSERDA plans to allocate 40 percent of total program capacity (80 MWs) towards the Residential Inclusive Storage Incentive (Residential ISI) for projects throughout the State, with a Block 1 capacity and energy target of 10 MW/25 MWh at an incentive rate of $450/kWh, and total funding of $11.25 million. In the Plan, NYSERDA also provides detail for qualifying contractors and builders and the proposed process for inspections and photo evaluations as part of quality assurance. The Commission will not require specific maturity requirements or project eligibility criteria for neither the Residential Program nor the Retail Program, and will instead require NYSERDA to include the same in its Program Manual.
As clarified by the Commission in response to comments on the Plan, Projects in the Residential Program that receive an incentive must participate in the relevant utility dynamic load management (DLM) program for the project’s location, if available. Similarly, the Commission clarified that projects with an executed non-wire alternative (NWA) project contract on or before the effective date of the 2025 Order will not be eligible to receive the Retail or Residential storage incentive. Either Retail or Residential projects which execute NWA project contracts after the effective date of the 2025 Order will be eligible for these programs prior to entering into the NWA contract.
Retail Energy Storage Program (Retail Program)
The Retail Program will be allocated $891.5 million for incentives, from the $1.2 billion program budget authorized by the 2024 Order. NYSERDA proposes the following incentive block: (1) a 300 MW/1,125 MWh Block with a $125/kWh incentive rate and total of $140.6 million in funding for New York City; (2) a 100 MW/375 MWh Block with a $125/kWh incentive rate and total of $46.8 million in funding for Westchester; and (3) a 150 MW/563 MWh Block with a $175/kWh incentive rate and total funding of $98.4 million for Rest of State. NYSERDA would propose subsequent blocks, incentive levels, and funding at a later date to meet the 1,500-MW target. In response to comments, the Commission declined to alter this proposed retail block, but did indicate that in the revised Plan, NYSERDA shall describe how future incentive levels and blocks will be calculated. NYSERDA also proposed to allocate a minimum of 50 percent of the total Retail Program (750 MW) to New York City projects and a minimum of 10 percent (150 MW) in Zone I; a minimum of 35 percent of behind-the-meter retail storage in disadvantaged communities (DACs); and 60 MW for a Retail Inclusive Storage Incentive (Retail ISI), for eligible projects at critical facilities in DACs (such as affordable housing properties, food banks, homeless shelters, etc.). The first block for the Retail ISI will be set at 15 MW/45 MWh, with an incentive rate of $350/kWh and total funding of $15.7 million.
Projects eligible for the Retail Program include energy storage projects up to 5 MW/20 MWh AC and include projects that are behind-the-meter, front-of-the-meter connected into the utility distribution system, and utility, non-demand storage projects paired with behind-the-meter solar. Eligible projects must be new, permanent projects, have a minimum 10-year manufacturer's warranty, have obtained interconnection agreements, meet minimum safety requirements, and enter service by December 31, 2030, unless extended by NYSERDA. Further, front-of-the-meter standalone storage projects up to 5 MW-AC, or energy storage paired with solar that receives Value of Distributed Energy Resource (VDER) compensation would be eligible for the Statewide Solar for All (SSFA) Program. The Commission directed NYSERDA to include in the revised Plan that participants in the NYISO DER Aggregation program are eligible to participate in the Retail Program as well.
Once a project with a retail capacity of 1 MW-AC or greater is included in the Retail program and receives an incentive it must pay prevailing wage and enter into a labor agreement. NYSERDA proposes a quality assurance system conducted via onsite field inspections and photographs once projects are mechanically complete, but before energization. NYSERDA also proposes that the Retail Program adopt certain recommendations of the Fire Safety Working Group, including peer review, emergency response plans, and first responder training. These requirements already apply to projects in New York City but will now apply statewide. In the 2025 Order, the Commission directed NYSERDA to implement any new fire safety requirements reflected in updates to the New York State Building Code. Lastly, NYSERDA will support predevelopment activities and technical assistance for projects serving lower- and middle-income (LMI) housing, DACs, and affordable housing. In response to comments on the Plan, the Commission did not establish specific DAC program criteria and left it up to NYSERDA to determine and include in the Program Manual.
Hodgson Russ Insights:
Ramping up energy storage is not only an essential element in the State’s energy transition efforts, but also a critical aspect of addressing increased electric demand from transportation, data centers, and other decarbonization efforts. With the NYISO reporting that 126 fossil-fuel generators relied upon by the State are at least 40 years old, the need – and the opportunity – have never been greater.
This Order furthers a years' long process led by NYSERDA to ensure the necessary revenues are available to attract needed development. Developers should pay close attention to the NYSERDA Program Manual for details on obtaining available incentives.
For more information on the Retail and Residential Energy Storage Program Implementation Plan, contact Daniel Spitzer, Alicia Legland, or any member of the Hodgson Russ Renewable Energy Practice.
Disclaimer:
This client alert is a form of attorney advertising. Hodgson Russ LLP provides this information as a service to its clients and other readers for educational purposes only. Nothing in this client alert should be construed as, or relied upon, as legal advice or as creating a lawyer-client relationship.
[1] Case 18-E-0130, In the Matter of Energy Storage Deployment Program, Order Establishing Updated Energy Storage Goal and Deployment Policy (June 20, 2024) (https://documents.dps.ny.gov/public/MatterManagement/ CaseMaster.aspx?MatterSeq=55960&MNO=18-E-0130).
[2] Case 18-E-0130, In the Matter of Energy Storage Deployment Program, Order Approving Implementation Plan with Modifications (Feb. 14, 2025) (https://documents.dps.ny.gov/public/MatterManagement/ CaseMaster.aspx?MatterSeq=55960&MNO=18-E-0130).
[3] “Rest of State” includes territories of Orange and Rockland Utilities, Inc., Central Hudson Gas & Electric Corporation, Niagara Mohawk Power Corporation d/b/a National Grid, New York State Electric & Gas Corporation, and Rochester Gas and Electric Company, Inc.
