Dive Brief:

  • It will cost New York up to $2 billion to add 6 GW of energy storage by 2030, up from the previous high-end estimate of $1.7 billion, according to updated cost estimates released March 15 by the New York State Department of Public Service and the New York State Energy Research and Development Authority, or NYSERDA. 
  • The update comes after NYSERDA and DPS reexamined an earlier road map version’s cost assumptions and found “a material increase in costs due to factors such as inflation and wholesale capacity price forecasts,” according to a cover letter written by Stephanie McDermott, assistant counsel for the DPS. The total cost increase could amount to almost $300 million, the updated road map said.
  • Recent energy storage cost declines haven’t been “fully captured in [storage project capex budgets] due to the higher cost of capital from higher interest rates and other factors,” Wood Mackenzie Senior Research Analyst Vanessa Witte told Utility Dive. “This has put quite a bit of pressure on developers to get storage financed” and called some projects’ economics into question, she added.

Dive Insight:

DPS and NYSERDA released the previous version of New York’s 6 GW Energy Storage Roadmap in December 2022. That version doubled the state’s preexisting storage target of 3 GW by 2030, a key milestone in New York’s efforts to achieve 100% carbon-free power by 2040 while maintaining grid reliability.

The bulk storage estimates saw the sharpest increase, from a projected range between $474 million to $1.19 billion in 2022 net present value to $701.5 million to $1.42 billion in 2024 net present value. The updated road map calls for 3 GW of bulk energy storage to be deployed in New York State through 2030.

Estimates for the road map’s 1.5 GW retail storage component also increased, from $438 million in 2022 net present value to $488.5 billion in 2024 net present value. The expected cost of the 200 MW residential storage component increased only slightly, from about $72 million to about $74 million in 2022 and 2024 net present value, respectively.

At the high end, the road map’s total projected deployment cost is $1.98 billion in 2024 net present value. High-end cost estimates increased $230 million for bulk storage, $50.5 million for retail storage and $2 million for residential storage. 

Achieving New York’s storage goals would increase the average residential customer’s electric bills by $0.40 to $0.64 per month over “the [21]-year period during which the proposed programs would make payments to projects,” Foley Hoag counsel Devlyn Tedesco wrote in a summary of the updated road map.

Despite recent increases in financing costs for distributed and bulk energy storage projects, the longer-term trend is toward lower prices per megawatt. In a joint response to the original New York energy storage road map, which called for 3 GW of storage capacity by 2030, state utilities estimated the cost of adding just 1.5 GW of storage between 2019 and 2025 at $2.5 billion. The current road map’s high-end estimate expects the cost of 3 GW in new storage to be $500 million less than that.

And energy storage cost estimates based on inflation-skewed 2022 and 2023 data could prove pessimistic, Wood Mackenzie’s Witte said. 

“The industry is cautiously optimistic [that] interest rates will go down [later this year] and some of these pressures will start to alleviate,” she said. “Prices were elevated in 2022 and early 2023, but they have dramatically come down since then [and] we are not projecting prices to increase again, as there is sufficient supply to meet demand for the near future.