Con Edison’s 20 Percent Problem Is Commercial Storage’s Best Sales Pitch

Con Edison commercial electric rates have risen more than 20 percent in under 18 months. The utility’s 2026 increases, approved through a Joint Proposal with the New York Public Service Commission, layer an 11.3 percent electric rate hike and a 13.4 percent gas rate hike on top of a 9 percent electric increase that took effect in January 2025. For larger commercial customers, the electric increase runs closer to 9.8 percent in 2026 alone.

These are not supply-side spikes. They are delivery rate increases baked into a three-year capital plan running through December 2028, driven by grid hardening against severe weather, electrification mandates under state climate law, and the infrastructure required to absorb growing electric vehicle and heat pump loads. Con Edison’s own rate filing describes investments to “strengthen the system against more frequent severe weather conditions, support state energy laws, maintain a safe and reliable gas system, and deliver more energy as customers adopt electric vehicles and electric heating.”

Translation: the rate trajectory is structural, not cyclical. And for commercial buildings in New York City and Westchester County paying demand charges that already constitute 40 to 70 percent of their electric bills, every percentage point compounds.

The demand charge math. Commercial demand charges in Con Edison territory have long been among the highest in the country. A midsize office building or retail location drawing 200 kW at peak can face $5,000 to $7,000 per month in demand charges alone before touching a single kilowatt-hour of consumption. A 20 percent cumulative rate increase does not add 20 percent to the total bill; it concentrates disproportionately in the demand component, where the per-kW rate absorbs both delivery increases and capacity cost adjustments.

Battery storage systems sized for demand charge management (typically 4-hour duration LFP systems in the 50 to 500 kWh range for commercial buildings) shave peak demand by 25 to 45 percent. At pre-2025 Con Edison rates, payback periods for commercial storage in New York City ran 5 to 7 years before incentives. The cumulative 20-plus percent rate increase compresses that window by roughly 14 to 18 months on a straight-line basis, and the compression accelerates if the remaining two years of the Joint Proposal deliver similar increases.

Incentive stacking. The rate increases do not exist in isolation. New York has assembled one of the densest incentive stacks for commercial battery storage in the country, and the programs are designed to layer.

Con Edison’s Non-Wires Solutions program offers $2,500 to $3,000 per kW for battery storage projects that can demonstrate load relief in constrained distribution areas, with current deadlines requiring systems operational by May 1, 2026. NYSERDA’s Retail Inclusive Storage Incentive, launching in Q1 2026, allocates $15.75 million for a 15 MW, 45 MWh statewide block at $350 per kWh for eligible public, nonprofit critical facilities, and affordable housing across Con Edison, National Grid, NYSEG, RG&E, Orange & Rockland, and Central Hudson territories.

For buildings subject to Local Law 97, New York City’s carbon emissions cap for large buildings, battery storage that reduces grid consumption during peak hours (when the grid’s marginal emissions factor is highest) directly reduces LL97 penalty exposure. The penalties, which began in 2024 for the largest buildings, can run into six figures annually. Storage systems that qualify for both NWS incentives and LL97 penalty avoidance effectively create two concurrent revenue streams on top of direct demand charge savings.

A commercial building owner in Manhattan installing a 200 kWh LFP system could reasonably stack: demand charge savings of $15,000 to $25,000 annually (at 2026 rates), NWS incentive payments of $125,000 to $150,000 (one-time, if in an eligible constrained zone), partial LL97 penalty offset, and a 30 percent federal Investment Tax Credit under the Inflation Reduction Act. The combined effect can push simple payback below three years.

Why this is not a rate spike story. The distinction between a rate spike and a rate trajectory matters for capital allocation decisions. A spike reverses. A trajectory compounds. Con Edison’s three-year Joint Proposal ensures that delivery rates will continue rising through 2028, with the PSC having already approved the framework. The utility has described this as a $4.2 billion capital investment plan. That capital does not pay for itself.

Commercial building owners and facility managers who treat the 2026 increase as a one-time event will undersize their response. The correct framing is that Con Edison territory is repricing commercial electricity on a structural basis, and every month of delay in deploying demand-side management (including storage) is a month of paying the higher rate without mitigation.

The offshore wind gap. NYSERDA’s February 13 cancellation of its fifth offshore wind solicitation, citing “federal actions disrupting the offshore wind market,” removed another potential source of downward price pressure on New York electricity costs. All four applicants (Attentive Energy One, Community Offshore Wind, Excelsior Wind, and Long Island Wind) walked away without awards. NYSERDA launched a request for information to explore modified procurement approaches, but new offshore wind capacity that might have moderated wholesale energy costs in the 2028 to 2032 timeframe is now further delayed.

Battery storage does not generate electrons. It cannot replace offshore wind’s role in the supply stack. But it can insulate individual buildings from the cost consequences of supply-side delays, and it remains deployable in months rather than years. In a policy environment where offshore wind faces federal headwinds and utility-scale solar interconnection queues in NYISO stretch beyond four years, behind-the-meter storage is the fastest path to commercial electricity cost reduction that a building owner can actually control.

The competitive window. Incentive programs have budgets. NYSERDA’s Retail ISI allocates 15 MW for its first block. Con Edison’s NWS program targets specific constrained zones with finite capacity. The federal ITC, while currently at 30 percent, faces ongoing political uncertainty. Building owners who move in 2026 capture the full stack. Those who wait risk depleted incentive pools, higher installation costs (as demand for qualified installers and compliant equipment increases), and continued exposure to rates that are not coming back down.

New York City’s commercial electricity costs are repricing permanently. The only variable is whether building owners pay the new rate or deploy the infrastructure to avoid part of it.

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