The Value of Distributed Energy Resources (VDER) tariff is New York's mechanism for incentivizing distributed BESS. It is an alternative to wholesale market participation, not an addition to it. An enrolled battery earns the energy value of its exports and capacity market revenue plus locational credits, the Locational System Relief Value (LSRV), and demand reduction incentives, known as the Demand Reduction Value (DRV) credit.

New York's seven utilities each pay out differently, and increasingly diverge through 2044. Con Edison could pay out up to $254/kW-year in 2027 and $388/kW-year by 2035. PSEG Long Island pays most in the second decade, reaching $391/kW-year by 2044. The five upstate and Hudson Valley territories sit below $98/kW-year in 2026 and top out at $184/kW-year in 2041.

Key takeaways

• Con Edison and PSEG Long Island are the two most investable territories, netting $290/kW-year and $270/kW-year over 2026 to 2049. A utility-scale battery at the same nodes nets $165/kW-year and $170/kW-year.
• Central Hudson, NYSEG and RG&E are the least investable at $57/kW-year to $80/kW-year, below their own zone's wholesale alternative of $117/kW-year to $123/kW-year.
• The DRV and capacity payments allow projects to pencil, supplying 91% of VDER BESS revenue in Con Edison in 2026 and 57% to 80% elsewhere. The DRV is a performance obligation, paid per kilowatt-hour exported during summer dispatch windows.

Con Edison leads until 2039, then Long Island capacity prices carry PSEG to $391/kW-year in 2044

The same 5 MW, 4-hour battery settles very differently across the seven tariffs. Averaged over the horizon, VDER out-earns wholesale by 1.8x in Con Edison territory and 1.6x on Long Island. National Grid clears 14% above its wholesale alternative and Orange & Rockland matches it. However, a grid scale battery outperforms VDER in NYSEG, RG&E and Central Hudson.

Modo Energy forecasts Con Edison paying $254/kW-year in 2027, depending on elevated capacity payments throughout the summer. It falls to $142/kW-year in 2028 as new downstate supply arrives and capacity prices trough, then climbs to $388/kW-year by 2035 as capacity prices rise again. A project enrolling today would hold the $198/kW-year DRV rate throughout if the operators maximize performance during the dispatch window.

PSEG Long Island earns less until the late 2030s, running between $147/kW-year and $213/kW-year through 2036 as Long Island capacity prices clear lower than NYC. PSEG payments then climb steeply, passing Con Edison for good in 2039 and peaking at $391/kW-year in 2044. That increase rests on capacity prices 13 to 18 years out, under a tariff set by LIPA.

NYSEG, RG&E, and Central Hudson start at $21/kW-year to $40/kW-year and hit their troughs in 2029, when NYSEG and Central Hudson both turn negative. Their DRV ceilings of $12/kW-year to $25/kW-year cannot cover $50/kW-year to $66/kW-year of fixed charges. Their curves are lifted from this trough by rising capacity prices, recovering to $109/kW-year to $132/kW-year by 2040. National Grid and Orange & Rockland sit between throughout the forecast.

Energy is the smallest component regardless of utility. Modo Energy's market outlook has four-hour top-bottom (TB4) spreads reaching $77/kW-year in Zones A and B by 2041, against $41/kW-year in New York City. Even so, no territory's energy credit reaches $39/kW-year.

Net revenue declines across the late 2040s as supply catches up with demand. The five other territories peak in 2041 and sit 28% to 51% lower by 2049. An upstate project underwritten on that peak is underwritten on its best year, not its average.

Rising capacity prices drive the growth of revenue under VDER

Modo Energy forecasts New York City unforced capacity clearing prices rising from $20.7/kW-month in 2026 to $62/kW-month by 2044, double the Long Island path.

VDER does not pay that clearing price to BESS owners. Con Edison posts its own monthly payment under Alternative 3, $13.73/kW for New York City in July 2026. The payment is the price derated by the battery's capacity tag, set each year by its exports during the prior capability period's single NYCA peak hour.

Therefore, the payment depends on how much the battery was exporting during last year's single highest-demand hour in New York State. Hitting that hour at full power every year is hard to guarantee, so Modo Energy credits 75% of it in the base case. A wholesale battery earns the clearing price instead, derated by NYISO's four-hour accreditation factor.

The DRV halves after year 10, but capacity holds Con Edison above $288/kW-year

The DRV pays a fixed rate per kilowatt-hour a battery exports during its utility's demand relief window, worth up to $198/kW-year in Con Edison territory. The rate is set at enrollment and holds for 10 years.

Every project hits the same cliff 10 years after it enrolls. The DRV then reverts to the then-applicable rate, which Modo Energy models at half the initial rate. For a 2026 enrollment the cut lands in 2036, removing $99/kW-year from Con Edison's stack. The tariff publishes no post-vintage schedule, so the half-rate is forecasted by Modo Energy.

Capacity does not offset the drop in DRV revenue. Con Edison's capacity credit adds only $2/kW-year in 2036 and $19/kW-year by 2044, so the 2035 peak is never recovered. Capacity revenues, however, hold revenues stable, with net revenue between $288/kW-year and $298/kW-year from 2036 to 2044.

An LSRV award adds up to $141/kW-year, but only at designated substations under VDER

The LSRV is a credit that pays only at substations the utility designates for relief, and it locks payments for 10 years like the DRV.

Con Edison posts $141/kW-year, and its July 2026 statement shows 5.06 MW of headroom left across two networks. Every other designated Con Edison location has no headroom left. National Grid lists 53 eligible substations, 20 already full, and Central Hudson designates none for LSRV.

The posted rates lift a 2026 Con Edison project by 52% and a NYSEG project by 176%. However, the LSRV restricts build sites to substations with remaining headroom which may be located in areas with limited usable land or additional interconnection costs.

What does this mean for developers, investors, and lenders?

Con Edison and PSEG Long Island out-earn the wholesale route across the horizon, carried by capacity prices in scarce regions. The five other territories peak below $184/kW-year, and the weakest three settle below their own zone's wholesale alternative.

Enrollment timing and site selection determine the remainder. The DRV and any LSRV award lock at enrollment for 10 years, while capacity and energy reprice every year. A 2026 enrollment holds the current rates through the years when capacity prices are forecast to rise fastest. LSRV headroom in Con Edison territory is close to fully subscribed, leaving the remaining locational upside at designated substations in other territories.