While energy storage is not a new technology, the use of energy storage systems (ESS) coupled with solar or other distributed generation (DG) for emergency backup power and energy management, is a newer application of the technology, with significant implications. Policy makers and the energy industry see enormous market potential for energy storage because of its flexible capacity to both absorb and dispatch energy in locations and time periods where it is most needed, and to operate both in conjunction with and independently of the grid. This versatility makes ESS a critical tool to help achieve broader energy sustainability, grid modernization, and resilience goals including overcoming constraints inherent to renewable energy sources and increasing the penetration of renewable energy onto the grid, replacing traditional and costly investments needed to upgrade the grid, and enabling buildings to operate when the grid is down.

For a reference guide to the technical terms used throughout the document, please reference the DG Hub glossary.

Energy storage, in particular batteries, has traditionally been used for familiar purposes such as consumer electronics, electric vehicles, and for backup power for sensitive facilities such as data centers that require an uninterruptible power supply (UPS). However, energy storage used in buildings for energy management purposes, often referred to as “stationary storage”, is a newer use case and the market for this application is still nascent in most of the US.  Stationary storage is typically used to manage individual buildings’ electricity needs during both normal operations and power outages; as well as to support utilities, regional transmission organization (RTOs), and independent system operators (ISOs) in operating the electric grid.  The full range of uses and benefits is presented further in the Capabilities and Benefits section.

This document and the CUNY Smart DG Hub’s storage resources focus on battery ESS (BESS). However, a brief overview of various types of energy storage is provided for context (for a more comprehensive list, click here):

• Electrochemical storage refers primarily to batteries and fuel cells.  Until recently lead acid batteries were the most common type of chemistry. However, as lithium ion batteries became more commonplace in consumer electronics and cars, it is now the most utilized chemistry. Other battery chemistries on the market include: nickel cadmium, flow batteries, sodium sulfur, and electrochemical capacitors, among others. Other chemistries on the horizon include zinc, aluminum, and iron-based.
• Thermal energy storage converts surplus electrical energy into heat or cold that can be used at a later time. It is most often used in HVAC applications, especially to provide air conditioning and refrigeration, but is not typically used to provide back-up electricity. In some markets such as New York City thermal storage is widely deployed, and it has great market potential across the commercial building market in the US.
• Mechanical energy storage encompasses a variety of technologies. Some common types are pumped-storage hydroelectricity, compressed air, and flywheels. These technologies are typically used in grid management applications.

The terms Solar+Storage, Resilient Solar, and Microgrids share similarities but encompass different features. Typical grid-tied solar PV systems, without added storage, are required to automatically stop operating during grid outages to avoid feeding electricity onto the grid. This function is known as “anti-islanding” protection and is designed to prevent damage to the grid as well as injury to utility repair teams.  “Resilient Solar” (or “Resilient PV”) refers to solar coupled with storage or another type of resilience-enabling technology that can disconnect from the grid and allow it to continue operating during grid outages. 

The term “microgrid” refers to an electrical network, typically across a small number of buildings, that can disconnect from the central power grid and operate independently using its own power generation. Microgrids can utilize solar+storage, although other technologies can also be used including combined heat and power, fuel cells, and diesel or natural gas generators. 

For further information on resilient PV, see the Smart DG Hub Hardware Fact Sheet and the Smart DG Hub Retrofit Fact Sheet.

The uses and benefits that energy storage provides can be encompassed in the following categories, and additional information on specific applications can also be found here:

1. Resilience/emergency power:
• Provides backup power during emergencies and grid outages for a facility’s critical loads to enable the continuity of mission-critical operations and reduce business interruption losses.
• Enables energy independence by reducing dependence on centralized power grid.
2. Renewable energy support:
• Smooths out gaps in energy supply that stem from the intermittent output of solar and wind energy supplies.
• Extends the availability of clean power supply when needed, for example during peak demand periods, or at night when solar is not generating.
3. Demand management:
• Reduces the high costs associated with demand spikes on electricity bills through peak shaving.
• Adds flexible, on-demand reserve capacity to grid electrical supply.
• Facilitates load shifting to take advantage of lower prices during off-peak time periods for customers with Time of Use (TOU) electric rates.
• Generates additional revenues through participating in Demand Response programs (see page 7 of the DG Hub Economics & Finance Fact Sheet for descriptions of demand response programs available in NY).
4. Grid services and support:
• Reduces reliance on expensive coal and gas-fired “peaker plants” that are often high-emissions source of back-up power used by utilities to meet short periods of high demand.
• Reduces costly investments in new transmission and distribution infrastructure.
• Provides ancillary services for the electric grid’s stability such as frequency and voltage regulation.

Storage installations fall into three general size and customer categories:

• Residential and Small Commercial (e.g. 1-80 kW/kWh): Smaller storage systems are geared for mass consumers such as single-family homes or small commercial facilities and typically tied to the customer’s electric meter, referred to as a “Behind the Meter” (BTM) installation. They mainly function to provide emergency backup power, as an alternative or addition to diesel or gas generators (gensets), and as an enhancement to solar PV systems.
• Commercial, Industrial and Institutional (C&I) (e.g. 40-5,000 kW/kWh): Larger commercial, institutional, and industrial users commonly employ medium to large systems for emergency backup as well as peak load/demand management purposes. Larger electric consumers typically pay a significant portion of their energy bills to demand charges, whereas smaller consumers do not, and energy storage is ideally suited to reduce these demand charges.
• Utility- or Community-scale (e.g. 1,000+ kW/kWh): Large-scale or utility-level energy storage may also be used for emergency backup and demand management, and beyond these consumer-oriented uses, also for support and enhancement of the electric grid as outlined above. Typically utility-level storage is referred to as “Front-of-Meter” (FTM), in contrast to consumer-level BTM, as it is not tied to any single customer’s electric meter.

The following FAQ sections are organized into four areas – Hardware, Software, Policy, and Economics – and provide more in-depth information within each of these categories. This information is also designed to complement the DG Hub’s reports and fact sheets and NYC Resilient Solar Roadmap, and users are encouraged to explore and use these additional resources. 

The solar+storage hardware market is a dynamic environment with technologies rapidly evolving to meet new demands from various consumer segments, driving the market to provide hardware options that are more flexible and customizable.

Lead acid batteries have historically been the most common chemistry especially in UPS backup applications, but lithium ion is poised to take most of the market share in the foreseeable future as the cost of this technology is coming down, and because lithium-based batteries are generally better suited for revenue-capturing operations such as peak shaving which requires frequent (one or more daily) charge and discharge cycling (see NYC Resilient Solar Roadmap, pages 9-10).  As more systems are installed and the systems are worked harder through daily cycling, the industry is developing better, safer, longer lasting, and more robust systems.  

Hardware providers are also beginning to offer pre-packaged systems with integrated components, which can be deployed more rapidly. These systems offer more functionality and reduce or eliminate the need for complex, custom controls and unique software and algorithms, and can make ESS installations less technically complex since there are fewer compatibility issues between the various system components.  Finally, as the market expands, further innovation and cost reductions can be expected with technologies that are able to access additional value streams within the utility market.

FAQ's

Q1. What battery properties should I be aware of?  

The main properties relate to the capacity (size), performance, and longevity of the battery.  The following properties are important:  

• Capacity – battery capacity, often used synonymously with battery size, consists of two quantifiable elements: charge/discharge rate (kW) and energy storage potential (kWh).  The charge/discharge rate is a measure of how quickly the battery can provide energy to a facility or the magnitude of load that can be served, while the energy storage potential is a measure of the total quantity of energy that can be stored in the battery.  These two properties together quantify the size and duration of a battery project. For example, a battery that stores 40kWh can discharge a maximum of 10kW for 4 hours, and is measured as a 10kW/40kwh battery.

• Cycling/cycle life – a cycle is one “roundtrip” charge and discharge of the battery.  Batteries have a finite number of cycles that can be performed before the battery cells will need to be replaced – this is known as cycle life.  As an example, a battery with a cycle life of 5,000 could do a single cycle each day for about 14 years before replacement.  The cycle life of a battery is also dependent upon the depth of cycle discharge.  If batteries are routinely fully discharged (below ~20% state of charge) the cycle life will deteriorate substantially. 

• Efficiency – the efficiency of a battery system is typically reported as round trip efficiency, and refers to the amount energy that is lost in a battery in a single charge/discharge cycle.    

Design duty cycle – duty cycle refers to the proportion of time a battery is used, and it is important to understand how the duty cycle for a particular application will affect battery life.  Batteries used for backup applications are typically discharged only a few times per year when grid power fails.  These batteries should have low standby losses, fast reaction time, and degrade very slowly when kept on standby.  For revenue generating applications such as peak shaving, batteries typically undergo one or more charge/discharge cycles per day; batteries used for these purposes must have high round trip efficiency, schedulable controls, and high cycle life. These batteries are sometimes referred to as “deep cycle” batteries.

More details about battery properties and how different battery chemistries perform can be found in the DG Hub Hardware Fact Sheet.  

Q2. Can I connect energy storage to an existing solar array?  

Yes, a properly designed battery storage system can be connected to an existing solar array, without making many changes to the solar equipment, by coupling the systems on the AC side.  In order to enable the system to provide backup power, proper switches must be installed and some wiring re-configuration may be necessary.   The DG Hub Solar+Storage Retrofit Fact Sheet walks through the considerations for adding storage to an existing PV system.

Q3. Will my solar work during a grid outage without batteries?   

All grid-tied solar arrays are equipped with anti-islanding protections as required by international electrical codes (IEEE 1547) – this means that in the event of a grid outage, the solar array will de-energize to avoid unintentional back-feeding of power onto the grid (which would endanger line workers repairing the outage). However, if the array includes an inverter with an “emergency plug”, this would be energized whenever the sun is out and typically powers a standard 120-volt plug for use by critical loads such as a fridge or cell phone charger.

Q4. Does every battery system provide resilience?   

No, in order for a grid-connected battery system to provide resilience, meaning power during an outage, proper equipment and software must be in place to conduct appropriate switching.  Some batteries are configured to provide utility bill savings during grid-tied mode only.  When implementing a battery system, adding features to enable resilience is relatively simple but will add cost to the project.  

Q5. How long can energy storage power a building for?  

Replace “EPRI StorageVet” with “EPRI DER-VET”

Q6. What is the difference between grid-tied vs off-grid and how does a system behave differently between on/off grid? 

Grid-tied and off-grid batteries have much different functions.  Grid-tied energy storage is typically used to reduce utility charges by peak shaving or shifting loads to off-peak times when electricity prices are lower. Off-grid energy storage is used to provide energy either during an outage or when solar is not generating.  Some systems can switch between grid-tied mode and off-grid mode in the event of a grid outage.  Different control strategies are required for different grid modes, and systems must have the appropriate software required to be able to operate in grid-tied vs. off-grid mode.     

Q7. Will the battery reduce my utility bills?   

Battery systems will typically save money on utility bills only for customers that pay demand charges, time of use (TOU) rates, or other demand-related costs, by using the ESS for peak shaving or to shift electricity usage to non-peak times.  Customers on a flat rate with no demand charges (such as typical residential rates) would largely not see a reduction in utility bills.   

Q8. Should I wait until battery technology improves to invest in an energy storage system?  

Battery technologies are robust and well proven at this time. Additionally, batteries are currently cost effective in many markets. The best way to decide if a battery system is right for you is to look at all of the benefits that the battery will provide (monetary and resilience) and determine how much a battery system for your specific application will cost. With this information you can do a cost benefit analysis and see if it is the right time to implement a battery system.

Q9. What do I need to know about inverter hardware?  

At the most basic level, inverters simply convert DC (direct current) power produced from solar PV into AC (alternating current) power.  In most solar+storage applications, inverters are more advanced, making decisions about charging the batteries, providing electricity to the on-site load, and/or feeding electricity onto the grid. With appropriate switches, inverters can also allow for solar+storage (and/or other DG) to function as an “islanded” microgrid, providing power to an individual building or a community separately and independently from the primary electrical grid.  For more information see the DG Hub Hardware Fact Sheet, ‘Inverters’ section, pages 4-5. 

In solar+storage systems, the energy management and control software is sometimes an overlooked aspect of the design, but software is a key feature of storage projects that enables coordination between smart devices and can potentially improve system operations. For systems designed to interact with or enhance utility operations, software is a central component to enable these types of functions and unlock greater value between the battery system and the electrical infrastructure.

There are two main types of software in a solar+storage system: (1) software tools for design and sizing and (2) software used for operation of the system which includes monitoring, controls and energy management in off-grid and grid-tied systems.  Some level of communication and controls to monitor set points and trigger alarms to alert operators of a problem are necessary in all projects for safety.  For more information see the Smart DG Hub NYC Resilient Solar Roadmap, pages 26-28.

The complexity of the controls required for a project depends on the use of the system. A small residential system used for emergency backup requires less complex controls than a large commercial system with multiple buildings and multiple sources of energy (PV, batteries, backup generators).  The complexity of the software in a grid-tied system also depends on the services and functionalities it can provide.  Software that can shave the peak demand and provide ancillary services requires sophisticated software algorithms.  Investments in advanced controls are often necessary to maximize benefits.

Presently, a wide variety of communication languages and protocols is used for the various layers of monitoring and controls software which can create compatibility challenges between equipment from different vendors or complicate system design. Efforts to establish greater uniformity across the industry are underway through the SunSpec Alliance, a trade group of solar and storage industry participants that is working to standardize all functions and communications protocols. Additionally, the North American Electric Reliability Corporation (NERC) has established a protocol for Critical Infrastructure Protection (CIP) cybersecurity standards.

FAQ's

Q1. What level of software is appropriate for my system?  

This depends on the size of the solar+battery system, and which functions the system is designed to accommodate. Details of different software communication layers and their functions are outlined in the DG Hub Solar+Storage and Microgrid Communications Fact Sheet. At a minimum, all battery energy storage systems utilize a BMS (Battery Management System) to control and monitor the system’s operations and status, and an ESMS (Energy Storage Management System) to manage external communications, for safety and battery optimization.  More advanced systems may interface with a larger communications system for interaction with the grid.  

Q2. Does all of the software that I need for my system come pre-loaded?  

Some solar+battery systems are designed and sold as a complete packaged system with software monitoring and controls included. Large systems with multiple generation sources and complex designs often require an additional layer of controls to coordinate all assets and optimize dispatch.

Q3. Can I forgo software and have someone charge and discharge the battery manually? 

No, PV systems with battery storage all need some basic type of charge controller that prevents over-charging and over-discharging which would damage the battery. Charge controllers may also have a low voltage disconnect to prevent the load from draining the batteries and maximum power point tracking (MPPT) capability. Many inverters have dual functions that allow them to control the charge on the batteries in addition to providing their standard power conversion functions.

Q4. Can a cyber-attack be used to damage the battery or endanger the facility?   

It is unlikely that damage will be done to the battery through a cyber-attack, but attempted cyber-attacks on power infrastructure have been reported. However, efforts have been made to minimize this through the NERC cyber security requirements. Utilities are tasked to identify cyber security needs based on IEEE 2030.5 cyber security specifications and utility security procedures. The cyber security is required to include firewalls, monitoring and audit logs of all significant alarms and events.

Q5. Do solar arrays automatically communicate with battery systems?   

No. A charge controller or a dual functioning inverter/charger is required when adding batteries to a PV system. See question 3 above regarding operating batteries manually. For systems to function and communicate seamlessly, additional software is typically designed and implemented.

Q6. Is my system required to have a software communication layer that interfaces with the utility? 

No – this layer is only required if you want to interconnect with the utility. A stand-alone solar+storage system that is used in off-grid applications would have no need to interface with the utility. Large systems that produce value and reduce utility expenditures do require a utility software layer to accept and process utility signals and optimize dispatch.

Q7. Can a new PV + storage system interact with the existing building management system?

Yes, but it must be designed to interface with the building management system’s protocol.

Q8. What software platforms are available for feasibility analysis?  

Below is a list of some of the most popular software modeling platforms that are available for PV + battery renewable energy feasibility analysis:

• NREL’s Renewable Energy Optimization (REopt) Lite tool: A web based techno-economic energy planning platform used to optimize grid-connected PV and batteries for buildings owners to analyze their energy performance and cost savings goals - https://reopt.nrel.gov/tool 
• NREL’s System Advisory Model (SAM): A financial modeling tool designed to calculate performance, financial, technology and incentive options of renewable energy systems - https://sam.nrel.gov/ 
• Distributed Energy Resources Customer Adoption Model (DER CAM): A decision support tool for financial and investment planning of DG resources in buildings and microgrids -https://building-microgrid.lbl.gov/ 
• Hybrid Optimization Model for Multiple energy Resources (HOMER): A techno-economic optimization tool used for renewable integration in microgrid design for village power, island utilities, grid connected campuses and military bases - https://www.homerenergy.com/homer-pro.html 
• Geli Products (Geli ESYST, EOS and GENI): Software tools designed to support an entire project life cycle from design and automation to monitoring and controls management - https://geli.net/geli-platform/

 Q9. What do I need to know about inverter software?

Advanced inverters (often called smart inverters) come factory loaded with control and communication capabilities that can provide additional benefits to the grid beyond the basic conversion of direct-current (DC) electricity to alternating current (AC). Advanced inverters can offer event logging, status report, power factor and VAR management, and storage management. Various levels of software controls also exist to handle devices and provide supervisory monitoring and controls with interconnection to the grid. However, not all of the functions of advanced inverter software are usable in today’s market due to regulatory and code limitations. Details of the functionalities of advanced inverters and an illustration of the various layers of communication can be found in NY Solar Smart DG Hub Solar+Storage and Microgrid Communications Fact Sheet

Q10. Why can’t all smart inverter software functions be used?

Not all of the functions of advanced inverter software are usable in today’s market due to regulatory and code limitations, but organizations such as EPRI (Electric Power Research Institute), IEC (International Electrotechnical Commission) and IEEE (Institute of Electrical and Electronics Engineers) are working to develop common standard protocols for the industry that would allow the full capabilities of advanced inverters to be used. Currently there are unresolved issues related to implementing smart inverter functions; revisions of standards such as IEEE 1547, grid codes such as California’s Rule 21, interconnection procedures and standard communication protocols are currently underway.  

Battery storage is an emerging technology in the U.S. and the market is still very nascent in most states. Until recently the high cost of battery systems has made them less attractive to the market and incentive programs are just starting to become available in some states. However, some areas of the US have seen significant growth, driven largely by hardware price declines particularly for lithium-ion batteries which had a 12% reduction in median price from 2015 to 2016. 

This has taken place in areas such as California and Hawaii where utility rates are sufficiently high and/or programs offered by local authorities allow for systems to partake in revenue generating programs such as demand response or ancillary services, although projects still rely on financial or policy incentives to drive system installations.  New York City is seen as another market with high potential due to the region’s high electricity rates and peak demand rate structures.  Due to its capacity for energy savings and peak load management, solar+storage is unique compared to other types of resilient/backup power options, which cannot be used to capture these types of revenue streams. 

FAQ's

Q1. What is the economic case/justification for considering storage in addition to solar PV?

For commercial facilities, there are three avenues of financial benefits:

• Reduction of demand charges of utility bills, which can comprise a significant portion (in the range of 20-30%) of electricity bills. Furthermore, these charges are typically based on the highest 15- or 30-minute energy usage period in a month, meaning a very short window of high usage sets the demand charge for the entire month. Solar PV can reduce utility bills by reducing energy purchased from the grid, but because its energy output is dependent on sunlight, PV systems alone cannot reliably reduce demand charges. With solar and storage together it is possible to both reduce overall grid energy usage and reduce demand charges.

• Prevention or reduction of economic damages, such as loss of inventory or business interruption, due to power outages. While not easily quantifiable as of yet, this can have significant value.

• Participation in demand response and ancillary service programs to earn additional revenues, which are offered through utilities as well as at the wholesale level through ISOs.

Reduction of demand charges is currently the primary value for commercial ratepayers. However, residential rate payers typically do not pay demand charges; thus, the economic value of residential solar+storage tends to be lower than for commercial systems (such as longer payback periods). Yet some consumers place a high value on having a supply of power during outages and see storage as a viable and emissions-free alternative to a generator, which has the further advantage of not being reliant on diesel or gas supplies that can be disrupted during an extended emergency.

For a primer on the economics and finance considerations of solar+storage, see the DG Hub Economics and Finance Factsheet.

Q.2 What types of pricing should I expect? What other costs are involved?

Prices of energy storage system installations can vary based on a number of factors including the complexity of the installation – for example, retrofitting existing PV installations or addressing special site, safety, or structural considerations – as well as soft costs that can vary widely depending on variables such as interconnection upgrades and local permitting requirements.

Prices of the battery component itself are based on the size as well as duration – for example, a 10kW battery with a one hour duration capacity will be less costly than a 10kW battery with a four hour capacity.

There are other categories and components that make up the total cost of a system. These include additional non-battery equipment and materials such as inverters and wiring; engineering, design, and labor costs; and soft costs including permitting, inspections, and interconnection. This recent NREL publication provides in-depth analysis of energy storage cost projections.

Q3. Can an entire facility’s power needs be met with an ESS or solar+storage system?

In almost all cases, it is currently not economical to provide back-up power for an entire facility’s electrical load, but solar and storage can support mission critical loads in most cases for a short duration outage (e.g. no more than one day). For a more detailed exploration of project economics, please see the DG Hub feasibility analyses for three facilities.

Q4. What other resilient solar options are available, and how do they compare to solar+storage?

Aside from solar+storage, other types of resilient PV include:

• Solar paired with an inverter and emergency plug: As an alternative to a battery installation, solar PV can be paired with smart inverters with an emergency power outlet. This provides much more limited emergency power support, but is a lower cost option than a solar+storage installation, and an alternative when there is not sufficient space for an energy storage system.

• Solar paired with a diesel or natural gas generator: Solar can be used to augment existing backup generators, which may or may not include an energy storage component as well. Diesel generators have lower up-front costs than battery storage, but provide no opportunities for revenue generation. The comparative economics between solar+storage and solar with a generator will be driven by the facility’s utility rate class, critical power needs, and building load.

This paragraph is adapted from the DG Hub’s Resilient Solar Roadmap, which contains additional information. For further information on current or upcoming installations which have utilized all three approaches please see the Solar for Sandy case study.

 Q5. What financing options are available for solar+storage?

Many larger energy storage systems are third-party owned and operated. Common arrangements include lease payments to site hosts, as well as shared savings models, in which the host facility can receive a system for little to no-upfront cost in exchange for sharing of savings, tax incentives and/or revenues from the solar+storage system with the third-party developer or financier.

Regardless of ownership arrangements, a variety of incentives and tax treatments are available for energy storage systems, see question 7 below or visit the DSIRE website for detailed information.

Q6. Do storage systems receive net metering compensation similar to solar?

For ESS and solar+storage systems that elect into a utility compensation structure, this has shifted from the traditional Net Metering tariff to the Value of Distributed Energy Resources (VDER) tariff. VDER rates reflect the value of the energy resource to the grid, which takes factors including location and time of generation into account.

Q7. What tax or other incentive programs are available to support ESS projects?

Currently the primary tax incentive for solar and storage available nationwide is the federal investment tax credit (ITC) which is equal to 30% of the total capital costs of a project, but the landscape of incentives and programs, especially at the state level, is rapidly evolving. In New York State, there are incentives available for solar PV through the NY-SUN Megawatt Block program, and NYSERDA recently announced a proposed roadmap to support 6 GW of storage deployment by 2030. In addition, in NYC the local tax abatement for solar systems was extended to energy storage systems, up to 40% of the system cost (less other incentives) with a $250K cap, through 2023.

Q8. What utility programs are available to support ESS projects?

Programs for solar+storage systems are offered from individual utilities as well as regional independent system operators (ISOs). They typically include different variations of demand management and demand response, which enable these systems to help utilities and ISOs manage system-wide peaks in demand, as well as ancillary services programs which are designed to provide other grid-support functions such as frequency regulation. Additionally, in some regions ESS can receive compensation through “Non-Wires Alternatives” (NWA) programs, which aim to help the utility reduce the need to use or build supplemental electricity generation assets (e.g. peaker plants) and also to defer costly investments in additional transmission and distribution infrastructure. See an updated list of NY State programs here.

However, it is important to note that individual storage systems often do not meet the size requirements for participation in many of these kinds of programs. Many ISOs, including New York’s NYISO, are developing plans to integrate more DG resources and accept aggregations of smaller systems so that they can participate. More information is in Q5 of the Policy FAQ section.

Q9. What are other resilience values and benefits that solar+storage can provide that are not currently formally valued or monetized?

The “Value of Resilience” is a fairly new concept that seeks to capture the monetary value of avoiding business interruption and losses and being better able to address the needs of a facility and its occupants during a power outage or emergency. These values are complex, difficult to quantify, and not yet widely recognized by insurers and the banking industry. The DG Hub has undertaken research to attempt to quantify this value and begin discussions with insurers and other stakeholders about how to monetize the resilience benefits of storage, for example, through reduced insurance premiums. More information is available in the DG Hub’s Value of Resilience study.

Due to the anticipated growth of the stationary energy storage market, regulations and policies are evolving quickly. Policies vary greatly by state and local government, but are typically aimed at delineating siting and permitting requirements, reducing capital costs, and enabling participation in revenue-generating programs and markets.

Solar+storage can both supply and absorb energy from the grid, posing unique questions to regulatory bodies. At the local level, municipalities are beginning to incorporate appropriate permitting, fire and safety, and interconnection requirements. At the state level, utilities and state agencies are identifying appropriate methods to incentivize and utilize solar and storage projects within the context of their renewable energy, energy efficiency, and climate programs and goals. The Federal Energy Regulatory Commission (FERC) and regional ISOs are identifying policy pathways to enable DG and ESS resources to participate in regional grid programs, as described in the Economics FAQ section. These programs were originally designed around large, conventional power plants and policies are not in place in most wholesale energy markets to allow small-scale generators to participate, but in the medium term regulations are expected to become more permissible.  Additionally, emergency management planning is just beginning to integrate the resilience capabilities of solar and storage technology. All new energy policies will require balancing the needs of consumers, government and regulatory agencies, utilities, and industry. 

FAQ's

Q1. What should I know about permitting and inspections processes for battery storage?

Permitting and inspection processes encourage safe siting, design, construction and operation of battery storage equipment. Local Authorities Having Jurisdictions (AHJs) – typically building, zoning, and/or fire departments of municipalities and counties – administer these regulations during the review, construction and commissioning of systems to ensure safety of installations. However, most municipalities lack a defined or streamlined permitting and inspection process for storage projects which has been a significant impediment to deployment of these systems in some regions.

Q2. What are the primary concerns around permitting battery storage?

The primary concerns revolve around fire and safety hazards, as using batteries for stationary storage is new and there is not a long history of performance data to inform risk analysis. Batteries store large quantities of energy, making the risk of fire greater than for non-fuel energy sources like solar and wind. Specific concerns may vary by the battery storage chemistry, but common concerns for all battery types include incorporating appropriate safety protocols and fail safes, designing for sufficient spacing and ventilation for thermal management and for appropriate fire protections in the event of a fire, and establishing communications, monitoring, and response protocols.

Q3. Why haven’t permitting regulations been developed more widely?

Design and safety standards for battery storage have evolved rapidly in recent years, most notably with the release of standards such as IFC 2021, NFPA 855, and UL 9540 listing.  Permitting regulations are based on these standards and consequently, permitting and approval regulations have also been developed/adopted more widely in recent years.

Q4. What is interconnection and how is it changing in New York?

Interconnection is the act of connecting energy generation sources to the electrical grid. The local utility manages the interconnection process for smaller DG assets, which typically involves submitting an application to the utility, a detailed interconnection study that is completed by the utility, and payment to the utility for any necessary electrical infrastructure upgrades that may be needed, since existing networks and substations cannot always accommodate new power sources. These upgrades can be costly and can extend project timelines. New York State has undertaken initiatives to streamline and lower costs associated with interconnection of DG assets, including:

• Standardized Interconnection Requirements (SIR) set forth by the Department of Public Service to enable streamlined interconnection.
• Interconnection Earnings Adjustment Mechanism (EAM) will incentivize utilities to streamline interconnection, enable DER integration, and increase developer satisfaction with the interconnection process.
• The Interconnection Policy Working Group set in place by the Department of Public Service to provide feedback and advisory support for crafting new interconnection guidelines, including solar and storage. These discussions are ongoing.

The Resilient Solar Roadmap released by Sustainable CUNY Smart DG Hub contains more detailed information on the barriers and opportunities regarding interconnection. Additionally, the ESS Permitting and Interconnection Guide for New York City contains more detailed information about the interconnection process.

Q5. What new policy efforts are underway that pertain to financial aspects of energy storage?

Several efforts are underway to accommodate, incentivize growth of, and open up new revenue opportunities for energy storage resources in New York State. These include:

• VDER (Value of Distributed Energy Resources) Tariff: Properly values the electricity supplied by distributed energy resources, as explained in Q6 of the Economics and Finance section of this FAQ. This electricity tariff provides a nuanced reimbursement for electricity produced from DG assets and incentivizes deployment where it is most crucially needed.
• NWA (Non-Wires Alternatives): Programs in which utilities procure DG resources instead of investing in traditional (“wired”) electrical infrastructure. Programs vary by utility, but awarded projects receive payments from the utility. Storage is a commonly proposed technology when these program opportunities arise.
• Aggregation: The NYISO is currently exploring opportunities for energy storage to participate in its wholesale market programs, such as demand response and ancillary services, through aggregation of small systems across multiple sites. Aggregated systems are sometimes referred to as a “Virtual Power Plant”. Aggregation of these systems allows them to meet the minimum size capacity that is needed in order to participate.
• Incentive programs: Policy makers are looking to expand incentive programs for renewables and storage, as described in Q7 of the Economics & Finance section of this FAQ.

Q6. What policy efforts exist or are on the horizon to promote and facilitate energy storage, in New York or elsewhere?

• Targets: New York City and New York State have established robust storage deployment targets, most recently aiming for 6GW of installed storage by 2030 statewide.

o   New York State’s REV (Reforming the Energy Vision) and associated initiatives: aims to fundamentally restructure New York’s entire energy infrastructure, to achieve greenhouse gas reductions, expand the use of renewables, ensure resilience of the state’s energy system, and enable cleaner transportation. REV aims to operationalize these goals through multiple policy initiatives including: Climate Leadership and Community Protection Act (CLCPA): passed by the state legislature in July 2019, the CLCPA (Climate Act) is among the most ambitious climate laws in the nation and requires New York State to reduce economy-wide greenhouse gas emissions 40 percent by 2030 and no less than 85 percent by 2050 from 1990 levels.

o   New York’s Clean Energy Standard: this renewable portfolio standard is one of the core components of REV and established an expanded goal for 70% of New York's electricity to comes from renewable energy sources by 2030 as part of the state’s passage of the Climate Leadership and Community Protection Act (CLCPA). Energy storage is identified as playing a key role in facilitating and supporting additional renewable energy deployment.

o   Further in-depth discussion of REV’s mission and history can be found here.

• The NYC Climate Mobilization Act (CMA): otherwise known as NYC's Green New Deal, was passed by the New York City Council in 2019 to put NYC on the path to reducing building carbon emissions by 40% by 2030 and by 80% by 2050.
• Peaker Plant Replacement: NYC has identified retirement and replacement of older fossil fuel-powered peaker plants, which serve to inject additional power onto the grid during peak demand periods such as heat waves, with solar + storage assets. Peaker plants are often inefficient and highly polluting, and located in areas with vulnerable populations such as low-income neighborhoods.  The NYC Peak Coalition spearheads this effort in collaboration with multiple city agencies and entities.