N. Trivedi, B. Xavier
Vrinda Inc.,
United States
Keywords: long duration energy storage, LDES, energy storage, market, wholesale, ISO, capacity, accreditation, ancillary, economic analysis
Summary:
New York’s ambitious goal of deploying 6 GW of energy storage by 2030, of which 600MW is carved out for long-duration energy storage (LDES), has underscored the growing need to modernize market designs and policies that currently undervalue these emerging technologies. Despite steady progress, less than 25% of the target storage has been installed or contracted statewide as of Q1 2025, with nearly all assets being short-duration lithium-ion systems. Our paper examines the barriers constraining LDES in the areas of policy definitions, market design, resource valuation, ownership models, interconnection, and siting. Our analysis explores how reforms could unlock viable pathways for the commercialization of long-duration storage in New York. A detailed techno-economic analysis was conducted for a hypothetical 10 MW / 80 MWh LDES system in NYISO Zones J (New York City) and K (Long Island), assessing revenue streams across energy, capacity, and ancillary services markets. Results show that LDES technologies with levelized costs of storage (LCOS) between $200–$250/MWh—such as lithium-ion phosphate LFP, Compressed Air Energy Storage (CAES), and pumped hydro—can achieve breakeven economics through multi-market participation, with location-specific revenue differentials driven by seasonal energy price volatility. NYISO’s 2024 hourly pricing data reveal consistent value concentration during January, July, and December, reflecting predictable arbitrage opportunities for LDES, particularly in NYC’s capacity-constrained environment. However, average energy prices for 8-hour discharge durations remained 4–12% below 6-hour averages in both zones, underscoring the need for market reforms to accommodate longer durations. Further, Installed Capacity (ICAP) markets failed to provide accreditation and derating functions to onboard duration-limited systems greater than 8 hours. Lastly, ancillary services markets continue to undercompensate for LDES capabilities, with missed opportunities in voltage support, black-start, and energy imbalance services. Financial modeling favored NYC due to higher capacity prices in theory, but practical siting and permitting constraints limit deployment potential, exemplifying the need for coordinated policy and regulatory reforms. These reforms are needed to strengthen market value recognition, access to low-cost capital, and to ensure LDES project success. Recommended actions include expanding duration-based capacity accreditation and performance metrics in NYISO and utility frameworks, increasing ancillary service eligibility beyond reserves and regulation service, modernizing interconnection and permitting processes, and providing transitional funding mechanisms to de-risk emerging projects. Implemented together, these reforms, along with others, would lay the foundation for scaling LDES as a core component of New York’s future reliable, flexible, and decarbonized grid.