In December 2023, the Long Island Power Authority (LIPA) in New York approved two large-scale battery energy storage system (BESS) projects developed by Key Capture Energy (KCE). This approval marks a significant move towards reinforcing the energy infrastructure and aligning with New York’s broader energy goals. The projects, which include the 50MW/200MWh Shoreham BESS in Hauppage and the 79MW/316MWh Kings BESS in Shoreham, are notable for their substantial capacities and strategic locations within Long Island’s Suffolk County. These projects are poised to play a crucial role in supporting the region’s electrical grid, enhancing reliability and enabling the integration of more renewable energy sources.
Key Capture Energy’s Proven Track Record
Key Capture Energy has previously demonstrated its capabilities with notable projects, including KCE NY 1 in 2019, the first large-scale BESS project in New York State. The recent approval comes on the heels of a 2021 request for proposals (RFP) by PSEG Long Island, on behalf of LIPA, which sought up to 175MW of battery storage to enhance the Long Island grid through existing substations. Various 78 proposals amounting to over 3,300MW of battery storage were submitted, out of which five projects totaling 329MW were shortlisted for contract negotiations by September 2022. Among these, KCE’s two projects have now reached final negotiation and approval stages, highlighting their capability to meet stringent criteria and deliver reliable storage solutions.
The RFP process sought to address the growing need for energy storage to stabilize the grid and manage peak load demands more effectively. Key Capture Energy’s previous experience with the KCE NY 1 project, which set a precedent for large-scale battery storage in the state, likely played a role in their successful bid. Their track record demonstrated the ability to deliver on time and within budget while meeting performance expectations. This historical performance instilled confidence in LIPA and PSEG Long Island, reinforcing the decision to advance KCE’s Shoreham and Kings BESS projects to the implementation stage.
Unique Aspects of the RFP Process
The RFP process spearheaded by PSEG LI and LIPA was unique, primarily due to two factors that differentiated it from standard energy storage procurements. Firstly, it allowed developers to lease land from LIPA, particularly within the boundaries of the Shoreham Nuclear Power Plant, which provided an optimal site for the Shoreham BESS project. By utilizing existing infrastructure and land that already had a history and capability of supporting significant energy projects, the RFP managed to attract quality proposals from experienced developers like Key Capture Energy. Secondly, unlike the typical 20-year power purchase agreements (PPAs) applied in similar projects, LIPA intends to own the projects, enabling lower capital costs by leveraging its strong credit rating and exemption from Federal Income Taxes.
This innovative ownership model not only reduces the financial burden on taxpayers but also positions LIPA to take advantage of long-term financial benefits and operational control. By decreasing reliance on third-party ownership and developers, LIPA can ensure that the projects align closely with regional energy goals and priorities. This strategy represents a forward-thinking approach to public-private partnerships in the energy sector, setting a potential example for similar initiatives across the country.
Ownership and Operational Models
Developers had the option of selling the projects immediately after commercial operation through build-own-transfer (BOT) agreements or retaining ownership for seven years before transferring to LIPA under build-own-operate-transfer (BOOOT) agreements. Key Capture Energy chose the seven-year BOOOT model, under which they will handle development and operational risks while being compensated based on performance. This setup emphasizes the accountability of the developer to ensure efficient and reliable performance, with conditions allowing LIPA to cancel contracts for poor performance. This arrangement aligns both parties’ interests toward achieving optimal results and ensuring the storage systems operate efficiently and effectively.
By opting for the BOOOT model, KCE takes on the responsibility for initial performance and operational aspects of the projects. This responsibility drives innovation and commitment to high standards from the developer, who must ensure that the storage systems meet defined performance metrics. After the seven-year period, LIPA will then assume ownership, benefiting from a proven, operationally sound asset that enhances grid stability and capacity. The arrangement ensures that Long Island residents and businesses experience minimal disruptions and reliable power supply, while LIPA leverages its financial strength and long-term vision for infrastructure development.
Strategic Importance of Energy Storage
LIPA’s acting CEO John Rhodes highlighted the importance of integrating storage into the electric grid, particularly in regions with high energy demand to support the distribution and availability of clean energy. These projects are expected to significantly bolster Long Island’s power supply portfolio, ensuring resiliency and stability in the region’s electricity grid. By adding substantial battery storage capacity, LIPA aims to smooth out the variability of renewable energy sources like solar and wind, making clean energy more reliable throughout the day and across seasons.
Energy storage plays a pivotal role in modernizing the grid and transitioning to a balanced mix of generation sources. The ability to store excess renewable energy during periods of low demand and release it during peak usage times helps optimize the overall energy system. This integration enhances grid flexibility, prevents potential overloads, and reduces the dependence on fossil fuel generation during high-demand periods. As a result, Long Island moves closer to achieving sustainability goals and reducing its carbon footprint, thus leading the charge in New York State’s broader energy transition strategy.
Regulatory Hurdles and Local Approvals
However, the final execution of the projects is contingent upon approval from the local towns of Brookhaven and Islip, where the sites are located. Notably, Islip has enacted a moratorium on energy storage developments, currently prohibiting the construction of Kings BESS. This presents a regulatory hurdle that needs resolution before moving forward. Stakeholder engagement and negotiations with local authorities are crucial to addressing community concerns and demonstrating the benefits of these projects, including economic development, job creation, and contribution to a cleaner environment.
Given the significance of these energy storage projects, overcoming local regulatory challenges involves collaboration between state and municipal governments, project developers, and community groups. Clear communication about the advantages and safety measures associated with BESS installations can help alleviate worries and foster a supportive environment for project approval. Additionally, showing how these projects align with broader sustainability objectives can increase community buy-in and promote a shared vision for a more resilient and greener energy future.
Challenges and Future Prospects
In December 2023, the Long Island Power Authority (LIPA) in New York gave the green light to two major battery energy storage system (BESS) projects developed by Key Capture Energy (KCE). This approval signifies a pivotal step in bolstering the energy infrastructure and aligning with New York’s broader renewable energy objectives. The projects include the Shoreham BESS with a 50MW/200MWh capacity located in Hauppage, and the Kings BESS with a 79MW/316MWh capacity situated in Shoreham. These projects are notable not only for their substantial storage capacities but also for their strategic placements within Long Island’s Suffolk County. The Shoreham and Kings BESS projects are expected to play an essential role in supporting the local electrical grid. They will enhance grid reliability, provide a more stable power supply, and facilitate the integration of additional renewable energy sources. Overall, these projects are a crucial advancement towards a more resilient and sustainable energy future for the region.