Conquering the Empire State

TESLA ENERGY

Conquering the Empire State A roadmap to capture the lucrative energy storage business within the state of New York

Sreeram Bhargav Dhurjati Master of Engineering Management Candidate Duke University | Pratt School of Engineering [email protected] | 919.949.1560 https://www.linkedin.com/in/sreerambhargav

Conquering the Empire State

A Roadmap to Capture New York’s Lucrative Energy Storage Business

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Contents Executive Summary .......................................................................................................................................................... 2

Chapter 01: Introduction to NYISO Electricity Markets .................................................................................................. 3

1. New York Independent System Operator Electricity Market ............................................................................. 4

Chapter 02: Reforming the Energy Vision (REV) Initiative .............................................................................................. 5

2. About the REV Initiative ....................................................................................................................................... 6

Chapter 03: Value Proposition for an Energy Storage System ........................................................................................ 8

3. What services can batteries provide to the electricity grid? .............................................................................. 9

Chapter 04: Potential Opportunities for Tesla within New York State ........................................................................ 10

4. Potential Opportunities for Tesla within New York State ................................................................................ 11

4.1. ISO/RTO Services: Targeting NYISO ........................................................................................................... 11

4.1.1. Energy Arbitrage ................................................................................................................................. 11

4.1.2. Frequency Regulation ......................................................................................................................... 14

4.1.3. Spin/Non‐Spin Reserves ..................................................................................................................... 15

4.1.4. Voltage Support .................................................................................................................................. 16

4.1.5. Black Start ........................................................................................................................................... 16

4.2. Utility Services ............................................................................................................................................ 17

4.2.1. Resource Adequacy and Distribution Deferral .................................................................................. 17

4.2.2. Transmission Congestion Relief ......................................................................................................... 18

4.2.3. Transmission Deferral ........................................................................................................................ 19

4.3. Customer Services ...................................................................................................................................... 20

4.3.1. Time‐of‐Use Bill Management and Demand Charge Reduction ....................................................... 22

4.3.2. Increased PV Self‐Consumption ......................................................................................................... 25

4.3.3. Backup Power ..................................................................................................................................... 25

Chapter 05: Product Mapping ........................................................................................................................................ 26

5. Mapping Tesla’s Powerwall and Powerpack Offerings with 13 fundamental electricity services .............. 27

5.1. Tesla Powerwall ...................................................................................................................................... 27

5.2. Tesla Powerpack ..................................................................................................................................... 27

Chapter 06: Recommendations ..................................................................................................................................... 30

6. New York Battery and Energy Storage Technology Consortium (NY‐BEST) ................................................. 31

6.1. About NY‐BEST ........................................................................................................................................ 31

6.2. NY‐BEST Energy Storage Roadmap for NY Electric Grid 2016 ............................................................... 31

About the Author ........................................................................................................................................................... 33

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Executive Summary Tesla’s CEO Mr. Elon Musk once said “The world does not lack for automobile companies, the world lacks for

sustainable energy companies”. Subsequently Mr. Musk announced plans to sell batteries for homes and

industrial energy storage. With the impending Solar City merger, Mr. Musk has given birth to an enticing

vision of clean energy vertical integration. In future it will be possible for a person to walk into a store, buy

rooftop solar panels which will turn sunlight into electricity, a swanky car to use that electricity and a battery

to store whatever energy is left. “Tesla as a whole is building the model of an energy company of future” said

Mr. Matt Roberts, executive director of the Energy Storage Association, an industry trade group.

USA seeks to regain leadership in clean energy adoption after more than a decade of ceding the pole position

to Europe. Unfortunately, most of the renewable energy technologies do not follow the traditional demand

supply cycle and are unable to meet the grid’s demand when needed. So if USA seeks to improve its pace of

clean energy adoption and meet its electricity demand, it needs to figure out a way to store energy. Using

PV panels and its energy storage solutions, Tesla can fulfil USA’s needs.

The rise of energy storage industry in USA is attributed to falling costs and increasingly favorable markets

and policy. Last month, Massachusetts became the third state in the USA to pass energy storage procurement

goals and California is pursuing a goal of 1.325GW of energy storage by 2020 for its public utilities. One of

the many progressive states in USA, New York is attempting to rebuild, strengthen and modernize its energy

system while bringing in economic growth. Under its Reforming the Energy Vision initiative, it aims to create

a cleaner, more affordable, more modern and more efficient energy system through the increased

development of distributed energy resources. The initiative includes aggressive targets of reducing

greenhouse gas emissions by 40% from 1990 levels, obtaining 50% of the state’s generation from renewable

sources, and reducing the energy consumption of buildings by 23%, all by 2030. To achieve its targets, it is

estimated that it will require as much as 4 GW of storage by 20301 to balance the increased penetration of

intermittent renewable energy generation.

Tesla with a fully integrated suite of PV Panels and energy storage solutions can take advantage of the above

developments and offer as much as 13 fundamental electricity services for three major stakeholder groups

(ISO/RTO, Utility and Customers) within the New York state. Its proposed integrated PV manufacturing

facility at Buffalo, New York can cater to the increasing demand for roof top PV panels. Its energy storage

solutions Powerpack and Powerwall can offer key grid/residential energy storage applications such as

shaping and balancing load, improving resiliency and reliability, and deferring T&D investments. This report

aims to provide a detailed analysis of all the available opportunities across the 13 fundamental electricity

services aimed towards the three major stakeholder groups. The report also proposes a timeline of actions

which Tesla can adopt to penetrate and gain market share within New York’s electricity market.

1 NY‐BEST: Energy Storage Roadmap for NY Electricity Grid, 2016

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Chapter 01: Introduction to NYISO Electricity Markets

INTRODUCTION: NEW YORK INDEPENDENT SYSTEM OPERATOR ELECTRICITY MARKET

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1. New York Independent System Operator Electricity Market The New York Independent System Operator (NYISO) operates competitive wholesale markets to manage

the flow of electricity across New York—from the power producers who generate it to the local utilities that

deliver it to residents and businesses.2

NYISO can be broadly classified into 11 zones (Figure 1) mostly controlled by 6 investor owned utilities. The

NYISO monitors a network of 10,892 miles of high‐voltage transmission lines and serves approximately 400

market participants3. In February 2007, the Federal Energy Regulatory Commission (FERC) sought to reduce

barriers to the inclusion of alternative power suppliers in electricity markets.4 The NYISO, consistent with the

FERC’s guidance, is working with alternative suppliers to facilitate their integration into the New York

electricity market. In 2009, the NYISO, working with stakeholders via its shared governance process,

developed new market rules and related market software that specifically supported the integration of a

class of resources known as Limited Energy Storage Resources or “LESRs.”5 LESRs act as a consumer of

electricity (an electrical load) when they store energy delivered by the electric grid. When they later release

that stored energy, they act as a supplier of electricity6. Energy storage is classified as a LESR and the

opportunities that exists for it to play a prominent role within the NYISO market are discussed in subsequent

sections.

Figure 1: New York Control Area Load Zone

2 https://home.nyiso.com/ 3 https://www.ferc.gov/industries/electric/indus‐act/rto/metrics/nyiso‐rto‐metrics.pdf 4 FERC Order No. 890 5 FERC Order Accepting Tariff Revision; Docket Nos. ER09‐836‐000 and ER09‐836‐001; May 15, 2009 6 NYISO: Energy Storage in the New York Electricity Market

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Chapter 02: Reforming the Energy Vision (REV) Initiative

INTRODUCTION: NEW YORK’s REFORMING THE ENERGY VISION INITIATIVE

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2. About the REV Initiative In the aftermath of Super‐storm Sandy, Governor Cuomo sought to rebuild, strengthen, and modernize New

York’s energy system while bringing economic growth to New York. His strategic vision gave birth to the

Reforming the Energy Vision initiative (REV).

"Reforming the Energy Vision" (REV) is a major decision‐making process underway now to transform the

retail electricity market and overhaul New York's energy efficiency and renewable energy programs. The

stated goal of the proceeding is to create a cleaner, more affordable, more modern and more efficient energy

system in New York, through the increased development of distributed energy resources, like rooftop solar,

energy efficiency, and battery storage.

Energy storage has a major role to play in the transformation of New York’s electric grid and in achieving the

goals of REV. Energy storage is already a cost‐effective solution for many applications on the grid and it will

be essential for meeting the State’s renewable energy goals. However, in order for the energy storage

industry to achieve its full potential to fundamentally change the nature of the State’s electricity system, it

must overcome a number of obstacles.

The Energy Storage Roadmap released by New York Battery and Energy Storage Technology Consortium in

2016 lists the following as some of the major obstacles for the growth of energy storage market within New

York:

1. Inability to participate in existing markets: The capacity threshold for resources to participate in the

PJM frequency regulation market is 100 kW; on the other hand, NYISO requires 1 MW systems.

2. High soft costs: Soft costs can account for as much as two‐thirds of the total installed cost of storage

systems. Many of these costs are driven by the geographic location where storage is deployed and

can only be addressed locally. Furthermore, with hardware costs dropping by 8‐10% a year, the

impact of soft costs has been growing.

3. Lack of standardized safety procedures and regulations: The current New York City fire code does not

address the use of stationary battery systems for energy management activities in buildings. It does

address the use of five types of batteries (non‐recombinant, recombinant (vented and sealed lead

acid, primarily), nickel cadmium, lithium ion and lithium metal polymer) but only when used for

“facility standby power, emergency power or uninterrupted power supplies”. Because energy

management is not a prescribed use in the current code, all stationary battery systems must be

submitted for approval to the Fire Department of New York and to New York City Department of

Buildings Office of Technology Certification and Research (OTCR). At present, every installation must

apply on a site‐by‐site basis. This process adds significant delay and expense in attempts to site

stationary storage projects — typically requiring multiple meetings, information exchanges, in‐person

discussions over a period of months that can exceed a year.

INTRODUCTION: NEW YORK’s REFORMING THE ENERGY VISION INITIATIVE

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4. Inability to monetize the full value of storage: There are still multiple DER benefits that are not

recognized or monetized through these programs. These benefits may include services to the local

distribution system (such as for upgrade deferrals and voltage/VAR support) or a number of

environmental or other public policy benefits.

5. Lack of common financing vehicles: There is a lack of standardized and transparent processes,

procedures and associated documentation that help investors reduce perceived risks and increase

the likelihood of high rewards. The development of third‐party financing, solar leasing, power

purchase agreements, and other financial vehicles has played a huge role in the explosive growth of

the PV industry. Loan guarantees, manufacturing incentives, investment tax credits, and tax

exemptions have all helped to create an active financing market for solar power. Energy storage

technology must develop a similarly robust financing market in order to achieve widespread

commercial adoption.

REV aspires to address these issues and create pathways for DERs such as energy storage to gain space

within the electricity market.

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Chapter 03: Value Proposition for an Energy Storage System

VALUE PROPOSITION FOR A BATTERY STORAGE SYSTEM

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3. What services can batteries provide to the electricity grid? The Rocky Mountain Institute in its report “The Economics of Battery Storage” states that energy storage can

provide thirteen fundamental electricity services for three major stakeholder groups (Figure 2) when

deployed at a customer’s premises (behind the meter).7

Key stakeholders are:

1. ISO/RTO services

2. Utility services

3. Customer services

Figure 2: Batteries can provide up to 13 services to three stakeholders8

7 The Economics of Battery Energy Storage, Rocky Mountain Institute: www.rmi.org/electricity_battery_value 8 http://www.rmi.org/electricity_battery_value

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Chapter 04: Potential Opportunities for Tesla within New York

State

POTENTIAL OPPORTUNITIES FOR TESLA WITHIN NEW YORK STATE

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4. Potential Opportunities for Tesla within New York State

4.1. ISO/RTO Services: Targeting NYISO

4.1.1. Energy Arbitrage

Currently New York uses its pumped storage facilities for energy arbitrage. A pumped storage facility is a

hydropower generating facility that stores water as potential energy during off‐peak hours for later use when

demand is higher.

Pumped storage facilities actually consume more electricity than they generate on a net basis, so unlike

conventional hydropower there is a short‐run cost to storage. The value (in terms of both economics and

reliability) of pumped storage resources is derived from their ability to deliver power when it is needed the

most. When the cost of pumping is less than the price differential between on and off‐peak pumped storage

facilities can effectively arbitrage these prices by purchasing power off‐peak and selling the power at peak.

The vast majority of power generated from pumped storage resources in New York comes from the

Blenheim‐Gilboa facility. Owned by the New York Power Authority (NYPA), Blenheim‐Gilboa is located in the

Catskill Mountains west of Albany, NY. The facility is the fifth largest in the U.S. on a capacity basis and has

four generating units that have a combined nameplate capacity of 1,116 MW. New York State’s other major

pumped storage facility is the Lewiston Pump‐Generating Plant, also owned and operated by NYPA. With a

nameplate capacity of 240 MW, the Lewiston plant is part of the Niagara Power Project complex near Niagara

Falls, which includes a reservoir that allows the conventional portion of the power project to store some

energy as well.

Within New York State, pumped storage accounted for 4% of capacity (Figure 3) and 1.1% (Figure 4) of all

generation output in 2015. The pumped storage portfolio in New York is not expected to expand significantly

during the near term due to a lack of sites where pumped storage facilities can be economically constructed.9

Additionally, most of the pumped storage facilities are located upstate (Figure 5) whereas most of the

demand fluctuations take place in the downstate (Figure 6).

Using Tesla’s Powerpack energy storage systems, NYISO can augment its storage resources and also obtain

the flexibility to locate these resources near the demand centers.

9 NYISO: Energy Storage in the New York Electricity Market


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Figure 3: Generation Capacity in New York State by Fuel Source ‐ Statewide, Upstate New York and Downstate New York: 201610

Figure 4: Electric Energy Production in New York State by Fuel Source ‐ Statewide, Upstate New York and Downstate New York: 201511

10 NYISO: Power Trends 2016 11 NYISO: Power Trends 2016


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Figure 5: Generating capacity comparison between Upstate and Downstate New York12

Figure 6: Regional Usage and Production in New York State13

12 NYISO: Power Trends 2016 13 NYISO: Power Trends 2016


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4.1.2. Frequency Regulation

The Federal Energy Regulatory Commission (FERC) Orders 755 and 784 relate to equitable compensation in

the ancillary services markets. It created new compensation rules for frequency regulation and recognizes

the value of speed and accuracy.

It also created two‐part payment (Figure 7):

Figure 7: Two‐part payment14

In 2009, the NYISO became the first grid operator in the nation to establish market rules for a new category

of energy storage resources, which provide frequency regulation service to balance supply and demand on

the grid. Under the new rules, a Limited Energy Storage Resource (LESR) is allowed to offer services on a

comparable basis while continuing to schedule resources to satisfy all reliability criteria.

Limited Energy Storage Resource (LESR): It’s a generator authorized to offer Regulation Service only and

characterized by limited energy storage, that is, the inability to sustain continuous operation at maximum

energy withdrawal or maximum energy injection for a minimum period of one hour.15

Key points:

1. NYISO does 5 minute State of Charge management which results in “effective capacity” less than

nameplate.

14 http://www.cesa.org/assets/Uploads/Webinar‐Slides‐9.30.15.pdf 15 http://www.nyiso.com/public/webdocs/markets_operations/committees/bic_prlwg/meeting_materials/2009‐04‐27/LESR_PRLWG_Presentation.pdf


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2. It settles net energy at wholesale nodal price; excluded from station power charges.

3. The minimum regulation resource size is 1 MW.16

Tesla’s Powerpack systems which can augment storage capacity on excess of 1MWh can be pitched as a

replacement to traditional gas fired turbines to NYISO for frequency regulation services. The service will

assume a lot of importance in future as more and more renewable energy generation is integrated within

the New York state electricity grid.

4.1.3. Spin/Non‐Spin Reserves

Spinning reserve is the generation capacity that is online and able to serve load immediately in response to

an unexpected contingency event, such as an unplanned generation outage. Non‐spinning reserve is

generation capacity that can respond to contingency events within a short period, typically less than ten

minutes, but is not instantaneously available.17

The NYISO Generator Deactivation Assessment released on 21st March, 2016 indicates that approximately

2400 MW of summer capability is being deactivated during 2016‐2018 period (Figure 8).

Figure 8: Capacity Resources ‐ Deactivations: 2016‐201818

Notably, the fast responsive gas turbines situated in Zone J and possessing a combined generation capability

of 144.6 MW are being deactivated. It may lead to supply/demand gap and dearth of spinning/non spinning

reserves within Zone J. Tesla’s Powerpack energy storage systems can definitely fill those capability gaps.

16 http://www.cesa.org/assets/Uploads/Webinar‐Slides‐9.30.15.pdf 17 The Economics of Battery Energy Storage, Rocky Mountain Institute: www.rmi.org/electricity_battery_value 18 NYISO: Power Trends 2016


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4.1.4. Voltage Support

The voltage on the transmission and distribution system must be maintained within an acceptable range to

ensure that both real and reactive power production are matched with demand.

NYISO incentivizes reactive power service to those Voltage Support Suppliers (VSS) who meet the following

criteria. Each resource must:

1. Have Automatic Voltage Regulator (AVR)

2. Successfully perform MVAr capability testing

a. Production ‐ Lag Var

b. Absorption ‐ Lead Var

3. Maintain specific voltage level as directed by NYISO/Transmission Operators

By meeting the above requirements, Tesla’s energy storage systems can unlock an additional revenue

stream. As of now VSS Suppliers Receive Weekly Payments based on an Annual Rate of $2,592/MVAr.19

4.1.5. Black Start

Black start capability represents the key Generators that, following a system‐wide blackout, can start without

the availability of an outside electric supply and are available to participate in system restoration activities

that are under the control of the NYISO or, in some cases, under local Transmission Owner Control. If a partial

or system‐wide blackout occurs, these units assist in the restoration of the New York Control Area (NYCA).20

NYISO develops and reviews black start restoration plan, identifies generating units in critical areas, manages

and deploys black start service and seeks new bids as needed. Payments are made against participant’s

annual submitted cost which is its O&M and personnel expense.

Daily Black Start Payment Calculated as Follows:

1. Statewide & Local = Annual Cost $ / # Days in Previous Yr. May 1st to April 30th

2. For Con Ed Providers = Annual Compensation $ + Cost $ / # Days in Previous Yr. May 1st to April 30th21

Tesla can pitch its Powerpack energy storage systems as an alternative to traditional generators possessing

black start capabilities. The current technologies require high capital investments and take time to restore

themselves during a black start. A typical energy storage system such as the Powerpack possess the capability

to come online immediately and it requires considerably less capital expenditure.

19www.nyiso.com/public/webdocs/markets_operations/services/market_training/workshops_courses/Training_Course_Materials/NYMOC‐Houston‐%20Oct%204‐6/6_Ancillary%20Services.pdf 20 http://www.nyiso.com/public/webdocs/markets_operations/committees/bic_miwg/meeting_materials/2009‐10‐26/Anc_Svcs_Manual_Black_Start_Change.pdf 21www.nyiso.com/public/webdocs/markets_operations/services/market_training/workshops_courses/Training_Course_Materials/NYMOC‐Houston‐%20Oct%204‐6/6_Ancillary%20Services.pdf


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4.2. Utility Services

4.2.1. Resource Adequacy and Distribution Deferral

Instead of investing in new natural gas combustion turbines to meet generation requirements during peak

electricity consumption hours, utilities can use Tesla’s Powerpack energy storage systems to incrementally

defer or reduce the new generation capacity and minimize capital expenditures.

Notable development: Brooklyn Queens Demand Management (BQDM) project is among the most well‐

known of utility non‐wire alternative projects. It is also one of Con Edison's demonstration projects under

New York's Reforming the Energy Vision initiative. Through a combination of 52 MW of demand reductions

and 17 MW of distributed resource investments, Con Edison plans to defer the need for a $1.2 billion

substation upgrade22. Recently, Demand Energy, an intelligent energy storage systems company won Con

Edison’s first‐ever auction to provide critical load relief on peak power days in New York City. It plans to

install multiple megawatts of energy storage in Brooklyn and Queens and plans to start its operation by

2017.23

Figure 9: Anticipated BQDM 2018 Portfolio, during a design peak summer day24

22 http://www.utilitydive.com/news/coned‐awards‐22‐mw‐of‐demand‐response‐contracts‐in‐brooklyn‐queens‐project/424034/ 23 http://www.demand‐energy.com/pressroom/latest/198‐demand‐energy‐wins‐in‐first‐ever‐con‐edison‐auction‐for‐load‐reduction‐in‐new‐york‐city 24 https://www.coned.com/energyefficiency/pdf/BQDM‐program‐update‐briefing‐08‐27‐2015‐final.pdf


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4.2.2. Transmission Congestion Relief

NYISO’s markets are designed to use the lowest cost power available to reliably serve demand. However,

physical transmission constraints limit the economically‐efficient dispatch of electricity and can cause

“congestion” on the system. NYISO charges utilities to use congested transmission corridors during certain

times of the day. Tesla’s Powerpack energy storage systems can be deployed downstream of congested

transmission corridors to discharge during congested periods and minimize congestion in the transmission

system.25

The 2015 Congestion Assessment and Resource Integration Study conducted by NYISO identified all or parts

of the high‐voltage transmission path from Oneida County through the Capital Region (Central East) and

south to the Lower Hudson Valley (New Scotland – Pleasant Valley), as well as the 230‐kV system in Western

New York (Western 230kV) 26 (Figure 10).

Figure 10: Transmission Congestion Corridors in New York State27

25 The Economics of Battery Energy Storage, Rocky Mountain Institute: www.rmi.org/electricity_battery_value 26 NYISO: Power Trends 2016 27 NYISO: Power Trends 2016


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4.2.3. Transmission Deferral

Over 80 percent of New York’s high‐voltage transmission lines went into service before 1980 (Figure 11). Of

the state’s more than 11,000 circuit‐miles of transmission lines, nearly 4,700 circuit‐miles will require

replacement within the next 30 years, at an estimated cost of $25 billion.28

Tesla’s Powerpack energy storage system can delay, reduce the size of, or entirely avoid utility investments

in transmission system upgrades necessary to meet projected load growth on specific regions of the grid.

Figure 11: Age of New York Transmission Facilities by Percentage of Circuit Mile29

28 New York’s State Transmission Assessment and Reliability Study Phase II Study Report, STARS Technical Working Group, March 30, 2012. 29 NYISO: Power Trends 2016


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4.3. Customer Services

New York State Energy Research and Development Authority (NYSERDA) conducted a Technical and Market

Assessment of behind‐the‐meter battery storage. It concluded that electricity rates and the Demand

Response programs available to the customers both in terms of service territory and rate structure play a

major role in realizing value from a battery storage project at customer’s end (behind‐the‐meter). The study

suggested that for a battery storage project to make an economic sense, the customer’s site should:

1. Be located in Con Edison territory: Con Edison’s demand charge rates are significantly higher than

those in the rest of New York. During the summer, Con Edison’s demand charges are almost seven

times as much as those in the Albany area for National Grid customers.

2. Be a low‐tension service customer and have access to the Standby Service and Hourly Pricing rate

structures: Facilities with low tension service pay higher demand charges, so peak clipping can be

more lucrative. The vast majority of facilities receive low tension service, though industrial facilities

are occasionally the recipient of high tension service.

3. Experience spikes in load that are intermittent, short in duration (ideally less than 2 hours in

aggregate duration), and large enough30 to be worth the effort of following through on the project.

The assessment suggested that as a rule‐of‐thumb, an appropriate load shape will be associated with

demand charges that are greater than 50% of the total electric utility bill.

4. Have space sufficiently large and safe enough to accommodate the necessary battery.31

30 In outdoor settings, customers have followed through on projects as small as 8 kW. In indoor settings, where the installation is more disruptive and costly, vendors suggest that a project must be at least 100 kW to be worth the trouble. 31 Behind‐the‐Meter Battery Storage: Technical and Market Assessment, NYSERDA, https://www.nyserda.ny.gov/‐/media/Files/Publications/Research/Electic‐Power‐Delivery/Behind‐Meter‐Battery‐Storage.pdf


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The assessment also looked into the viability of a battery storage project within different market segments:

Figure 12: Market Sector Summary32

32 Behind‐the‐Meter Battery Storage: Technical and Market Assessment, NYSERDA, https://www.nyserda.ny.gov/‐/media/Files/Publications/Research/Electic‐Power‐Delivery/Behind‐Meter‐Battery‐Storage.pdf


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4.3.1. Time‐of‐Use Bill Management and Demand Charge Reduction

Currently, Con Edison rate structure consists of the 15 service classifications (SC) out of which SC‐08 covers

multifamily buildings on a master meter and SC‐09 covers commercial and industrial customers and the

common areas of multifamily buildings where apartments are separately metered.

Each service classifications has 5 rate classes which can be categorized under 3 main billing structures:

1. Standard Service (Rate I)

2. Time‐of‐Day Service (Rate II & III)

3. Standby Service (Rate IV & V)

Across the board, they have seasonal variability, with higher rates for the summer months (June through

September), and lower rates during the rest of the year.

A summary of SC‐08 and SC‐09 rate characteristics is provided below:

Figure 13: Con Edison SC‐08 & SC‐09 Sub‐Rate Characteristics33

Note: For Standard Service and Time‐of‐Day Service, peak demand is applied on a monthly basis, whereas

for Standby Service the peak demand is applied daily. Thus, a one‐day lapse in peak‐clipping activities (as the

result of, for example, poor planning on the part of the battery control software or participation in a DR

event) would result in a forfeiture of the demand‐charge savings for an entire month for Standard and Time‐

of‐Day Service, but only one day’s savings for Standby Service.34

33 Behind‐the‐Meter Battery Storage: Technical and Market Assessment, NYSERDA, https://www.nyserda.ny.gov/‐/media/Files/Publications/Research/Electic‐Power‐Delivery/Behind‐Meter‐Battery‐Storage.pdf 34 Behind‐the‐Meter Battery Storage: Technical and Market Assessment, NYSERDA, https://www.nyserda.ny.gov/‐/media/Files/Publications/Research/Electic‐Power‐Delivery/Behind‐Meter‐Battery‐Storage.pdf


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Customers having on‐site generation can avail Standby service whereas other on the Time‐of‐day Service can

arbitrage energy using battery storage system and purchase electricity in periods of lower rates as against

purchasing during peak electricity‐consumption hours when time‐of‐use (TOU) rates are highest.

Estimating Savings from Peak Clipping35:

= [( × ) + ( ‐ × ‐ )] ×

×

Where,

1. : The number of days June through September

2. : The maximum $/kW charge incurred during summer months

3. : The number of days in the other months of the year

4. : The maximum $/kW charge incurred during non‐summer months

5. : The kW reduced; this is equivalent to battery power capacity

6. : The percentage of peak clipping potential actually achieved net of mistakes, variations

in load peaks and valleys, and Demand Response (DR) events; for purposes of calculation, we assume

90% in general and 80% for batteries participating in Demand Response

For a 100kW battery system that’s not a part of DR event and charged through Standby Service rates, the

annual savings is:

Savings = [(122 × 1.2742) + (243 × 0.8626)] × 100kW × 90% $32,856/year

Note: Con Edison rate classes distinguish pricing between low tension and high tension service based upon

service voltage. All figures are for low tension service based upon the understanding that the vast majority

of customers interested in battery storage are low tension customers. As a rule‐of‐thumb, high tension costs

tend to be lower by about 25%, which eats into the potential savings.

35 Behind‐the‐Meter Battery Storage: Technical and Market Assessment, NYSERDA, https://www.nyserda.ny.gov/‐/media/Files/Publications/Research/Electic‐Power‐Delivery/Behind‐Meter‐Battery‐Storage.pdf


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Comparison with other utilities:

All NY Utilities offer Standby service rate structure for use with on‐site generation and follow a similar constructs: daily, per‐kW peak

demand charges, sometimes with variations depending on time of day or time of year.

Figure 14: Summary of New York State Standby Service by Utility36

From figure 14, it’s evident from the comparison of demand charge savings calculations above that a battery storage project within a

Con Edison territory is much more attractive financially as compared to other utilities/territories. Thereby, Tesla should specifically

target low tension customers (multifamily residential and commercial retail) within Con Edison territory.

36 http://www3.dps.ny.gov/W/PSCWeb.nsf/All/DCF68EFCA391AD6085257687006F396B?OpenDocument http://www.coned.com/documents/elecPSC10/SCs.pdf https://www.oru.com/documents/tariffsandregulatorydocuments/ny/electrictariff/electricSC25.pdf https://www2.dps.ny.gov/ETS/jobs/display/download/5910214.pdf http://www.rge.com/MediaLibrary/2/5/Content%20Management/RGE/SuppliersPartners/PDFs%20and%20Docs/PSC19_237_250.pdf https://www2.dps.ny.gov/ETS/jobs/display/download/5919392.pdf https://www2.dps.ny.gov/ETS/jobs/display/download/5919946.pdf

Utility Con Edison Orange & Rockland Central Hudson Rochester Gas & Electric National Grid NYSEG

Rate ClassSC 9 Rate V ‐

Standby Rate

SC 25 Standby

Service Rate 3

SC 14 Standby

ServiceSC 14 Standby Service SC 7 Standby Service SC 11 Standby Service

Peak Charge Cycle Daily Daily Daily Daily Daily Daily

Summer Charge per kW $ 1.2293 $ 0.5825 $ 0.3445 $ 0.3584 $ 0.2897 $ 0.1786

Summer Peak WindowJune ‐ Sept

8 AM to 10 PM

June ‐ Sept

24 hours

Mon ‐ Fri

7 AM to 11 PM

Mon ‐ Fri

7 AM to 11 PM

Mon ‐ Fri

8 AM to 10 PM

Mon ‐ Fri

7 AM to 10 PM

Winter Charge per kW $ 0.7915 $ 0.3674 $ 0.3445 $ 0.3584 $ 0.2897 $ 0.1786

Winter Peak WindowOctober ‐ May

8 AM to 10 PM

October ‐ May

24 hoursSame as Summer Same as Summer Same as Summer Same as Summer

Expected Annual Savings from

100kW Battery $ 30,808 $ 14,431 $ 11,317 $ 11,772 $ 9,517 $ 5,868


Page 25 of 33

4.3.2. Increased PV Self‐Consumption

New York State electric utilities and solar companies have jointly proposed a distributed generation

compensation model that addresses cost‐sharing issues in transitioning from net energy metering (NEM).

The proposal encourages ongoing development of distributed energy resources (DER) and adequate funding

to maintain grid reliability, while protecting customer interests and limiting bill impacts, particularly for non‐

NEM‐customers. The proposal also provides a mechanism to move to a more geographically targeted

incentive for resources that provide locational distribution benefits.

Currently, New York has more than 3,100 MW of NEM‐eligible resources installed or in the utilities’

interconnection queues. Notably, NEM‐eligible applications have more than doubled in Q1 2016, with much

of the recent development configured as community distribution generation projects. NY PSC stated that the

growth pattern lends urgency to its decision‐making on DER compensation mechanisms. In October 2015,

NY PSC issued an order (Docket No. 15‐E‐0407) suspending retail rate NEM caps until the state’s Reforming

the Energy Vision proceedings decides on the valuation of DG resources.37

Until then, New York will continue to compensate the export of excess solar energy to grid using net metering

incentives, regardless of caps. So until the rules for net metering is decided upon, the battery storage with

solar panel offering (Powewall + PV Panel) may not look attractive specifically within the residential market

sector.

4.3.3. Backup Power

Batteries, like other grid‐independent generation sources, can serve as a back‐up power system (or a

component of one) in the event of a grid outage. Batteries with short discharge durations can serve as

uninterruptible power systems (UPSs), which bridge the gap between the outage and the more long‐term

generation source (typically a gas‐fired generator) or batteries with long discharge durations can serve

critical loads such as elevators, emergency lighting, water pumps, etc. In most of the cases, a battery simply

dedicated to provide backup power may not be economically attractive. Tesla should evaluate each project

on a case by case basis and ensure that it takes advantage of additional revenue streams.

37 https://enerknol.com/new‐york‐electric‐utilities‐and‐solar‐companies‐partner‐to‐revalue‐solar/

Page 26 of 33

Chapter 05: Product Mapping

PRODUCT MAPPING

Page 27 of 33

5. Mapping Tesla’s Powerwall and Powerpack Offerings with 13 fundamental electricity services

5.1. Tesla Powerwall38 Tesla Powerwall is a rechargeable lithium‐ion battery designed to store energy at a residential level for self‐

consumption of solar power generation, load shifting, and backup power.

The Powerwall can provide a number of different benefits to the customer including:

1. Increasing self‐consumption of solar power generation – The battery can store surplus solar energy

not used at the time it is generated and use that energy later when the sun is not shining.

2. Load shifting – The battery can provide financial savings to its owner by charging during low rate

periods when demand for electricity is lower and discharging during more expensive rate periods

when electricity demand is higher.

3. Back‐up power – Assures power in the event of an outage.

Powerwall specs:

1. Mounting: Wall Mounted Indoor/Outdoor

2. Inverter: Pairs with growing list of inverters

3. Energy: 6.4 kWh

4. Continuous Power: 3.3 kW

5. Peak Power: 3.3 kW

6. Round Trip Efficiency: >92%

7. Depth of Discharge: 100%

8. Operating Temperature Range: ‐20C (‐4F) to 50C (122F)

9. Warranty: 10 years

10. Dimensions: H: 1300mm W: 860mm D:180mm

5.2. Tesla Powerpack39 The Tesla Powerpack system delivers broad application compatibility and streamlined installation by

integrating batteries, power electronics, thermal management and controls into a turnkey solution. The

Powerpack system scales to the space, power and energy requirements of any site, from small commercial

businesses to utilities. It can be configured in various arrangements, offering far more modularity than

competing models. The 100kWh Powerpacks are grouped to scale from 100kWh to 100MWh+. These

systems are capable of 2hr to 8hr continuous net discharge power using grid tied bi‐directional inverters.

The Powerpack can provide a number of different benefits to the customer including:

1. Load Shifting: Shift energy consumption from one point in time to another.

2. Demand Charge Reduction: Discharge at times of peak demand to avoid or shave demand charges.

3. Demand Response: Discharge or charge in response to signals from a demand response administrator

or aggregator.

38 https://www.Tesla.com/presskit 39 https://www.Tesla.com/presskit

PRODUCT MAPPING

Page 28 of 33

4. Self‐consumption: maximize consumption of on‐site clean power.

5. Emergency Backup: Provide intermediate backup power in the event of a grid interruption. This

function can stand alone or be tied to solar.

6. Microgrid: Build a localized grid that can disconnect from the main power grid, operating

independently and reinforcing overall grid resilience.

7. Renewable Firming: Firm up renewable generation by reconciling the intermittency of power from

these sources and storing excess capacity to dispatch when it’s needed.

8. Capacity & Spinning Reserve: Provide power or energy capacity to the grid as a standalone asset.

9. Ancillary Services: Provide services to the grid in response to signals sent from utilities, Transmission

System Operators (TSO) or other grid service providers.

10. Transmission & Distribution Support: Supply power or energy capacity at a distributed location to

defer or eliminate the need to upgrade aging grid infrastructure.

Please refer to Figure 15 for mapping of Tesla’s Powerwall and Powerpack offerings with 13 fundamental

electricity services.

PRODUCT MAPPING

Page 29 of 33

Figure 15: TESLA Product Mapping

Utility Services

ISO/RTO Services

Customer Services

Energy Arbitrage

Spin/Non Spin Reserve

Frequency Regulation

Voltage Support

Black Start

Resource Adequacy

Transmission Congestion Relief

Transmission Deferral

Distribution Deferral

Time‐of‐Use Bill Management

Demand Charge Reduction

Increased PV Self‐Consumption

Back‐up Power

TRANSMISSION

DISTRIBUTION

BEHIND‐THE‐METER

CENTRALIZED

DISTRIBUTED

HYBRID SYSTEM

LONG CHARGE/DISCHARGE

SHORT CHARGE/DISCHARGE

BATTERY

SYSTEM TYPE

TESLA POWERWALL, 6.4 kWh

TESLA POWERPACK, 100 kWh to 100 MWh+

PRODUCT MAPPING

Page 30 of 33

Chapter 06: Recommendations

RECOMMENDATIONS: PENETRATING THE EMPIRE STATE MARKET

Page 31 of 33

6. New York Battery and Energy Storage Technology Consortium (NY‐BEST)

6.1. About NY‐BEST The New York Battery and Energy Storage Technology (NY‐BEST™) Consortium was created in 2010 to

position New York State as a global leader in energy storage technology, including applications in

transportation, grid storage, and power electronics.

NY‐BEST currently has more than 150 members. The Consortium's membership is diverse and includes

manufacturers, academic institutions, utilities, technology and materials developers, start‐ups, government

entities, engineering firms, systems integrators, and end‐users. The majority of its members are New York

State based entities.40

6.2. NY‐BEST Energy Storage Roadmap for NY Electric Grid 2016

In 2012, the New York Battery and Energy Storage Technology Consortium (NY‐BEST) published the first New

York Roadmap for Energy Storage and set a ten‐year goal of having 1 GW of storage on the grid. That goal

for 2022 is still valid but taking account of tremendous changes underway in NY’s electricity market and REV

Initiative’s push, NY‐BEST released a new roadmap in the current year and it pushes for much more ambitious

goals. Figure 16 maps the potential changes within NY’s regulatory environment (assuming that NY‐BEST’s

2016 roadmap is implemented) and recommends actions for Tesla within ISO/RTO Service, Utility, C&I and

residential markets.

40 https://www.ny‐best.org/About_NY‐BEST

RECOMMENDATIONS: PENETRATING THE EMPIRE STATE MARKET

Page 32 of 33

Figure 16: Mapping NY‐Best 2016 Roadmap and suggested Tesla actions

INCREA

SE PV SALES taking advantage of Buffalo facility Modify NYISO rules for Storage

Participation in Wholesale Market

1MW to 100 kW 2018

Establish Standardized Safety

Regulations 2017

Provide Detailed Distribution System

Data with Locational Pricing 2019

Reduce soft costs by 33% 2020

Reach 1GW installed Storage capacity 2022



2050

REV

INITIATIVE

80% GHG emissions reduction

50% power from renewables

40% GHG emissions reduction

NY‐BEST GOALS AND

RECOMMENDATIONS

POTENTIAL IMPACT

WITHIN THE MARKET

RECOMMENDATIONS

If successful, soft costs + project

timelines decrease, customer

willingness to invest increases

INCREA

SING

MARKET

POTENTIAL

TESLA & PANASONIC PV

PRODUCTION STARTS

2016 Net Metering Cap remains

suspended

Solar + Battery offering may not be

attractive, Grid used as a battery

Smaller Energy Storage systems can

participate + Additional value streams

open up

ISO/RTO MARKET UTILITY MARKET C&I MARKET RESIDENTIAL MARKET KEY DEVELOPMENTS

2018

2017

2019

2020

2022

2025

2030

2050

2016

Affordability increases

Locational value of DER like storage

established, will stimulate the growth

of storage markets

Locational value of storage system will allow it to capture higher revenues for services offered

Pitch POWERPACK: Utility owned energy

storage systems ensure resource adequacy and

will aid it in transmission or distribution infrastructure

investment deferral

Pitch POWERPACK: Ability to participate in wholesale markets will bring in additional

revenues, will lead to lower payback periods

and higher NPVs

Pitch POWER PACK: Installing small scale energy storage systems within

urban areas will be easier. Utility can take advantage to undertake distribution deferral programs such as

BQDM.

80/50 Goal

Pitch POWERPACK: Increased renewable energy

integration, especially wind and solar: energy storage will play a significant role

Pitch POWERWALL: As energy storage systems become affordable,

Solar + Battery storage within residential market becomes

attractive if a decision on NM incentive is

finalized

GIGA FACTORY –

PRODUCTION STARTS CAPACITY MARKET,

INCREASE MARKET SHARE

ABOUT THE AUTHOR

Page 33 of 33

About the Author Sreeram is passionate about bringing innovative and future‐shaping

technologies to market and scale, accelerating the world’s shift towards

cleaner forms of energy. Prior to joining Duke in 2015, he worked with a

French MNC, ALSTOM wherein he was responsible for the design of

automation logics for a thermal power plant. He graduated from National

Institute of Technology, Jalandhar, India in 2013 with a Bachelor's degree

in Instrumentation and Control Engineering. Recently, as an EDF Climate

Corps Fellow at New York City Housing Authority (NYCHA), he built a

comprehensive economic and technical feasibility analysis tool which

allows NYCHA to evaluate the project life cycle costs of a Combined Heat

and Power project. Apart from the work he takes‐up, he is passionate

about cooking and loves reading fiction.

Contact details:

Phone (M): (919) 949 – 1560 Duke email ID: [email protected] (Preferred) Personal email ID: [email protected]