Added costs may threaten proposed Shoreham battery project, developer says

The cost to connect a proposed utility-scale battery to the Long Island electric grid at the former Shoreham nuclear power plant site could be as high as $27 million, a figure that could render the LIPA-awarded project "financially unfeasible," according to correspondence from the project's developer shown to Newsday.

The connection-cost estimate is in a draft report by a state electric grid operator that is expected to complete its analysis in the fall. The developer in the correspondence said its budget for the project is $86 million, and it has applied to receive more than $6 million from the Brookhaven Industrial Development Agency to defray certain costs through tax exemptions, according to town records.

The overall contract value is listed at a total of $174.5 million for the 50-megawatt battery. At the time it was announced, LIPA said the project would cost average customers 11 cents a month over the 20-year term of the contract, but didn't release the full contract value. (The State Comptroller's page, however, says the contract ends in 2055.) 

The project by developer Key Capture Energy at Shoreham is one of two awarded by LIPA in 2024, to help stabilize the grid with batteries as part of Gov. Kathy Hochul's green-energy vision. The facility would be on a site at the old Shoreham nuclear power plant and would power up during low demand times, when power is cheapest, and sell it back to LIPA during high-demand times.

KCE will pay LIPA zero dollars to lease a LIPA-owned parcel at the former Shoreham nuclear plant site, for a term that ends in 2061, according to state documents. KCE declined to comment on the free lease arrangement with LIPA. 

In a May 18 letter from KCE’s lawyers to the Brookhaven Industrial Development Agency, which awarded certain tax breaks to the project, Key Capture said it had recently been advised by LIPA that the cost to link the battery to the Long Island grid could be anywhere from zero to $27 million, "adding significant cost uncertainty to the expected $86 million budget" for the project.

KCE in the letter from its outside attorney at the firm Harris Beach Murtha told the Brookhaven IDA that its estimate for a final projected cost for the battery plant "may need to be materially amended and/or the project may be rendered financially infeasible."

The finding came about as part of a normal interconnection study required for the project by the New York Independent System Operator, which manages the state grid.

LIPA declined to comment on the interconnection cost increase, saying the figures were part of a draft report on the project. KCE spokesman Chris Linsmayer said KCE "can't comment on the potential interconnection cost right now" because the numbers are based on a draft report "that could change substantially in the months ahead." 

The Brookhaven IDA last year passed a resolution that granted KCE certain exemptions from sales and use taxes totaling up to $6.4 million. It’s unclear if the IDA is being asked to potentially increase its award because of the cost. An IDA representative didn’t immediately respond to a request for comment.

KCE is seeking an extension of its IDA grant award through year end as it awaits further information from LIPA and the NYISO.

A second Key-Capture battery awarded by LIPA in Hauppauge would have a 79-megawatt storage capacity, and cost ratepayers $280.23 million over its 30-year life span, according to the state’s page. LIPA said the 20-year contract for the Hauppauge battery would cost ratepayers 19 cents a month.

The proposed Hauppauge facility faces opposition from groups including the Hauppauge Fire District, which has expressed concern that the facility is too close to homes, schools and major roadways in the event of a fire. The state says newly approved facilities under a recently enacted state fire-safety code for batteries make the facilities considerably safer than in the past. Islip, like most other Long Island towns, has a moratorium on battery storage plants.

The two battery contracts were announced as part of LIPA’s plan to help stabilize the grid and eventually, wean itself off fossil-fuel power plants over the next 20 years. But the larger state plan that has been set back by Trump administration attacks on green energy, which has frozen new wind-power development and curtailed even solar power. Batteries can play a part by stabilizing the grid with available power when it’s needed most, while reducing the need for smaller plants known as peakers. 

But battery projects have run into considerable local resistance on Long Island, particularly over concerns about fires at the primarily lithium-ion plants. After a fire at the NextEra-National Grid-owned plant in East Hampton, the Suffolk County Water Authority last month filed a federal lawsuit against the developers and battery maker, alleging soot-laden water at the site of the fire contaminated four vital drinking water wells with a soup of toxic forever chemicals.

The plume has already led to the shutdown of two SCWA wells, while two others are on partial service, while residents with private wells have seen levels of forever chemicals at more than 1,000 parts per billion, well above safe-drinking water standards. Suffolk County is testing to see if the toxins have impacted the larger aquifer in the area.

New York State has been finalizing a review of dozens of battery projects across the state, including 11 proposed in Suffolk, as part of a bulk energy storage award. Final awards are expected to be announced in the fall.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.