NYC DOB Clarifies How Retail Battery Storage Can Generate Local Law 97 Compliance Value

On December 8, 2025, the New York City Department of Buildings (“DOB”) issued Buildings Bulletin 2025-014, providing long-awaited clarification on how battery energy storage systems (“BESS”), including retail and off-site systems, may generate greenhouse gas emissions deductions for Covered Buildings[1] under Local Law 97 (“LL 97”). The Bulletin materially expands compliance pathways for building owners and creates new opportunities for third-party and retail storage providers. See N.Y.C. Dep’t of Bldgs., Bldgs. Bulletin 2025-014 (Dec. 8, 2025).

Local Law 97 authorizes emissions deductions for Clean Distributed Energy Resources (“CDERs”), including energy storage systems, based on their ability to reduce greenhouse gas (“GHG”) emissions during designated peak periods. See N.Y.C. Admin. Code § 28-320.3.6.3. Prior to this guidance, DOB rules under 1 RCNY § 103-14 constrained off-site storage systems to a single, complex calculation method, leaving uncertainty regarding how “Host” deductions applied to partial or off-site subscriptions.

The Bulletin clarifies that a Covered Building may qualify for emissions deductions as a “Host,”[2] an “Off-taker,”[3] or both, depending on the characteristics of the CDER and the subscription structure. See Bldgs. Bulletin 2025-014. Consistent with the Administrative Code, DOB confirms that off-site storage does not preclude eligibility for deductions and that deductions may be allocated based on subscription and energy usage rather than physical co-location alone.

For Off-takers, the Bulletin confirms that an adjusted Total Emissions Spread (“TES”) methodology may be used to calculate an Off-taker deduction in lieu of the Time of Use (“TOU”) methodology described in 1 RCNY § 103-14. See Bldgs. Bulletin 2025-014. Under this approach, the deduction is calculated using the DOB-determined annual total emissions spread value and assumes an 85 percent round-trip efficiency for calendar years 2024 through 2029, as reflected in the TES framework set forth in the DOB rules. See 1 R.C.N.Y. § 103-14(e)(2)(ii).

The Bulletin also resolves a notable gap in the Host deduction framework. While existing rules describe Host deductions primarily for on-site systems or for Hosts subscribing to the full capacity of a storage system, DOB now confirms that an adjusted TES methodology may be used for off-site BESS where the Host subscribes to only a portion of system capacity or purchases energy from a different Host. See Bldgs. Bulletin 2025-014. Under this adjusted approach, deductions are calculated based on measured consumed energy during the prior reporting year rather than rated system capacity, aligning emissions benefits more closely with actual system utilization.

Taken together, this guidance substantially enhances regulatory certainty and the commercial viability of retail and aggregated BESS offerings for LL 97 compliance. As emissions limits tighten in upcoming compliance periods, Covered Buildings now have a clearer and more flexible pathway to leverage off-site energy storage as part of an integrated emissions reduction strategy.

If you have questions regarding LL 97 compliance, contact Daniel Spitzer, Alicia Legland, Jenna Rackerby, or any member of our Environmental Energy Practice.

[1]COVERED BUILDING. The term “covered building” means, as it appears in the records of the department of finance, (i) a building that exceeds 25,000 gross square feet or (ii) two or more buildings on the same tax lot that together exceed 50,000 gross square feet (9290 m2), or (iii) two or more buildings held in the condominium form of ownership that are governed by the same board of managers and that together exceed 50,000 gross square feet (9290 m2).  

[2]  HOST is the building where a Clean Distributed Energy Resource (“CDER”) is physically installed.

[3] OFF-TAKER is a building where the energy from said Clean Distributed Energy Resource is deployed.

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