$26.6M in backup battery subsidies approved by City Council, will use Entergy settlement cash

The New Orleans City Council has cleared the way for a new backup battery program that advocates say will help keep the lights on at homes, businesses and community sites when the grid goes down.

In a unanimous vote Thursday, the council approved a draft of rules and incentives for the $26.6 million program, which will create a new battery network or "virtual power plant," that will be funded with proceeds from a settlement with Entergy New Orleans over allegations that its parent company mismanaged the Grand Gulf nuclear plant.

The council's action directs Entergy to draw up an implementation plan by the end of October and propose a date to start rolling out the program by the end of March 2027.  

Approval of the program is a victory for the nonprofit advocacy groups Together New Orleans and the Alliance for Affordable Energy, who first proposed using the Energy settlement cash for a virtual power plant in 2024.

"What is going on in this city is rippling across the nation and across the world," said Rev. Jeff Connor, a member of Together New Orleans. "It is a drop in the bucket, but it is a very significant drop in the bucket."  

Juice v. squeeze

The program, technically the third phase of the Energy Smart Battery Energy Storage System pilot, is part of the City Council's post-Ida efforts at increasing resilience to outages by creating battery networks that can ease the strain on the grid by allowing Entergy New Orleans to draw power from the batteries rather than paying surge prices during times of peak demand. 

When paired with solar panels, the battery systems could keep the lights on indefinitely during an outage, as long as the owners go easy on heavy loads like air conditioning. Without solar panels, a single battery can power a house for six to 12 hours depending on usage.  

The battery subsidies, to be split evenly between residential and commercial customers, are expected to be sufficient for about 250 businesses, 400 low-income households and 800 other residential customers.   

When federal tax credits are included, the upfront incentive would cover 98% of the cost of the installation of an $18,500 single battery for lower-income households and more than 75% of installation costs for wealthier ratepayers.

That leaves an out-of-pocket payment of about $4,400 for households making more than 80% of the area median income, or about $72,000 for a family of four, according to modeling by Together New Orleans.

Business customers would end up paying $25,000 or more upfront for larger, more powerful battery setups. 

"The residential side, we just think this was like a home run," Broderick Bagert, lead organizer with Together New Orleans, said in an interview ahead of the final vote. "Commercial will have to put in more skin in the game, but we think there's more skin to be put in there."

Battery owners will also receive annual payments of $75 per average kilowatt, or about $500 per battery per year for residential customers.

But who owns the battery matters. While the federal tax credit for homeowners who buy batteries expired at the end of last year, a separate business credit for energy storage remains available. 

As the resolution points out, changes in tax policy mean that most residential participants won't own their batteries outright. Instead, they'll sign contracts with third-party owners and developers. 

Still, the numbers are not final. The resolution describes them all as "initial values subject to ongoing periodic review and adjustment" based on "program demand and performance," as well as other data. 

Ahead of the vote, Entergy New Orleans spokesperson Beau Tidwell said the utility will seek to limit cost increases for ratepayers who do not participate and focus on implementing the program efficiently.