New estimates released by the New York State Department of Public Service (DPS) and the New York State Energy Research and Development Authority (NYSERDA) suggest that expanding energy storage capacity in the state to 6 GW by 2030 could cost up to $2 billion. This figure represents an increase from the previous high-end estimate of $1.7 billion.
According to a cover letter penned by Stephanie McDermott, assistant counsel for the DPS, the updated cost projections reflect a substantial rise in costs due to factors such as inflation and wholesale capacity price forecasts. The total cost increase amounts to nearly $300 million, as indicated in the updated roadmap.
Vanessa Witte, Senior Research Analyst at Wood Mackenzie, noted that recent declines in energy storage costs have not been fully reflected in storage project budgets due to higher interest rates and other factors, putting pressure on developers and raising questions about project economics.
The revised roadmap builds upon the previous version released in December 2022, which aimed to double the state’s storage target to 6 GW by 2030, a crucial step in New York’s pursuit of achieving 100% carbon-free power by 2040 while ensuring grid reliability.
Significant increases were observed in bulk storage estimates, with projections ranging from $701.5 million to $1.42 billion in 2024 net present value. The roadmap now calls for the deployment of 3 GW of bulk energy storage in New York State by 2030.
Estimates for the retail storage component also rose, reaching $488.5 million in 2024 net present value. However, the cost of the residential storage component saw only a slight increase.
Despite the upward trend in financing costs for energy storage projects, the long-term outlook points towards lower prices per megawatt. State utilities estimated the cost of adding 1.5 GW of storage between 2019 and 2025 at $2.5 billion. In comparison, the current roadmap’s high-end estimate anticipates a lower cost for adding 3 GW of storage capacity.
Devlyn Tedesco, counsel at Foley Hoag, highlighted that achieving New York’s storage goals would result in a modest increase in average residential customers’ electric bills over a 21-year period.
Witte expressed optimism about potential reductions in interest rates later this year, alleviating some of the financial pressures on energy storage projects and contributing to a more favorable pricing outlook.
Despite challenges, the energy storage sector remains optimistic about the industry’s trajectory, anticipating continued advancements and cost reductions in the near future.