Navigant Research Blog

New York’s Grid Restructuring Begins to Take Shape

Alex Eller — November 28, 2016

GeneratorAfter numerous rounds of conferences, discussions, and announcements, concrete results from New York’s Reforming the Energy Vision (REV) initiative have begun to emerge. Despite the initiative’s ambitious goals, limited on-the-ground changes have been made. The recent announcement that Green Charge Networks will deploy a network of 13 MWh of distributed energy storage marks one of the most significant developments to date and adds Green Charge to the growing list of companies driving the initiative.

The REV initiative aims for major reforms to both utility business models and market regulations to enable a transformation to a grid built around distributed energy resources (DER). Near-term targets include allowing for greater use of renewable generation and other DER to reduce emissions, improve the resiliency of the grid, and limit costs for upgrades passed onto customers. New York City and other urban areas face extremely high costs for replacing or upgrading underground electrical infrastructure, hence the initiative’s focus on using local DER.

Ambitious Goals

Perhaps the most notable project through REV thus far is the Brooklyn Queens Demand Management Program. This program seeks to defer a proposed $1.2 billion substation upgrade through a combination of 52 MW of demand reductions and 17 MW of DER investments. Most of the projects supporting this effort involve conventional demand response (DR), energy efficiency, and other demand-side management solutions. Utility Consolidated Edison is also looking at more reliable options, including distributed energy storage and microgrids. It first announced requests for information and proposals in March 2016. Following this request, the first major announcement of new DR capacity was released in August 2016, accounting for 22 MW of peak demand reduction capacity, with payments to providers ranging from $215/kW to $988/kW each year. This announcement is noteworthy for including distributed energy storage from leading providers Stem and Demand Energy.

The program has also established incentives for thermal energy storage, with system vendor Axiom Energy offering subsidized solutions to grocery stores throughout New York city. Through the program, customers can save on their monthly bills by using stored ice to provide cooling for refrigeration at times of peak grid demand rather than compressors; the utility is then able to reduce peak demand in constrained areas. These incentives are expected to result in 6 MWh to 8 MWh of utility-controlled demand reduction capacity.

Building on Success

The announcement for a further 13 MWh of distributed storage capacity from Green Charge Networks further builds on the progress made through the REV initiative. This progress positions New York as a leading state in shaping the structure of the emerging distributed energy ecosystem. A successful transition to a DER-centric grid requires a two-pronged approach. It’s necessary to both facilitate the integration of new technologies and also to reform utility business models so that all stakeholders—including utilities—benefit from the efficiency and resiliency that DER can provide. These recent developments have made New York’s efforts much more tangible, and it will be exciting to see what else the state has in store.

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