A group of New York”™s largest utility companies have teamed up with SolarCity and two other large solar developers to propose a deal that the group says will place a more fair and sustainable value on solar power.
The deal, proposed to the New York Public Service Commission, brings together two parties mostly on opposite sides of a dispute occurring across the country: how to find a fair form of compensation for the excess power homeowners and businesses with solar arrays put back into the grid.
Under the current system, referred to as net metering, if you have an array of solar panels that produces electricity beyond what your home or business needs, you can sell the excess energy back to the utility at the full retail rate in the form of a credit on your bill.
The problem with that, according to utility companies, is that it allows major producers of solar energy to pass the costs of maintaining the electrical grid onto consumers without the ability to produce power.
The coalition of utility and solar companies calls itself the Solar Progress Partnership. Their proposal would lock in the current system of net metering for homeowners until 2020, while requiring larger solar farms, or buildings with large solar arrays, to make payments to offset the costs of maintaining the electrical grid.
In December, the state PSC put out a request for proposals for an interim plan to rework the net-metering compensation system. The proposal from the group ”“ which includes Con Edison, New York State Electric & Gas Corporation, National Grid, Central Hudson Gas & Electric, Orange & Rockland, Rochester Gas and Electric on the utility side, and SolarCity, SunEdison and SunPower on the solar side ”“ is one answer to that request. The proceedings have received public comment from more than 20 groups in the industry.
The push to rework the net-metering system is part of the Reforming the Energy Vision pushed by Gov. Andrew Cuomo that promotes a wider deployment of distributed energy resources, such as microgrids and rooftop solar. Cuomo has a separate Clean Energy Standard goal, which calls for the state to use 50 percent renewable sources for its power by the year 2030.
Under the Solar Progress Partnership proposal, the payments solar developers provide would be broken into a series of tranches, which would organize payment amounts based on what developers produce. Those payments would eventually be decided based on a formula that factors the cost of power, relief provided to the grid and environmental benefits.
“We”™re working together to keep our state”™s solar industry vibrant while enabling us to maintain the robust power grid that solar energy requires, and in a way that is fair to all customers,” Con Edison CEO and Chairman John McAvoy said in a statement. “Utilities and solar companies have found common ground to enhance our environment, the economy and electric reliability.”
Sean Garren, Northeast manager for the nonprofit solar advocacy group Vote Solar, said this proposal comes as part of a “larger discussion happening around the future of net metering, and to some extent the future of solar power and distributed energy resources.”
Garren said this proposal is in no way a done deal for the debate of net metering. Vote Solar and the Solar Energy Industries Association, a trade group, submitted a proposal of its own on the matter to the PSC. Garren is also on the board for the New York SEIA. He said he hopes there will be an “active and transparent conversation” going forward.
“We”™re excited to be having a data-driven conversation about what is really the value of distributed generation,” Garren said, “and how do we deliver that to customers in a simple, predictable way that will continue to grow the solar industry.”
Karl Rábago, the executive director of the Pace Energy and Climate Center, said he is happy to see the larger solar providers and utilities come together, but cautioned that he”™d like to see more details. He said he wanted to see more to back up the claim that the current system of net metering shifts costs to regular energy consumers.
“Show me your homework. Show me your work, and it”™s not in that paper,” Rábago said.
The proposal also calls for solar developers to establish letters of credit to prove they will be able to make the payments to utilities within their tranche. Rábago said this requirement could make it difficult for smaller developers to enter the market.
“So now I”™ve added significantly to the cost of doing business, because every time I do a project I have to simultaneously go buy an insurance policy and a line of credit,” Rábago said.
Nina Orville, a program manager for Solarize Westchester, said the main concern for her group, which helps homeowners and businesses through the process of installing solar panels, is that any new net metering system grandfathers in consumers who have already installed panels.
“Homeowners and commercial property owners have made decisions ”“investment decisions ”“ regarding their solar installations based on the way net metering currently works,” Orville said. “So in order build the sense of certainty and predictability you need to grow the solar market, it”™s important the rules don”™t change for existing systems.”
The PSC will host a technical conference on May 10, where parties that submitted proposals will be able to present and answer questions. There will then be a 30-day comment period to make additional filings.
A final plan could come from the PSC by the end of the year. Rábago said he expects a mix of recommendations to be in the final decision.
“This will be a soup,” he said. “They”™ll throw everything in there then scoop it out with a ladle to find the right answer. You might have some potatoes, and you might have meat, and you might have some peas. It will be representative, but not identical.”
