New York has a statewide Clean Energy Standard, which establishes that 50% of the state’s energy must be generated from renewable sources by the year 2030. However, there is a key challenge involved: although solar photovoltaic systems and wind turbines deliver clean and affordable electricity, their output cannot be adjusted to follow consumption. Therefore, utility companies must now manage variability in both generation and consumption.
The conventional approach has been to complement variable renewable energy (VRE) sources with generation technologies that offer rapid response, such as hydroelectric or gas turbines. However, hydroelectricity demands specific site conditions, while gas turbines require a fossil fuel, which is precisely what the state of New York wants to avoid. Another problem with this approach is that generation and transmission capacity must be upgraded constantly to meet a growing demand peak, and utility companies have to increase electricity rates to recover these investments.
Energy storage offers an alternative approach, since it can serve as a buffer that balances variable generation and variable consumption. Storage systems can be filled up with surplus energy from solar arrays and wind turbines, or with low cost electricity from the grid itself during off-peak hours. The stored energy can then be used to mitigate peaks in demand, which benefits both utilities and their customers:
Electricity rates in New York City are notoriously high, exceeding 20 cents per kilowatt-hour for many residential and commercial customers. However, the price of electricity does not remain constant during the day. For example, consider how Con Edison charges electricity to residential customers subject to time-of-day rates (as of August 2017):
It is important to note that this is only the energy delivery charge, and the actual kilowatt-hour price becomes higher after adding delivery charges and adjustments. However, it illustrates the value of energy storage. Assume a residential client purchases a 5-kWh battery to store energy at 1.45 cents/kWh, avoiding the 20.53 cents/kWh rate as much as possible during the summer. In a 30-day month, they can shift 150 kWh of consumption and reduce their power bill by $28.62.
Energy rates are lower for high-rise apartment buildings and large businesses, but these consumers are subject to demand charges based on their highest kilowatt measurement of the month. These charges exceed $20/kW under many tariffs, which means that reducing peak demand with energy storage by just 10 kW can deliver monthly savings above $200. Businesses with a short-duration peak in consumption are the most promising candidates for energy storage, since the capacity required to trim the peak is reduced. For example, a 100-kW peak lasting 30 minutes can be eliminated with 50 kWh of stored energy, while a peak of the same magnitude but lasting three hours would require 300 kWh - six times more capacity.
Building codes in New York City are among the most demanding in the world, and energy storage systems will not be exempt from their requirements. However, large lithium-ion batteries are a relatively new invention compared with other building systems, and their safety requirements and fire hazards are still being determined. Newer versions of the NYC Building Code, Electrical Code and Fire Code can be expected to have chapters dealing specifically with lithium-ion batteries.
Smart lithium batteries can offset the variability of solar and wind power, which means they have a high potential to help decarbonize the power grid. However, if the technology will be adopted at a large scale, it is important to have a detailed procedure to deal with faults, especially in a place with a high concentration of buildings like NYC.
New York City buildings pay the most expensive electricity during summer days, when the power grid is taken to its limit due to the large number of air-conditioning systems in operation. As a result, using surplus electricity to make ice is a valid alternative to battery storage.
Many commercial chiller models are compatible with ice storage tanks. Chillers can be configured to make ice with low-cost off-peak electricity or with surplus output from variable renewable sources. Then, this ice is melted during peak demand hours, allowing the chiller to operate at reduced capacity. As previously mentioned, business clients can achieve significant savings from trimming peaks in energy consumption.
This concept can be very cost-effective when many businesses pool their resources together. In Chicago, more than 100 buildings are using a large-scale ice storage system that reduces the total peak load of their chiller plants by more than 30 megawatts.
Solar power is being adopted at a fast rate in New York. For example, the NY-Sun Incentive Program aims to bring more than 3,000 MW of solar power capacity throughout the state through incentives, and more than 1,000 MW will be located in the Con Edison service area. In the absence of energy storage, utilities in New York will have to manage a peak in solar generation around noon and a sudden drop in energy output during sunset. However, energy storage unburdens the power grid by absorbing surplus generation and meeting peak demand locally. The load curve as measured by utilities is flattened, allowing generation resources to operate more efficiently and with less variation.
Energy storage also reduces the transmission and distribution burden on utility companies. Consider that the grid must be sized according to the peak load, which may only occur for a short fraction of the day. If aggregated energy storage capacity is used to mitigate peak load, expensive grid upgrades can be delayed or prevented altogether.
Recognizing the potential of energy storage, New York City has established two capacity targets to complement the adoption of renewable energy: 100 MWh by 2020, and 1,000 MWh by 2030. With this, NYC is the first US city to establish an energy storage capacity target. This will help NYC achieve two other sustainability targets: 50% renewable generation by 2030, and an 80% reduction in emissions by 2050.