LIPA Issues Much-Awaited Bulk Energy Storage RFP

Foley Hoag LLP - Energy and Cleantech Counsel
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Foley Hoag LLP - Energy and Cleantech Counsel

On April 30, 2021, PSEG Long Island, LLC (PSEG-LI), on behalf of the Long Island Power Authority (LIPA), issued a much-awaited request for proposals (RFP) seeking 175 megawatts (MW) of utility-scale storage projects that will interconnect to the Long Island electricity grid. This RFP issuance follows a Request for Information nearly a year ago regarding how such a solicitation should be structured. The storage deployment resulting from this RFP will make a significant contribution to New York’s statewide goals of deploying 3,000 MWs of energy storage by 2030, a statutory goal set by the Climate Leadership and Community Protection Act of 2019 (CLCPA), and 1,500 MWs by 2025, a goal established by the New York Public Service Commission. As LIPA stated in its RFP, this effort will “help meet LIPA’s share of NYS’s 2025 storage goal, though LIPA may select more or less than this goal depending on the cost-effectiveness of the Proposals.” Also in accordance with the CLCPA, LIPA has directed proposers to specify how a proposed project may “reduce the usage of combustion-powered peaking facilities located in or near disadvantaged communities and further discuss the extent to which disadvantaged communities would receive the benefits of spending on the Project.”

Long Island is in particular need of battery energy storage; the technology – specifically at bulk scale – is a significant component of LIPA’s resource planning objectives, including PSEGLI’s Utility 2.0 Long Range Plan. Bulk storage facilities have the potential to relieve local grid congestion, reduce transmission upgrade costs, enable the retirement of fossil-fueled peaking units, and ease the integration of the large amount of variable offshore wind energy that is expected to be interconnected to LIPA’s grid over the next decade.

Responses to the RFP are due July 30, 2021. LIPA will post additional RFP documents – including standard form contracts and term sheets – on May 10. Respondents can submit questions to LIPA from May 10 to May 24, which will be followed by a recorded webinar during the week of May 24, 2021. Respondents must submit a notice of intent to propose by July 23, 2021.

The post-submittal timeline is relatively long – LIPA plans to select proposals by January 2022 and execute contracts with the winning developers by December 2022. Proposed contract pricing must be firm until at least June 30, 2023.

Other key highlights of the RFP include:

  • All commercially viable storage technologies are eligible.
  • Each Proposal must represent a Project at a single site with a single point of interconnection with a minimum size of 20.1 MWac.
  • Target commercial operation date must be no later than December 31, 2025.
  • Two contract models are available:
    • A build-own-transfer contract model (developer transfers a turnkey project to LIPA upon achievement of commercial operation), or
    • A build-own-operate-transfer contract model (developer owns/operates the project for seven years and then transfers such project to LIPA).
  • PSEG-LI has identified two points of interconnection – the Southold 69-kV and Glenwood 138-kV substations – for the deferment of transmission lines. Appendix G of the RFP details solution requirements for these points, including capacity and duration ranges for any proposed energy storage system solution. LIPA’s savings due to deferred transmission and distribution investments will be considered in the quantitative evaluation of the bid.
  • LIPA intends to offer respondents the opportunity to lease certain sites that are owned or may be acquired through LIPA.

Potential proposers should pay particular attention to LIPA’s stated intentions with respect to evaluating multiple proposals and the applicable New York State public authority contracting rules, among the range of considerations when evaluating the opportunity of this first-of-its-kind – for LIPA – solicitation and process.

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