By Michael Kuser

The New York Public Service Commission on Thursday ordered the state’s utilities to open participation in their “value stack” programs to distributed energy resource projects up to 5 MW, more than doubling the current 2-MW limit starting April 1.

The commission’s Value for Distributed Energy Resources (VDER) Phase I order of March 2017 (Case 15-E-0751) directed that compensation for eligible DER transition from net energy metering (NEM) to the “value stack,” a methodology that bases compensation on the benefits provided by the resources. (See NYPSC Adopts ‘Value Stack’ Rate Structure for DER.)

“Our decision to expand the size of the projects eligible for compensation will further reduce costs and spur the development of solar power, energy storage and other localized forms of electric generation,” PSC Chair John B. Rhodes said.

Commissioner Diane Burman asked if Department of Public Service staff had discussed with NYISO what impact New York’s expansion of eligibility might have on the wholesale market, considering FERC’s recent order that RTOs and ISOs revise their tariffs to allow energy storage resources full access to their markets. Each grid operator will be required to develop a “participation model” for storage resources and establish a minimum participation threshold not to exceed 100 kW. (See FERC Rules to Boost Storage Role in Markets.)

“I don’t believe there were discussions with the ISO about this specific increase,” DPS Assistant Counsel Ted Kelly said. “Projects of this size already are covered by utility interconnection rules rather than ISO interconnection rules, so that’s not a change, and also would generally be covered by utility compensation policy, currently by the buyback rate, or in some cases, for some small hydro producers, by long-term contract with the utility.”

The commission last month also approved implementation of the fourth tranche in its VDER tariff, continuing the transition of DER away from NEM.

The DPS’ consumer advocate, the Utility Intervention Unit, expressed concerns about expanding eligibility while a rehearing petition challenging those regulations is pending.

However, the commission ruled that because it was not increasing the total capacity allocation for community distributed generation resources, its order “will not increase the total potential customers for DER suppliers, nor is there any reason to believe it will result in longer contracts than would otherwise be employed.”

PSC OKs Con Ed Energy Storage Tariff

The commission last week also approved amendments to Consolidated Edison’s tariff intended to increase the ability of energy storage to export power to the utility’s primary and secondary voltage distribution systems, but it ordered the utility to clarify vague language that “may lead to unnecessary disputes between customers and the company.”

Con Ed’s changes will broaden the definition of energy storage beyond batteries to include flow batteries, flywheels, compressed air systems and other technologies. The utility will also expand the ability for energy storage systems to participate in any non-wires alternative project, instead of a few specific projects such as the Brooklyn-Queens Demand Management program.

Energy storage technologies equipped with inverters will be allowed to export to either the secondary or primary voltage distribution system, whereas non-inverter-based technologies will be limited to exporting to the primary voltage system.

Standalone energy storage systems will be excluded from earning the reliability credit applicable to standby service customers, which is designed to compensate customers for offsetting their native load.

In response to concerns by the New York Battery & Energy Storage Technology Consortium that standalone energy storage systems would be charged retail rates for charging and wholesale rates for discharging, the commission ruled those issues will be considered as part of Phase II of the VDER proceeding.

Gov. Andrew Cuomo last month announced his clean energy jobs and climate agenda, which includes directing NY Green Bank to invest $200 million toward meeting an energy storage target of 1,500 MW by 2025. In November, Cuomo signed legislation requiring the commission to establish targets for energy storage by early 2018.

The New York State Energy Research and Development Authority is also this year investing at least $60 million in storage demonstration projects. (See Cuomo Pushes Clean Energy in Annual Address.)

Burman reiterated her concerns about the VDER expansion, asking whether DPS staff had done their own analysis or had “reached out to the ISO in terms of the recent cases with FERC as it relates to the wholesale market, energy storage and the DER issues.” She also asked how the Con Ed order would affect the recent state bill on energy storage and its pending amendments.

“We are in continuous discussion with the ISO related to their roadmap in addition to our own development of a storage roadmap, so it’s ongoing,” said Marco Padula, DPS deputy director for market structure. “This is one piece of the puzzle. It’s a very complicated puzzle, but this is one step in a very positive direction of enabling storage to connect to the grid.”

PSC Accepts OSW Environmental Impact Statement

The PSC also resolved that, as lead agency, it has completed and accepted a draft generic environmental impact statement for a state-mandated program (18-E-0071) to procure 2.4 GW of offshore wind energy by 2030. Public comments on the draft will be accepted by the commission until April 9.

NYSERDA in January issued a master plan for offshore wind and filed a policy paper with the commission proposing two initial offshore wind procurement rounds of 400 MW, one each in 2018 and 2019.

The master plan projects that the full deployment of offshore turbines by 2030 would reduce greenhouse gas emissions by more than 5 million short tons, or approximately one-third the expected reductions from new renewable energy projects developed to meet the 50% renewable electricity target under the state’s Clean Energy Standard. (See NY Offshore Wind Plan Faces Tx Challenge.)

Thomas Rienzo, DPS chief of clean energy programs, said that NYSERDA’s policy paper does not propose development of a particular offshore wind generation facility or site. However, he said the paper does include various program and financing options intended to broadly apply to the development of multiple projects over time in different locations, which will result in installation of 2.4 GW of offshore wind able to deliver electricity by 2030.

“Since these options are strictly financial, the environmental impacts are not expected to vary among the options presented,” Rienzo said.

Rhodes said, “Moving forward to enable offshore wind that is appropriately sited and in careful consideration of environmental impacts is critical to achieving the state’s vital clean energy goals.”

PSC Orders Revision to ZEC Calculation for LSEs

The PSC on Thursday ordered NYSERDA to suspend 64.4% of energy service company Astral Energy’s zero-emission credit (ZEC) obligation for the April 1, 2017, to March 31, 2018, compliance period. It also directed NYSERDA and DPS staff to modify the way in which load-serving entities remit ZEC payments.

The commission’s Feb. 22 order directed that ZEC obligations no longer be based on a fixed-fee payment structure calculated from each LSE’s historic share of the statewide load, but rather on a flexible, “pay-as-you-go” model based on each LSE’s actual load.

Astral twice petitioned the PSC for relief, saying in January 2018 that its load had dropped a total of 64.4% since the 12-month period used to calculate each LSE’s percentage of total load, in turn reducing its ZEC obligation. The company argued that, as a result, the number of ZECs it was required to purchase for the current compliance year created a financial burden without reasonable compensation.

Although the overpayment would ultimately be refunded through the true-up process, Astral said that it nonetheless represented a substantial burden, as it was being required to bear an interest expense not borne by other LSEs.

In approving the order, Rhodes said, “This item is an important example of our approach to managing our policy-driven programs, particularly the aspect where we adjust the mechanics of their implementation as circumstances change, and … in a manner that’s consistent, predictable and pragmatic.”

In August 2016, the commission adopted the Clean Energy Standard, which requires LSEs, including ESCOs, to purchase ZECs from NYSERDA in order to preserve existing zero-emission nuclear generation resources.

The commission’s Nov. 17, 2016, order approving cost recovery in the same proceeding required all LSEs to enter into contracts with NYSERDA for the purchase of renewable energy credits (RECs) and ZECs monthly, beginning Jan. 1, 2017, for RECs and April 1, 2017, for ZECs.