New York outlines new ways to compensate distributed solar users as it looks beyond net metering

Dive Brief:

The New York Department of Public Service (DPS) on Monday released recommendations on new ways to compensate residential and small commercial distributed solar users as the state works to move past net metering, proposing a one-year extension for "mass market" net metering eligibility.
The New York DPS staff recommended in the white paper to continue net metering for new distributed energy customers starting in 2021, but also charge them somewhere between $0.69 and $1.09 per kW based on their solar array's capacity.
The New York DPS staff did not endorse a proposal from a group of New York utilities, including Consolidated Edison, National Grid and Rochester Gas and Electric, to replace net metering with charges based on customer demand.

Dive Insight:

In order to give the distributed solar industry time to adjust to changes, the white paper recommends that the New York Public Service Commission (PSC) extend the deadline for "mass market" customers to be eligible for net metering from Jan. 1, 2020 to Jan. 1, 2021. The secretary of the PSC is likely to agree to extend that deadline, Solar Energy Industries Association Senior Director of State Affairs for the Northeast Dave Gahl told Utility Dive.

Previously, New York regulators said that after the end of this year they would start cutting back on the full retail rate that new rooftop solar users receive for exporting their excess energy to the grid under net metering.

The "mass market" definition includes residential customers as well as smaller commercial customers like small businesses. The New York PSC is separately dealing with compensation for larger distributed energy users, and earlier this year made changes to the Value of Distributed Energy Resources tariff.

"We are relieved to see the Department of Public Service Staff's request to extend the deadline from 2020 to 2021 for moving small residential and commercial solar projects to a new compensation mechanism for their local, clean power," Vote Solar Senior Director, Northeast Sean Garren said in an email to Utility Dive. "The Value of Distributed Energy Resources tariff is too complicated and dynamic at the moment to be suitable for family or small commercially owned projects, and there is no other solution beyond existing net metering that has been thoroughly investigated and publicly vetted."

New York Gov. Andrew Cuomo, D, and the state legislature have set an ambitious goal of 6 GW of distributed solar in New York by 2025, and the charge on solar arrays proposed by the white paper represents a "conservative" approach away from net metering while not placing a burden on solar installations that would make that goal harder to achieve, according to Gahl.

The white paper calls its proposed charge on solar arrays "relatively minor" compared to the cost that rooftop solar users shift onto customers who do not have solar installations.

The solar industry still has questions about the economic impact of the charge, however.

"How will the size of the charge affect the solar industry? Does it affect companies' sizing of their projects?" Gahl said, adding that the potential effects will be evaluated over the coming months. The white paper estimates that the charge would have a 3.6% to 7.8% impact on the simple payback of a solar system.

The DPS had asked for suggestions from stakeholders on a new tariff for smaller distributed energy customers, and a group of major New York utilities proposed rate designs based on different charges for levels of customer demand. The white paper, however, said that rates with "demand-based price signals" don't provide customers with enough data to understand how to size distributed energy projects under that kind of rate design.

Gahl called the utility rate design proposal "unworkable."

"Customers don't know when they are going to hit maximum demand," he said.

"This is an important step toward making the deployment of distributed renewable energy more sustainable," a Con Edison spokesman said. "The proposal builds on the PSC's recognition (from the March 9, 2017 Value of Distributed Energy Resources order) that the current net energy metering policy is shifting costs onto other customers and is not equitable."