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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