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New York Looks To Well-Tuned Incentives To Sustain Solar Growth

The state of New York is celebrating a 300% increase in the deployment of solar power within its borders between 2011 and 2014. This brought the Empire State’s total solar electric capacity up to 314.48 MW as of December 2014.

The administration of Gov. Andrew Cuomo says the increase is due to the success of the NY-Sun Initiative, which has committed essentially $1 billion in support of solar power as part of an effort to reach the state’s goals of achieving an 80% carbon equivalent reduction in emissions from 1990 levels by the year 2050. Recently, the state published an energy plan calling on an interim target of a 40% reduction in emissions by 2030.

According to the New York State Energy Research and Development Authority (NYSERDA), NY-Sun’s success in rapidly expanding deployed solar makes it a signature program in getting to that goal. New York does not have a renewable energy portfolio standard, so targets backed by well-planned and well-funded incentives are seen as key to achieving meaningful reductions in greenhouse-gas emissions.

John Rhodes, president and CEO of NYSERDA, points out that the increase in solar capacity was experienced in all regions of the state, although to varying degrees. Going forward, he says the NY-Sun’s Megawatt (MW) Block program of tiered incentives pegged to regional and sector deployment levels will be important in sustaining solar growth.

The MW Block program, adopted last August, tailors incentives by sector - small commercial, residential and large commercial - and by geographic region. It also reduces the incentives in those sectors and regions when market conditions improve.

“The long-term return on investment is the secret sauce in the MW Block program,” Rhodes says. “We get to less and less need for subsidies as the program succeeds in increasing PV penetration.”

Rhodes says that the state investment in solar and its tiered incentive plan are important for creating the business case he believes installers and developers need to see. “We want them to come to New York with their own form of commitment,” he says. “Let’s build a real business; let’s invest in people and processes and get some pipelines going.”

Phil Van Horne, chairman and CEO of Syracuse, N.Y.-based energy provider BlueRock Energy, says the state’s expansion of solar in the last five years demonstrates acceptance of the technology across the board. Moreover, he says that this is part of a historical “early adopter” philosophy in the state that makes it fertile ground for initiatives such as NY-Sun.

“The target customers in New York are very willing to look at technologies like solar and may adopt them ahead of other areas of the country,” Van Horne says. “Our approach has been that we sell New York-sourced renewable energy, and that’s what our customers respond to.”

- Michael Puttré

 

Future Deployment Of Distributed Solar Hinges On Electricity Rate Design

Future distributed solar photovoltaic deployment levels are highly sensitive to retail electricity rate design, according to a newly released report by researchers from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory.

The study also explores the feedback effects between retail electricity rates and PV deployment and suggests that increased solar deployment can lead to changes in PV compensation levels that either accelerate or dampen further deployment.

The rapid growth of net-metered solar PV has provoked concerns about the financial impacts of that growth on utilities and ratepayers. To address these concerns, an increasing number of states are exploring changes to net-metering rules, retail rate structures or both.

Berkeley Lab researchers examined PV deployment levels under broad adoption of time-of-use rates, purely volumetric rates, feed-in tariffs and avoided-cost-based rates. According to the study, most of these scenarios lead to deployment levels lower than under a continuation of net metering and current rate designs.

There are two potential feedback effects between solar deployment and retail electricity rates reported in the study. One sort of feedback occurs if increased solar deployment leads to under-recovery of utility fixed costs, creating a need to increase retail electricity prices and accelerating solar deployment. A second - and opposing - feedback occurs when increased solar deployment causes a shift in the timing of peak electricity pricing, which tends to dampen solar adoption by customers on time-of-use rates.

“Our study shows that - at least on a national basis - these two feedback effects largely counteract one another,” says Berkeley Lab’s Ryan Wiser, a co-author of the report. “As such, current discussions that focus largely on the fixed-cost recovery feedback miss an important and opposing feedback mechanism that can, in many circumstances, moderate the issue of concern.”

In the shorter term, up to the year 2030, the study finds that PV deployment is greater than in the reference scenario - a result of the higher average compensation for PV under time-varying rates, which boost PV deployment. However, as regional PV levels increase and the energy and capacity value of PV drops, the compensation for net-metered PV generation under time-varying rates also falls, leading to lower PV deployment levels. Therefore, proposals to move toward time-varying rates may boost PV deployment in the shorter term but may actually reduce PV deployment in the longer term.

“Understanding the deployment impacts of potential reforms to rate design and net metering will be critical for regulators and other decision-makers as they consider changes to retail rates, given the continued role of PV in advancing energy and environmental policy objectives and customer choice,” says Galen Barbose, a co-author of the report.