ALBANY, N.Y. — The state with the highest goal for installed energy storage also has some market structures that make it hard for the private sector to pursue those goals.

The 2023 Capture the Energy Conference & Expo featured ideas on moving past the challenges in an environment where storage is expected to become indispensable to vehicles, structures, the grid and society itself.

Storage is boosted by favorable government policy, tax incentives and intensive research. It is hampered generally by some of the same challenges that face other renewable energy sectors: rising costs, still-evolving technology, workforce and supply chain shortages and interconnection delays.

In New York, there is the added barrier of a wholesale power market that is not favorable for storage. But the state, its ISO and the industry are working on these things.

“We have an industry that is really at the center of the transition,” William Acker, executive director of the New York Battery and Energy Storage Technology Consortium (NY-BEST), said as he welcomed the crowd to the expo Wednesday. “This conference is going to delve into those opportunities … we’re going to hit head-on some of the key challenges, also.”

Batteries get attention because they are an available technology, but as its name indicates, NY-BEST advocates for all other forms of energy storage, too.

Doreen Harris, CEO of the New York State Energy Research and Development Authority, emphasized how important storage will be to a future grid where intermittent wind and solar provide a sizable percentage of the state’s electricity.

“When we think about how we get from here to there, storage is, full stop, critical to enabling the decarbonization that we are talking about,” she said.

The state’s strategy relies on storage in three ways, Harris said: to serve as a power source for peak demand; to make the grid more flexible; and to be an avenue for developing new technology.

The state has set a goal of 6 GW installed by 2030, but it may need 12 GW by 2040 and up to 21 GW by 2050, she said.

“Those are really big numbers, but they’re also very necessary numbers. That’s why we’re all here today, to drive toward that outcome.”

Developing a viable form of long-duration storage — days-long rather than hours-long — is essential to meeting those goals, Harris said, and is a focus area for the research support NYSERDA provides.

Barriers

Large-scale deployment of storage in New York has not kept pace with the ambitions set for it.

NYSERDA attributes this to two primary factors: the slow interconnection process and the structure of the wholesale energy market.

Interconnection delays are universal, but energy storage faces some unique market challenges in New York.

“As identified in the 2022 Energy Storage Roadmap, current wholesale market revenue is insufficient to support energy storage deployment,” a NYSERDA spokesperson said, explaining that this includes “market uncertainty, market pricing not fully representative of system needs, and the fact that market prices are based on current system conditions.”

Beyond this, the market is not particularly volatile: There aren’t the price swings that allow storage operators to make a steady profit by charging batteries with low-cost power and selling the power back into the grid for a significantly higher price.

The state’s response has been to propose an index storage credit mechanism for storage projects larger than 5 MW. It is being drawn up by NYSERDA and the Department of Public Service; the Public Service Commission will have final approval.

NYISO President Rich Dewey told the audience that the ISO is developing ways to enhance energy market products such as a hybrid pricing scheme for co-located storage and generation resources and a ramping product that would incentivize a rapid response capability to replace the gas turbine peakers that are targeted for retirements.

Attorney Adam Conway, a partner at the Couch White law firm who specializes in energy project development, touched on some of these issues when he spoke at the conference.

He told NetZero Insider that the proposed credit aims squarely at the problems facing storage development and is similar in concept — but not details — to the well-received renewable energy certificate system.

“What they’re proposing is really a brand-new compensation scheme,” Conway said. “My understanding is that it’s not one that has been used elsewhere yet.”

Other obstacles face storage development, including local opposition that is often based in ignorance of the technology, he said.

But he said it is important to remember that these are the early days of energy storage. He said he is reminded of the early years of community solar, which Couch White was heavily involved in.

“It felt like at the time it was taking a lot of time to get the program off the ground,” Conway said. “I think you can draw some parallels to battery storage.”

Extensive community education helped build public acceptance of solar, and NYSERDA is mounting the same effort with storage, he said.

“My sense is this is just going to take time.”

Infrastructure

Bart Franey, vice president for clean energy development at National Grid (NYSE: NGG), spoke of the upgrades being made to prepare for renewable energy and storage. New York’s power grid was designed a century ago, he said, and is not optimized to support repeated large-scale charging and discharging of batteries.

“We see that short- and long-term storage are essential to overall reliability of system operations,” Franey said. “However, short-duration storage works best to address transmission security, while long-duration is needed for supply security.”

“A four-hour battery works very well in addressing transmission security,” he said. “However, we need hundred-hour dispatchable resources to address supply security.”

Venkat Srinivasan, who heads the Argonne National Laboratory’s Collaborative Center for Energy Storage Science, said the United States lags in developing a domestic manufacturing ecosystem and needs to not just catch up with China but leapfrog ahead of it.

“You really want to go beyond what is happening in the rest of the world,” Srinivasan said, and that means moving beyond lithium battery technology as the market matures, and beyond batteries.

There is much interest and activity in the non-lithium battery pace, he said, but no clear front-runner yet among those alternative technologies.

Key strategies for the United States developing a leadership role in batteries are maximizing attractiveness for investments; supporting research, innovation and commercialization; helping industry secure access to critical minerals and low-carbon infrastructure; developing education and training curricula; and most of all, establishing a workforce development pipeline.

“The one big topic that kept coming up is workforce,” Srinivasan said. “Everybody is worried about the workforce. This is probably one of the biggest challenges they’re going to face in the energy transition.”

Necessity

New York Public Service Commission Chair Rory Christian reiterated the importance of getting it right. “Storage is going to offer a degree of flexibility that is only going to become more valuable over time.”

The PSC and NYSERDA are developing a roadmap for the buildout of grid-scale storage in New York state, he said, but the technology has many behind-the-meter applications as well, particularly when combined with smart meters.

“I believe through the proper alignment of incentives, through proper establishment of markets, battery storage in a residential setting can completely transform our relationship with energy at a level not previously imagined,” Christian said.

NYISO President Dewey spoke of the balance the grid operator is trying to maintain as dirty-but-steady fossil fuel generation assets are retired in favor of clean-but-intermittent renewables.

The first tranche of peaker retirements was May 1, he said, and there needs to be caution about prematurely shutting down the others.

NYISO has changed its annual reliability study to a quarterly study because the rate of change has accelerated so much.

“When you think about the promise that storage brings to that transition, and the facilitation of that transition, it gives us so many more options, and it’s such a valuable tool,” he said.

NYISO is proud to have developed the first set of integrated energy storage rules, Dewey said, and is looking at how to fine-tune the market signals that are needed to attract the right mix of development.

He acknowledged a common complaint at this conference and elsewhere: the slowness of the interconnection process.

“I know it’s viewed as a barrier and a pain point,” Dewey said, but NYISO has a lot of work to do. On Thursday morning there were 520 projects in the bulk system interconnection queue. Among them there were 178 storage proposals rated at a combined 28 GW.

“That is a phenomenal increase from where we were even a couple of years ago,” he said, and he only expects the numbers to grow.

NYISO has added personnel and is looking at revising its processes and procedures to streamline the interconnection process, Dewey said.

“It’s not quite as simple as just throwing resources and manpower at it. But I want you to know that we recognize how important this is, and you have our commitment that we’re going to very aggressively approach that.”