New York Energy Storage Roadmap – Cost Projections Part 2

On December 28, 2022, the New York State Energy Research & Development Authority (NYSERDA) and the New York State Department of Public Service (DPS) filed New York’s 6 GW Energy Storage Roadmap (Roadmap) to the Public Service Commission (PSC) for consideration.  I previously gave an overview of the Roadmap and looked at the way the costs were projected.  In this post I give my estimate of the costs.

Everyone wants to do right by the environment to the extent that they can afford to and not be unduly burdened by the effects of environmental policies.  I submitted comments on the Climate Act implementation plan and have written over 270 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

New York Energy Storage Plan

The NYSERDA Energy Storage in New York web page gives an overview of New York’s plan:

In 2019, New York passed the nation-leading Climate Leadership and Community Protection Act (Climate Act), which codified some of the most aggressive energy and climate goals in the country.

6,000 MW of Solar by 2025

70% Renewable Energy by 2030

9,000 MW of Offshore Wind by 2035

100% Carbon-free Electricity by 2040

85% Reduction in GHG Emissions from 1990 levels by 2050

3,000 MW of Energy Storage by 2030, further increased to 6,000 MW of Energy Storage by 2030 by Governor Kathy Hochul

In my previous post I pointed out that the press release for the Roadmap claimed that “the roadmap will support a buildout of storage deployments estimated to reduce projected future statewide electric system costs by nearly $2 billion”.  The state’s modeling predicts that it will cost $0.46 per month per electricity bill and the trade press has jumped on that cost as less than the cost of a slice of pizza.

I showed that Roadmap costs are misleadingly presented relative to incremental revenues: “For the proposed bulk storage procurement program, program costs are calculated as the incremental revenue, on top of revenue that storage assets can realize through commercial operation in the existing energy markets, that would allow such assets to reach their cost of capital.”  If the state were to be open and transparent, the total expected capital costs, the revenue costs, and how they expect energy storage to get paid would be presented so that readers could understand the incremental revenue.  I have come to believe that the obfuscation of the actual costs is deliberate because the numbers are so large that the public backlash would be immense.

Cost Estimates

I have written in the past that every aspect of the net-zero transition that I have evaluated has turned out to be more complicated, uncertain, and nuanced than has been portrayed by the proponents of net-zero transitions.  This calculation is no different.  On the face of it you just figure out the capacity (MW) needed or the energy generation (MWh) needed and the multiply those values by a published cost estimate. 

I am not going to discuss all the ambiguities I tried to reconcile but will give an example of one.  In order to estimate the electric resources needed to power the zero-emissions electric grid in 2040 sophisticated modeling is required.  The New York State Energy Research & Development Authority (NYSERDA) and its consultant provided that evaluation for the Scoping Plan for the net-zero transition plan required by New York’s Climate Leadership and Community Protection Act (Climate Act).   The New York Independent System Operator did modeling for its 2021-2040 System & Resource Outlook evaluation.  I looked at five of the scenarios they modeled: NYISO Outlook Scenario 1: Industry data and forecasts, NYISO Outlook Scenario 2: Assumptions aligned with Integration Analysis, Integration Analysis Scenario 2: Strategic Use of Low-Carbon Fuels, Integration Analysis Scenario 3: Accelerated Transition from Combustion, Integration Analysis Scenario 4: Beyond 85% Reduction

There are substantial differences in the methodology used for the energy storage estimates between the two approaches.  Table 1 lists the capacity (MW) and generation (GWhr) projections for the present and 2040 for the five scenarios.  Note that the storage capacity estimates are roughly the same but the generation estimates are different.  The NYISO generation is at least 13,414 GWhr in 2040 but the Integration Analsis generation is negative, so the methodologies are different.  Energy storage generation can represent two different things: the amount of electricity stored say over a year or the amount of electricity that can be stored all at once, the storage capacity.

Table 1: NYISO Outlook Study Scenarios and Integration Analysis Mitigation Scenarios

I believe that both analyses use total stored electricity for their energy storage estimates.  David Wojick recently used the storage capacity approach to estimate energy storage costs.  His approach simply takes:

  • a reasonable period of no wind and solar, say 3 days or 72 hours, and
  • a reasonable average demand on renewables over that period, say 35,000 MW, and
  • multiply them to get 2,520,000 MWh of required storage
  • which at $700,000 per MWh equals $1,764,000,000,000

Given the issues with the energy storage generation different interpretation, I chose to use Energy Information Administration overnight capital costs (2021$/kW) in the comments I submitted on the Draft Scoping Plan to make a cost estimate.  This approach does not include operating and maintenance (O&M) costs, the expected lifetime of the energy storage devices, and how the lifetime would vary depending on how it is used.  My estimate of the overnight cost to develop the resources needed to transition to a zero-emissions electric system in 2040 are generally consistent with the Scoping Plan Appendix G Figure 48 net present value of system expenditures.  Table 2 lists those costs for all five scenarios.  This approach estimates a cost three orders of magnitude less than the costs projected by Wojick.  The big difference is that both NYISO and NYSERDA include a zero-carbon firm resource or dispatchable emissions-free resource (DEFR) that can satisfy the need for extended periods of high load and low renewable energy resource availability thereby reducing the energy storage needed.

The NYISO 2021-2040 System Resource Outlook explained that to achieve a zero-emissions grid, DEFRs must be developed and deployed throughout New York.  The following Figure 38 from the Roadmap illustrates the problem.  The difference between cost estimates emphasizes why this resource is needed.  The ultimate problem of any electric system that relies on intermittent wind and solar is that there are periods when they are not available.  It turns out that the weather systems that cause light winds are large and affect all of New York at the same time and solar resources are lower in the winter when days are short and the sun is lower in the sky.  In other words, all the renewable resources in the state can go very low at the same time.  Just figuring out what the worst case of renewable resource availability is a major problem and both modeling groups agree that something besides batteries is needed.  The Outlook noted that “While essential to the grid of the future, such DEFR technologies are not commercially viable today” and went on to point that research and development efforts are needed to identify the most efficient and cost-effective technologies that can be deployed.  Needless to say, it is risky to depend on a resource that is not currently commercially viable that makes such a difference between costs.

Discussion

The Hochul Administration claims that “the roadmap will support a buildout of storage deployments estimated to reduce projected future statewide electric system costs by nearly $2 billion”.  The key point is that nowhere does the Roadmap document total costs. The fair question is what are the projected future statewide electric system costs?  Moreover, I showed previously that Roadmap costs are presented relative to incremental revenues: “For the proposed bulk storage procurement program, program costs are calculated as the incremental revenue, on top of revenue that storage assets can realize through commercial operation in the existing energy markets, that would allow such assets to reach their cost of capital.”  It is impossible to check the validity of that statement without full disclosure of all these cost components.

This analysis compares future statewide electric system costs for energy storage.  The simplest approach estimates that energy storage necessary to provide electricity when wind and solar resources are unavailable could be as much as $1.7 trillion.  NYISO and NYSERDA used more sophisticated analyses to refine how much backup was needed.  The overnight capital costs for the batteries, and only the batteries, for five different scenarios ranges from $13 to $15 billion.  There are a host of other factors that could raise those estimates.  The approach used by NYSERDA and NYISO relies on DEFR technologies that increase the cost to provide backup when wind and solar resources are unavailable totals between billion $187 and $349 billion but provide massive savings relative to any approach that does not include that kind of resource.  It is clear that whatever approach is used, that the Hochul Administration claim of “savings” of $2 billion is insignificant relative to the total costs which are at least two orders of magnitude larger.

Conclusion

The Roadmap has been presented to the Citizens of New York as a sales spiel.  The public heard that the costs of energy storage were only $2 billion and that the cost to ratepayers would be less than the cost of a slice of pizza.  The costs that ratepayers will ultimately pay is much, much higher.  The shell game manipulation of costs demonstrates that the Hochul Administration goal is hide the expenditure of hundreds of billions of dollars under so many different programs and subsidies to make it intentionally impossible to capture the total costs to consumers.  The true “Total Cost” of the Climate Act will be hidden forever from the public by design. 

My thanks to David Wojick for his review and comments.  Any errors in this analysis are my responsibility.

Author: rogercaiazza

I am a meteorologist (BS and MS degrees), was certified as a consulting meteorologist and have worked in the air quality industry for over 40 years. I author two blogs. Environmental staff in any industry have to be pragmatic balancing risks and benefits and (https://pragmaticenvironmentalistofnewyork.blog/) reflects that outlook. The second blog addresses the New York State Reforming the Energy Vision initiative (https://reformingtheenergyvisioninconvenienttruths.wordpress.com). Any of my comments on the web or posts on my blogs are my opinion only. In no way do they reflect the position of any of my past employers or any company I was associated with.

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