New York Solar Net-Metering is Under Attack (Updated – 2019)

Our Response to Solar Net-Metering Changes In New York State And Proposed Changes to Long Island

Show up to a LIPA hearing on November 27th

10am – H. Lee Dennison Building  – 100 Veterans HWY Hauppauge, NY

2pm – LIPA – 333 Earle Ovington Blvd., Ste. 403 Boardroom A Uniondale, NY

• Submit written testimony to LIPA here.
  
• Watch this video from our leadership staff on our proposed changes.
• Sign the petition here.

Earlier this year, changes to New York’s solar net metering laws were enacted, impacting solar policy in most utility territories except the Long Island Power Authority (LIPA).  Just this week, LIPA announced they are planning to adopt the same disruptive rules, for a January 1 start date – just 8 weeks away!

1. How net metering currently works: Any excess solar power sent back to the grid results in a net metering credit. This credit is worth the same as a unit of electricity that a homeowner would otherwise purchase from the grid in the absence of an on-site solar power system. Solar energy users can use those credits at night or winter when solar production levels are lower.
2. What’s being proposed: New York’s solution is called Value of Distributed Energy Resources or VDER. VDER creates a value stack of 5 to 6 categories that places a variable price on solar net hourly exports. In other words, the value of the excess energy credit will vary based on many different factors including time of day, and the value of energy in that area.
3. Why this is bad: The bottom line is that this hurts solar customers by reducing the rate of solar compensation and making the specific rate nearly impossible to predict.

Key changes for commercial accounts would happen overnight and changes to residential accounts would be implemented in 2020. Any residential accounts installed before December 31 2017 would be grandfathered in for life, where anyone installed between Jan 1 2018 and December 31 2019 would be granted net metering for a period of 20 years.

The New York State solar community, comprised of various stakeholders, is rallying to oppose LIPA’s adoption of the proposed net metering changes, which could severely impair the future growth of solar.

SunPower by EmPower Solar will be testifying at these hearings, and encourages all interested parties to support our efforts by joining us as the Nassau and Suffolk hearings, submitting testimony, and encouraging their networks to join this fight to save solar on Long Island.

BACKGROUND: NET METERING & CURRENT BATTLES

Net metering allows owners of renewable energy systems (including solar, wind, and other technologies) to receive credits for excess energy produced by their system throughout the course of the year. As part of going solar, the local utility company (PSEG-LI, ConEdison, etc.) will swap out a customer’s existing electrical meter with a “net meter.” A net meter is just like a regular electrical meter, except it has the ability to track energy both ways – into a home and out to the grid. This functionality is crucial because solar production varies greatly depending on the time of day and time of year. In the middle of the summer, solar energy systems may produce far more than the home or business-owner needs at any given time. During those times, the excess energy that is produced by the system is sent back to the electrical grid and recorded on the customer’s electric bill in the form of a “credit bank.” This credit bank allows energy users to tap into the credits they’ve stored during times of lower energy production such as nighttime or winter time.

Historically, a net metering credit has been valued at the retail rate of electricity. In other words, the value of a net metering credit (or, the value of one unit of electricity sent back to the grid) is worth the same as a unit of electricity that a homeowner would otherwise purchase from the grid in the absence of an on-site solar power system. Conceptually, this makes sense, because every unit of electricity generated by a solar power system is one less unit that has to be generated by the utility company.

Net metering has been instrumental to the success of solar for the past 15 years in New York and throughout the United States.  Net metering is available today in some form in 41 states (research here).

Net metering, both in New York State and throughout the country, has been widely regarded as a favorable policy by renewable energy providers and utility stakeholders alike, largely due to its simplicity and fairness.  However, there are many known flaws in that it doesn’t always value the generation at a market price.  For a long time, utilities have been concerned about net metering as the industry has grown because it is not within their control, nor does it generate a profit.  There is also longstanding debate regarding the stress that net metering places on the grid, and the value of resiliency and environmental benefits. Nevertheless, utilities still have an obligation to maintain the infrastructure to keep solar customers connected and supplied, putting utilities in a challenging position.

For these reasons, net metering has been under attack in several states. Notably, Nevada rescinded net metering, only to have the decision overturned.  California modified its net metering policy and launched a new program called Net Metering 2.0, which we believe is superior to the program New York has put forth.

NEW YORK’S APPROACH

Value of Distributed Energy Resource (VDER)

In many ways, New York should be applauded for its approach to the evolution of net metering.  It’s a complicated problem; utilities will be crucial for electricity supply for many years to come – we must ensure their stability. However, it is imperative to value solar accurately, including the value it provides to the grid, while considering air and water quality, and climate change.

New York’s solution, VDER, is a system that creates a value stack of 5 to 6 categories that places a variable price on solar net hourly exports.  While laudable, we feel this structure is highly flawed and will negatively impact solar adoption.

LIPA is not subject to the NYS Public Service Commission orders, but generally adopts some form of it shortly after statewide implementation. In July 2017, leaders of the Long Island Solar Energy Industry Association (LISEIA) published a position paper that outlines key flaws and opportunities for improvement.

LISEIA’s core recommendation is to postpone adoption to a) provide for a period of observation, b) allow stakeholders to carefully review the policy design, valuation methods, soliciting thorough public comment throughout the process, and c) explore alternatives.

KEY CONCERNS

• The value of solar energy production is subject to proprietary utility analysis and judgments without third-party auditing. The value of environmental attributes, which is a key component of the VDER pricing model, has been a heavily debated topic across U.S. solar markets, and warrants the equal participation of all industry stakeholders.
• The value of solar energy will be variable and very difficult to predict, making it extremely challenging to deliver accurate and realistic savings projections to customers. Net metering is already a confusing concept for potential clients to understand, and these changes could disorient consumers even further.
• It is proposed that net metering credits will be based on locational and time data which changes on an hourly basis. As a minimum precondition, contractors must have easy access to full one-year hourly data.  Today, such data is not publicly available.
• VDER increases the complexity of an already challenging sales process and places stress on the availability of project financing capital in the marketplace.
• Currently, ratepayers are not subject to a rate structure based on real-time grid conditions, which is the intent of VDER’s valuation of net solar exports. The varying treatment of solar generation vs. conventional electricity seems to be a key weakness. Notably, California NEM 2.0 requires any solar generator to be on a new consumption tariff with varying prices based on time of use (TOU). VDER goes further than TOU for solar generation, but it seems that to justify implementing VDER, utilities should create this dynamic price signal for conventional energy consumption.
• New York State has set a goal to source 50% of its energy production from renewables by 2030.  Our fear is that VDER will serve as a hindrance to achieving this goal.

WHAT’S NEXT FOR NEW YORK & NET METERING?

The solar industry on Long Island is currently presented with a unique and time-sensitive opportunity to influence the VDER structure in a way that is fair and reasonable to all industry stakeholders. Click here to read the letter submitted by LISEIA.

Today, New York State is one of the largest markets for solar energy in the U.S. and can continue to serve as a leader in the adoption of solar energy, energy storage, and other renewable energy technologies. Our mission is urgent and requires dramatic action and acceleration, which will not only help mitigate the consumption of fossil fuels, but deliver profound economic and societal benefits. Admittedly, the utility grid and electric business model is complex and engages many stakeholders, but we must devise a system that is fair to all stakeholders.

The solar industry in New York has worked for many years to create the vibrant market we have today. Together, we can usher in even more rapid growth and achieve our goals.

LATEST UPDATES (AS OF AUGUST, 2019)

In April, 2019, the PSC (Public Service Commission) updated the VDER tariff. Some of the highlights include:

• An update to the calculation for the reduced energy demand.
• An additional “community credit,” which encourages all participants of the NYC energy grid, including citizens, schools, & businesses to participate in community solar projects by making it easier for them to do so.
• Projects for under 750 kW are now included under VDER, an added benefit for smaller commercial solar projects.

David G. Schieren, CEO SunPower by EmPower Solar

My perspective articulated above is guided from 15 years in the business, as a New York State Solar Energy Industry Association Board Member, and in concert with the Long Island Solar Energy Industry Association.  Further, we have an earned reputation for fair, ethical and principled participation in the marketplace.

Last updated: August 16, 2019