New York’s New Solar Rules Pay Out

While we’ve still got our eye on the prize of unleashing real solar market growth with the New York Solar Jobs Act, our work to improve New York’s existing PV incentive program keeps on truckin.

New York’s Public Service Commission recently released its 2010-1015 plans for the customer-sited program under the RPS. This document authorizes funding and sets implementation strategies for solar, fuel cell, small wind and other technologies that help New Yorkers meet their own electricity needs. It includes mostly less-than-inspiring updates to the old program – with one exception: a new geographic initiative designed to make sure the program benefits are spread fairly throughout the state (that’s good for you NYC).

Here’s a more detailed look at just what the plans mean for solar in New York . . .

Statewide PV Program Still Falls Short:

First there is the primary, statewide PV program: authorizing NYSERDA to administer $24 million in incentives each year through 2015 (more details here). If we consider this a pilot program, it is actually quite innovative and well-funded. But we think New York is ready for more. The state is one of the top electricity consumers in the country, and solar is a smart fit for its peak-driven power needs. It’s time to move beyond the test phase and into rapid market development.

Here are three areas most in need of improvement to jump-start New York’s next stage of solar development:

Issue 1: Timeliness (or lack thereof)

This operating plan was released six months into the first year of the program. That’s a half-year pause at a time when New York could have been leveraging continually decreasing PV prices, abundantly available ARRA funding, and putting much needed jobs on the books. No serious market can develop under this level of delay and uncertainty. Come on PSC, let’s do better next time.

Issue 2: Unpredictable incentive levels

Vote Solar has long supported a dynamic pricing scheme for solar incentives in New York and elsewhere. Those are rebate levels that predictably decline over time as the solar market grows and costs come down. It’s a way of encouraging further cost reductions and ensuring that the incentive pool delivers the most solar bang for the buck. New York’s new program allows for prices to adjust, but not through a viable market mechanism. From our summary:

If demand exceeds funding supply in any two year period, NYSERDA (New York State Energy Research Development Authority, the program administrator) has the ability to ratchet down the program incentive by 10%.

Yikes. Rather than setting clear market-based trigger points that the solar industry can confidently build around, this criteria is far too vague and puts control over the incentive level in the hands of a bureaucratic agency. Hardly the kind of transparent approach needed to build market confidence. Unless solar companies get really good at reading crystal balls.

Issue 3: Participation restricted to small systems

The program only provides incentives for PV systems of up to 7 kW for residential, 25 KW for not-for-profits, and 50 kW for commercial systems. That’s too small to be useful to most businesses, government buildings, schools and other larger energy consumers. New York misses an opportunity to develop a major additional channel for job and economic growth and achieve the better economies of scale that these larger project sizes deliver. The program must expand if we are to achieve full market deployment in New York.

Downstate Initiative Shows Signs of Progress:

For the first time, the PSC outlined an additional “geographic balancing program” that’s designed to make sure downstate energy customers are able to reap the benefits. The plan addresses the cost-benefit imbalance driven by the New York City area that’s heavy on rate-paying population but light on conventional solar-friendly rooftops. This separate program contains some terrific policy elements that we’d like to see adopted at the state-wide level. (You’ll certainly see a theme here in our policy recommendations).

Issue 1: Clarity and timeliness

In contrast to the regular portion of the customer-sited program that’s getting its operating plan six months late, this downstate plan comes six months before the start of the program, which will officially launch in 2011. That gives NYSERDA time to work with utilities to map strategic locations for grid integration. We hope to see them use this window to plan and communicate program details.

Issue 2: Market-based dynamic price setting

The program offers a competitive solicitation process that will encourage declining pricing. That’s certainly a step in the right direction, however do have two areas of lingering concern:

1. The plan places a to-be-determined limit on the number of awards made to individual companies to encourage diversity. While we appreciate the goal of achieving market diversity, the fact that the program remains vague on that award limit is troublesome. We wonder if this individual project cap will come at the expense at higher overall costs to the program. We think there are other, clearer ways to foster broad participation.

2. Program solicitations will happen *at least* annually. Again, the lack of clarity on the frequency of solicitations is troublesome. Solicitations should, at the very least, occur bi-annually.

Issue 3: Support for larger system sizes

This plan calls for funding to be made available to solar system sizes up to 2 MW (those systems must be net metered to meet onsite load). We do see an additional opportunity for developing a wholesale market where electricity from 1-2 MW systems is being delivered to the utility grid rather than used on-site, but this provision for larger systems is a really great start.

So there you have it. We are encouraged by the geographic balancing program and remain concerned by the bad habits of the old program. Which brings us back to Point A: it is time for NY State to do away with this piecemeal approach and get serious about building a new solar economy by adopting a comprehensive policy framework. The New York Solar Jobs Act provides that much-needed blueprint for solar leadership.

Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.

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