The NY Joint Utilities just recommended what may be the biggest changes to DRV since it was created.
The core ideas are simple:
Compensate storage where it is needed, when it is needed, and at a competitive rate.
They are not proposing to implement everything immediately, but the direction makes sense for a market that is no longer in its infancy.
Here is why.
- “Where it is needed.”
This sounds obvious, but it is a meaningful shift.
Today, everything from lightbulbs to HVAC upgrades can receive some form of “avoided distribution value” through their BCA. Apply that same logic to batteries and you quickly start writing billions of dollars of checks for services that may not actually be needed on the system.
The result is what some people (or maybe just me) refer to as the "DRV-induced reverse mohawk": batteries clustering in a few areas because the compensation signal is uniform rather than targeted.
“When it is doing what it needs to do.”
The grid rarely has a clean four-hour peak for ten straight years. Peak hours shift, load shapes flatten, and electrification complicates it all.
If storage is being compensated for peak reduction, the performance windows need to evolve with the system.“Competitive rate.”
This may be the most surprising element.
If storage costs fall while the cost of traditional wires infrastructure rises, storage may increasingly be the traditional solution. If/when this is the case, everyone should be happy to give infrastructure funds a risk adjusted reasonable rate of return while reducing the cost to customers. The devil is in the details here.
The Commission already signaled interest in competition by allowing competition in the demand response programs, but that concept never fully worked when developers could rely on a baseline DRV payment regardless.
No idea where this ultimately lands. In the near term, it will probably create frustration for developers with funds raised to build distribution-connected storage portfolios based on a more simple and stable version of DRV.
Long term, though, it could be a positive step toward a more durable and sustainable distribution storage market.
Even if many of these recommendations move forward, the biggest remaining question is how the retail storage incentive adapts.