PSC Approves NYSERDA’s Bulk Energy Storage Program Implementation Plan

On March 21, 2025, the New York State Public Service Commission (“PSC”) adopted, with modifications, the draft Bulk Energy Storage Program Implementation Plan proposed by the New York State Energy Research and Development Authority (“NYSERDA”). Efforts towards a finalized implementation plan have been ongoing since June 2024, when Governor Hochul first announced that the PSC had approved an Energy Storage Roadmap in furtherance of the state’s goal to achieve six gigawatts (“GWs”) of energy storage by 2030. The PSC’s subsequent 2024 Energy Storage Order approved the energy storage programs described in the Roadmap in order to achieve a total of 4,700 megawatts ("MWs”) of incremental installed capacity of energy storage spanning the bulk, retail, and residential sectors. The 2024 Energy Storage Order established a statewide goal of deploying 3,000 MW of new bulk energy storage by 2030 and required that NYSERDA submit a draft Implementation Plan that outlines the methods and budget that could be used to achieve the bulk energy storage deployment target. The approval of NYSERDA’s Implementation Plan, with conditions, marks a major milestone in this process.

Specifically, the PSC directed NYSERDA to modify the implementation plan to include concerns raised by public comments and PSC feedback on several key areas, including minimum maturity requirements, uniform efficiency factors, and Reference Energy Arbitrage Price (REAP) Calculation Methodology. The contents of the order, including NYSERDA’s proposals and the PSC’s comments, are further described below:

Maturity Requirements

The PSC noted that the maturity requirements established in the 2024 Energy Storage Order may not align with the development processes that bulk energy storage projects go through, and considered  NYSERDA’s proposed potential maturity requirements in the Implementation Plan to be a more accurate representation of the relevant maturity metrics that a bulk energy storage resource would be expected to fulfill.  The PSC also recognized that specific maturity requirements may change from one solicitation to the next based on a variety of factors.

However, the PSC reiterated its position that certain minimum maturity requirements are important to increase the chances that viable projects receive ISC awards. As a compromise, the PSC will require that NYSERDA receive confirmation in writing that projects less than eight hours in duration have an active interconnection request with the NYISO or through a relevant utility process, as well as have evidence via a permitting plan that the project has a reasonable pathway towards securing all permits within the proposed schedule.  For resources with eight or more hours of duration, the PSC will require that NYSERDA receive confirmation in writing of an interconnection plan that the project has a reasonable pathway to securing an interconnection agreement within the proposed schedule and evidence via a permitting plan that the project has a reasonable pathway to securing all permits within the proposed schedule. 

Beyond these minimum requirements, the PSC accepted NYSERDA’s proposal to create and modify additional maturity requirements within each procurement in consultation with DPS Staff and will reflect such in the RFP documents for each solicitation.

Weighting of Price and Non-Price Factor for Bid Evaluation

NYSERDA proposed a 60/40 weighting of price and nonprice factors, respectively, during the bid evaluation process to account for attributes of bulk energy storage projects that are important to the electric system but may not be captured on a purely cost-based analysis. The PSC adopted this 60/40 weighting as proposed, reasoning that this breakdown gave a larger emphasis on project cost while still giving NYSERDA the ability to use non-price factors as a significant component during the bid evaluation. For the non-price factor elements, the PSC gave NYSERDA permission to alter the weightings of the subcategories from one solicitation to the next in consultation with DPS Staff. These weightings of subcategories must be included in the RFP documents for each solicitation.

Uniform Round Trip Efficiency 

NYSERDA’s proposal to utilize uniform RTEs as part of the Reference Energy Arbitrage Price (“REAP”) calculation based on technology type received strong support from the PSC. In its draft Implementation Plan, NYSERDA proposed uniform RTEs for three categories:

• 85 percent for lithium-ion technologies
• 65 percent for non-lithium-ion technologies; and
• 45 percent for multi-day technologies.

The PSC agreed that the inclusion of uniform RTEs in the REAP calculation based on technology type is more reflective of how bulk energy storage systems operate and found that Uniform RTEs balance the need for accuracy in calculating the REAP while not being overly complex to administer. The PSC gave NYSERDA leave to alter the uniform RTEs from one solicitation to another, in consultation with DPS Staff.

Fire Safety

NYSERDA’s proposed fire safety rules for bulk energy storage systems, including a peer review requirement, emergency response plan maintained on-site, and annual site-specific first responder training for the fire department where the energy storage facility is located, were well supported by both the PSC and stakeholders. The PSC accepted NYSERDA’s proposed fire safety requirements but recommended that NYSERDA continue its outreach work so that local governments and municipalities gain comfort with energy storage systems operating within their jurisdiction. The PSC will also require NYSERDA to update its fire safety rules if and when the New York State Fire Prevention and Building Council makes relevant updates regarding energy storage systems to the New York State Uniform Fire and Building Code.

Definition of Operational

The 2024 Energy Storage Order adopted the ISC mechanism described in the Roadmap to help drive investment in bulk energy storage resources. The ISC represents 1 MWh of energy storage capacity that is operational and available on a given day, with units considered either available or unavailable for the entire day. However, the PSC emphasized the value in accounting for partial availability in terms of time and capacity when calculating the number of ISCs a bulk energy system is eligible to receive over the course of a month. Based on this, the PSC directed NYSERDA to further describe how partial availability will be addressed in terms of time and capacity under the operational requirement, including how monthly availability percentages will be determined relying upon Generating Availability and Data Systems (GADS), that the NYISO relies upon and how the availability percentage is applied to the maximum potential monthly ISCs to calculate how many ISCs are created over the month. 

Duration Targets in Solicitations

NYSERDA proposed the procurement of two separate resource duration categories in each solicitation, the first being for resources with a duration of 4+ hours and the second for resources with a duration of 8+ hours. NYSERDA proposed to disallow resources with a duration of two hours from participating in ISC solicitations on the grounds that these resources may experience large drops in capacity revenue over time which would result in large ISC payment obligations from NYSERDA to the developer. NYSERDA proposed to have flexibility within each solicitation to consider viable 8+ hour projects larger than 200 MWs and adjust the overall procurement size so that other high value 4+ hour projects can be considered. If a solicitation does not attract at least 20 percent of viable 8+ hour resources, NYSERDA proposed to allocate the remaining volume to viable 4+ hour projects and adjust future solicitations to meet the 20 percent 8+ hour target.

The PSC agreed that having two separate procurement categories based on duration is beneficial in that the bid selection process more accurately compares projects of like attributes. However, the PSC disagreed with NYSERDA’s proposal to disallow the participation of 2-hour energy storage resources in ISC solicitations and to receive contracts, on the grounds that these resources can provide resiliency to New York’s electric grid by supplying many of the same services that longer duration resources can provide. The PSC directed NYSERDA to include two separate duration categories in each solicitation:  One being for energy storage resources up to 8-hours in duration, and the other for resources with duration of 8+ hours. The PSC additionally directed NYSERDA to ensure that the ISC cost evaluation accurately assesses for the potential in capacity price decline, and to cap the amount of 2-hour resources that can be awarded ISC contracts to 10 percent of the total amount of the 3 GW of planned bulk energy storage procurements.

The PSC also accepted NYSERDA’s proposal in the Implementation Plan to have the flexibility to consider viable 8+ hour duration projects greater than 200 MW and adjust the overall procurement size to consider other high value projects with a lower duration. It also accepted NYSERDA’s proposal that, if a solicitation does not attract 20 percent of viable 8+ hour projects, it may allocate the remaining volume to shorter duration resources and adjust further solicitations accordingly in consultation with DPS staff to achieve the 20 percent 8+ hour target.

Index Storage Credit (“ISC”) Daily Generation

The current ISC definition specifies that one ISC will be generated for each MWh of energy storage discharge capacity that is operational and available for dispatch on a given day. The amount of ISCs that are generated daily impact the calculation of the Reference Price and Strike Price bid comparisons. The Roadmap contemplated ISC generation for resources up to 8-hours, and the PSC emphasized that resources that are in the 8+ hour category that vary by duration may not be compared fairly. Recognizing that the ISC structure was designed with resources up to 8 hours in duration as the focus, the PSC elected to limit daily ISC generation to the MWh capacity of an 8 hour resource at present, which will allow for consistency when NYSERDA is comparing ISC bids from resources with 8+ hours in duration.  However, the PSC will also consider limited modifications to the ISC mechanism for multi-day storage resources.

Reference Energy Arbitrage Price (REAP) Calculation Methodology 

NYSERDA proposed to use two separate categories when calculating the REAP. The first used the top and bottom (TB) priced four or six hours in any given day for an energy storage resource, depending on its duration, while the second used the top and bottom eight hours for resources that are 8 hours or more in duration. Despite public comments to the contrary, the PSC found that the two separate categories proposed aligned with the current design of the ISC. However, the PSC noted that the Roadmap acknowledges the importance of long duration and multi-day storage in helping achieve the decarbonization of New York’s electricity sector and, as such, found it important that these resources have an avenue to participate in the ISC solicitations. Therefore, the PSC directed NYSERDA to propose an alternative methodology for estimating expected market revenue for 12+ hour resources by September 1, 2025. This filing will be subject to a public comment period under SAPA and subsequent consideration by the PSC.

Limitation of Liability

NYSERDA described that there are instances when the REAP could exceed the strike price of a project in a given month. In those instances, the project would be required to make a payment to NYSERDA as opposed to receiving a payment. NYSERDA proposed in its Implementation Plan to limit the ISC payment a developer must pay to NYSERDA in these situations to the negative value of the Strike Price. For example, if a 100 MW / 400 MWh battery project had a strike price of $50, its maximum payment to NYSERDA in any given month would be limited to $600,000 ($50 x 400 x 30 days). NYSERDA explained that there are low-probability scenarios where energy market price volatility and/or capacity market prices reach extremely high levels, and a project is operational but is not able to participate in the market for reasons beyond its control. NYSERDA’s proposal to limit the ISC payment from a developer to NYSERDA is an attempt to address this low probability, high impact scenario. The PSC accepted this proposed limitation of liability for developers as a reasonable backstop.

NYPA and LIPA Participation

In the 2024 Energy Storage Order, the PSC recognized that the New York Power Authority (“NYPA”) and the Long Island Power Authority (“LIPA”) are involved in many key activities, including the development of energy storage, and recommended that both NYPA and LIPA voluntarily participate and accept ISC allocations proportional to their share of Statewide load for the bulk program.  Recognizing that NYPA and LIPA have the demonstrated ability to develop/procure bulk storage projects, NYSERDA was ordered to take such independent storage procurements into account in its assessment of the amounts of bulk storage needed through its solicitations and to propose how such projects shall be credited towards NYPA and LIPA load share compliance obligation.   The specific details for LIPA’s participation would be outlined in a BES contract between NYSERDA and LIPA.

The PSC agreed with the Implementation Plan proposal for NYSERDA to work with LIPA to determine an ISC equivalent credit for independently procured bulk energy storage in LIPA’s service territory. The Implementation Plan states that if NYPA decides to voluntarily participate and accept ISC cost obligations, NYSERDA would work with NYPA to credit its independently procured projects using the same crediting process as with LIPA. Bulk energy storage projects that NYPA pursues under its expanded authority whose revenue directly benefit groups other than NYPA customers would also be eligible to participate in ISC solicitations and receive ISC awards. To the extent that project revenues directly benefit NYPA customers, NYSERDA would allow these projects to participate in ISC solicitations and receive ISC awards only if NYPA is fully participating and accepting ISC cost allocation obligations as a Load Serving Entity.

The PSC also accepted NYSERDA’s participation and crediting proposal for NYPA as described in the Implementation Plan. Projects that NYPA develops where the revenues directly benefit groups other than NYPA customers will be able to participate in ISC solicitations and receive contracts since benefits are accruing to customers that are contributing to the costs of the ISCs. The PSC agreed with NYSERDA’s proposal to allow NYPA’s participation in ISC solicitations for projects it develops as an LSE only if NYPA voluntarily allows its customers to contribute toward the ISC cost obligations.

Hodgson Russ Insights

NYSERDA will now file a revised and redlined Implementation Plan reflecting the modifications discussed above within 30 days of the PSC’s order. The proposed Implementation Plan filed by NYSERDA and approved by the PSC with modifications will help facilitate the development of 3,000 MWs of new bulk energy storage resources in New York. Energy storage plays a critical role in supporting New York’s electric grid by enabling the integration of large quantities of renewable energy, helping to smooth generation, reduce curtailment, and shift renewable generation to where and when it is needed most. As New York electrifies buildings, transportation and industrial end uses, accelerating energy storage deployment will provide a flexible solution to help meet these additional demands on the grid.

Hodgson Russ will continue to monitor the PSC and NYSERDA’s efforts toward the drafting of their revised Bulk Energy Storage Program Implementation Plan. For further information, please contact Dan Spitzer, John Dax, Alicia Legland, or any other member of the Hodgson Russ Renewable Energy Practice.

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