If clean energy policy is what you wake up for in the morning, New York must have had you really jumping out of bed over the past week. In addition to releasing their plans to enhance and expand the NY-Sun Initiative through 2023, the New York State Energy Research and Development Authority (NYSERDA) has released a bold vision to drive private clean energy investments through Governor Cuomo’s $1 billion Green Bank. NYSERDA also began a comprehensive review of the state’s Renewable Portfolio Standard and Energy Efficiency Portfolio Standard, which will set the stage for possible extension of these programs beyond their current 2015 horizon. Mornin’ sunshine!
With such a hefty clean energy agenda, the state has called upon some new energy leaders to guide New York’s clean energy success. First up is John Rhodes, former Director of the Center for Market Innovation at the Natural Resources Defense Council, who was appointed just this week to serve as NYSERDA’s president and CEO. At the Public Service Commission, Audrey Zibelman will join the Commission and take over as Chair from Commissioner Gary Brown – Zibelman brings a wealth of experience in the energy industry from her previous roles as founder, president and CEO of Viridity Energy, Inc. and tenure at PJM. And to round it off, Richard Kauffman continues to demonstrate his clean energy leadership having joined the administration earlier in the year as Chairman for Energy Policy and Finance for the State of New York.
The NY-Sun Initiative is looking bright
Now in its second year, the Governor’s NY-Sun program is driving solar market growth by leaps and bounds. Originally conceived of as a 4-year program (2012-2015) to scale up the state’s solar industry, NY-Sun is quickly closing in on this year’s goal to quadruple the amount of solar capacity installed just two years ago. All told, NY-Sun has resulted in nearly 300 MW of new solar capacity installed and under development. With upfront rebate programs and competitive solicitations designed to enable diverse market participation by homeowners and businesses up and down the state, NY-Sun has successfully propelled New York to a top 10 market for solar according to the latest U.S. Solar Market Insight®. And it has helped put more than 3,300 New Yorkers to work in the solar industry.
Nonetheless, Governor Cuomo and his administration have their sights set towards even more ambitious goals for their NY-Sun program. Cuomo has committed to extending the NY-Sun program through 2023 to provide the long-term market certainty necessary for robust investment in the state’s solar industry. Although there is work to be done to secure this extension through statute or regulation, NYSERDA recently moved ahead with a request for the next two years of NY-Sun program funding. Along with this request, NYSERDA proposes a new program design that puts the industry on a predictable glide path to wean off direct incentives and maintain healthy growth rates through 2020.
Proposing a regional Megawatt (MW) block approach for their residential and small commercial rebate programs, NYSERDA aims to establish distinct incentive levels based on the different needs of regional markets throughout the state. Similar to the approach taken under the California Solar Initiative, this program design would also reduce the incentive levels in predictable “steps” based on target MWs of solar capacity. As the solar market matures and achieves new economies of scale in each region, the incentive levels will drop predictably down these steps until reaching zero. It’s the exactly type of market-building approach we have advocated for and highlighted in our 2013 policy proposals.
Along the same lines, NYSERDA also suggests modifying their current competitive PV program for larger-scale solar systems and moving to a standard offer incentive program in 2015 whereby incentive levels decline predictably. Similar in design to the MW block approach for residential and small commercial systems, NYSERDA aims for this program to deploy solar in an orderly fashion while reducing incentive levels over the course of the decade.
Importantly, NYSERDA’s petition emphasizes that they will need to work closely with the solar industry and other stakeholders to determine how incentives ramp down over time as well as how regional market differences can be addressed in a just, reasonable and prudent fashion. This last point is of critical importance as exemplified by the recent suspension and subsequent restart of the Long Island Power Authority’s (LIPA) residential solar rebate program.
Long Island’s Solar Pioneer program was suddenly suspended on August 30th due to strong participant demand outpacing budget constraints. The program has supported the installation of more than 6,600 residential solar energy systems. Earlier this week, NYSERDA announced that it get the rebate program temporarily back on track with $5 million while decision-makers consider the long-term structure of the state’s solar programs. The Solar Pioneer program will begin accepting applications again starting on September 23rd.
The disruption surrounding the suspension and restart of this program is precisely the type of issue that NYSERDA is aiming to avoid, as described in their NY-Sun petition and their call for great transparency and predictability. In an effort to establish a centralized and coordinated approach to solar development from Buffalo to Montauk, NYSERDA will also consider combining LIPA’s rebate program in with their entire suite of solar programs.
The New York Green Bank aims to unleash private capital
Just days after releasing their plan for NY-Sun, the state was back at it: unveiling its bold vision for the Governor’s $1 billion New York Green Bank. The Green Bank is focused on utilizing public dollars to mobilize private sector investment in the state’s clean energy economy. Though the primary objective of the Green Bank is to develop financial products that will tackle market gaps and barriers head on, it is also designed to provide a bridge from direct public incentive programs towards more innovative private sector financing options.
NYSERDA’s initial Green Bank petition to the PSC requests an initial capitalization by reallocating $165.6 million in funding from other clean energy programs. NYSERDA will also draw funding from proceeds of the Regional Greenhouse Gas Initiative (RGGI) to achieve a total capitalization of $210.3 million. NYSERDA and its Green Bank team will aim to develop an initial suite of products to roll out in early 2014. Importantly, these public investments will be positioned to leverage increased levels of private capital at the outset and then to revolve back through the Green Bank for multiple rounds of investment.
Over the past several months, NYSERDA worked closely with the consulting firm, Booz & Co. to identify financial products aimed to overcome the market barriers and gaps that persist within the state’s clean energy market. See here for Booz’s detailed market analysis, recommendations and potential Green Bank products. Booz estimates that New York’s market potential for clean energy is a whopping $85 billion (see slide 15), and that an initial Green Bank capitalization of $1 billion will unleash at least $8 billion of addition private sector capital in clean energy projects (see slide 7).
With numerous financial products proposed and its initial capitalization of $210.3 million, the Green Bank will be the largest such endeavor in the U.S. If the Green Bank successfully delivers on its promise, it will deliver a bigger bang for the public buck while providing a bridge to a self-sustaining clean energy market.
The Green Bank also holds the potential to expand the clean energy market by targeting underserved customer segments with credit enhancement products. Booz estimates, for instance, that by tapping into the next level of credit quality customers in the marketplace, the Green Bank can open up solar opportunities to an additional 880,000 households in New York.
It is exciting to see the Governor’s Green Bank added to New York’s suite of tools for building a strong clean energy economy. With robust demand among New Yorkers for more solar power, the state’s growing solar industry is ready to deliver. Access to financing is one of the few limiting factors standing between New Yorkers and the clean energy they want. The New York Green Bank addresses that need by harnessing more private capital for clean energy investment.
All in all, this is a lot of good news for New York solar.
Vote Solar is a non-profit grassroots organization working to fight climate change and foster economic opportunity by bringing solar energy into the mainstream.