On March 21, 2025, the New York Public Service Commission (PSC) approved the draft implementation plan for the New York State Energy Research and Development Authority’s (NYSERDA) bulk energy storage program—with a number of changes.1 This bulk storage program will provide incentives for energy storage systems greater than 5 MW and establish a new round of funding since the initial round of funding was fully allocated. This program update is long-awaited, as the last bulk storage project incentive was awarded in February 2021.2 The PSC’s approval opens up a projected $701.5 million to $1.42 billion in funding expected to be incurred from 2028 through 2044, which does not include program implementation funding. The total cost of the program is expected to be $1.33 to $2.94 billion. Ultimately, as detailed below, these costs will largely be driven by the “strike price” submitted by energy storage developers.3
The PSC’s prior 2024 Order Establishing Updated Energy Storage Goals and Deployment Policy4 required NYSERDA to issue its first competitive solicitation for bulk storage through a request for proposals (RFP) by June 30, 2025. This approval of the bulk storage program’s implementation plan is a key milestone in the process that should allow NYSERDA to make that deadline. NYSERDA is required to issue an updated implementation plan by April 21, 2025, to conform to the PSC’s requirements and is expected to then issue a draft RFP for further stakeholder feedback. NYSERDA should issue a program manual and the final RFP before the end of June 2025. At least two more annual solicitations are anticipated in 2026 and 2027.
Under the upcoming bulk storage incentive solicitations, energy storage developers will competitively bid in to be awarded an Index Storage Credit (ISC), which is a design modeled after NYSERDA’s Renewable Energy Credit market under its Large-Scale Renewables program. Developers will bid in their strike price and NYSERDA will develop a reference price, which approximates the wholesale market revenue a project could earn.5 As stated in NYSERDA’s implementation plan, the ISC “[p]ayments will be made by NYSERDA to the developer when the Strike Price exceeds the Reference Price, and vice versa.”6
The PSC approved NYSERDA’s draft implementation plan with modifications and included the following guidelines:
Maturity
NYSERDA proposed that specific maturity requirements be set forth in each annual procurement and will depend on the status of projects in the New York Independent System Operator’s (NYISO) interconnection queue under its cluster study process. The PSC approved maintaining this flexibility with two key caveats:
- projects less than eight hours in duration must “have an active interconnection request with the NYISO or through a relevant utility process, as well as have evidence via a permitting plan that the project has a reasonable pathway towards securing all permits within the proposed schedule”; and
- projects greater than eight hours in duration will need “a reasonable pathway to securing an interconnection agreement.”
Weighting Price and Nonprice Factors
The PSC approved NYSERDA’s proposal to utilize a 60/40 weighting criteria in its evaluation process for projects bidding into its ISC solicitations, in which 60 percent of the evaluation will be based on price and 40 percent will be based on nonprice factors. The 40 percent weighting of nonprice factors will further be allocated as follows: 20 percent weight assigned to project maturity and viability (which includes interconnection queue status), 10 percent assigned to electric system value, and 10 percent assigned to societal and economic benefits. The PSC approved this framework but allowed for the subcategories of nonprice factors to be weighted differently as annual solicitations progress.
Limiting Developers’ Liability
For awarded projects under the ISC solicitations, the ISC payments will be settled monthly and developers will be required to pay NYSERDA if the reference price exceeds the strike price in a month. The strike price is intended to represent the revenue requirement for a developer to achieve project viability, which is why payment from NYSERDA only occurs if the strike price exceeds the reference price. However, there may be instances of volatility, where the reference price greatly exceeds the strike price and the developer is unable to capture that wholesale market value even if the energy storage system is considered operational. Thus, NYSERDA proposed—and the PSC approved—capping the liability of developers to the negative value of the strike price, which can be represented as |Monthly ISC Payment| ≤ Strike Price x Operational MWh. Thus, in a month with 30 operational days, a 100 MW / 400 MWh project with a strike price of $50 would have its monthly payment to NYSERDA limited to $600,000 ($50 x (400 MWh x 30 operational days)).
Round-Trip Efficiency
Round-trip efficiency is a key issue when determining the reference price in upcoming ISC solicitations, particularly when calculating the value of the reference energy arbitrage price. NYSERDA proposed 85 percent for lithium-ion technologies, 65 percent for non-lithium-ion technologies, and 45 percent for multi-day technologies, all of which were accepted by the PSC. While these round-trip efficiency requirements may be altered in different solicitations, the PSC rejected a commenter’s suggestion for more granular technology-specific calculations for round-trip efficiency.
Fire Safety Outside New York City
NYSERDA proposed requiring projects to undergo a peer review of the project design, develop an emergency response plan, and provide first responder training. The PSC approved NYSERDA’s proposal and further required that NYSERDA update these requirements “if and when” the New York State Fire Prevention and Building Council updates the New York State Uniform Fire and Building Code regarding energy storage systems.
Operational
The ISC will be paid depending on the hours when a storage system is considered operational. The PSC required NYSERDA to further detail how an energy storage system will be compensated if it is partially operational over a given day rather than only allowing a storage resource to be either considered entirely operational or not operational in a day.
Duration-Based Solicitations
While NYSERDA proposed to exclude two-hour duration systems, the PSC disagreed with that approach, finding that there are instances where two-hour energy storage resources might provide resiliency to New York’s electric grid by supplying many of the same services that longer duration resources can provide. Accordingly, the PSC directed NYSERDA to include two separate duration categories within its solicitations: (1) for durations up to eight hours and (2) for durations of eight-plus hours. NYSERDA, however, must cap two-hour resources at 10 percent of the total energy storage procured. NYSERDA will target 20 percent of eight-plus-hour duration systems in each solicitation but has flexibility to shift the proportion of funding to each duration category. NYSERDA is also directed to establish an alternative methodology for estimating expected market revenue for storage resources of 12-plus hours in duration by September 1, 2025, which will ideally allow NYSERDA to have this methodology available for its second annual bulk storage procurement in 2026.
Barclay Damon’s Regulatory Practice Area and Energy Team attorneys are available to provide more information on NYSERDA’s Bulk Energy Storage Program, including a comprehensive summary of the PSC’s ruling, the formulas used for NYSERDA’s upcoming ISC solicitations, and the status of the NYISO’s interconnection queue.
If you have any questions regarding the content of this alert, please contact Brenda Colella, Regulatory Practice Area co-chair, at bcolella@barclaydamon.com; George Pond, partner, at gpond@barclaydamon.com; Ben Falber, partner, at bfalber@barclaydamon.com; Peter Keane, of counsel, at pkeane@barclaydamon.com; or another member of the firm’s Regulatory Practice Area or Energy Team.
1Case18-E-0130, In the Matter of Energy Storage Deployment Program, “Order Approving Bulk Implementation Plan With Modifications,” (issued and effective March 21, 2025), https://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?MatterSeq=55960.
2Storage Data Maps - NYSERDA
3Case18-E-0130, In the Matter of Energy Storage Deployment Program, “Order Establishing Updated Energy Storage Goal and Deployment Policy,” p. 92 (issued and effective June 20, 2024), https://documents.dps.ny.gov/public/MatterManagement/MatterFilingItem.aspx?FilingSeq=329364&MatterSeq=55960.
4Id.
5ISC = Strike Price – Reference Price, where Reference Price = Reference Energy Arbitrage Price (REAP) + Reference Capacity Price (RCP). A developer’s potential payment to NYSERDA is capped at the negative value of the Strike Price.
6Case 18-E-0130, In the Matter of Energy Storage Deployment Program, “Bulk Energy Storage Implementation Plan Proposal,” Filed by NYSERDA on October 18, 2024, https://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={F099A092-0000-C938-98D5-9D3FB839557F}.