Unfortunately, New York's solar regime is still not set-up for success.

Unfortunately, New York’s solar regime is still not set up for success.

When NYSERDA announced on March 26 that they were withdrawing their >200kW Megawatt Block program from launch for significant revision, we confess that we were optimistic.  Reportedly, April 7 would reveal a radically revised program.  Perhaps they read our blog!  Maybe they would listen to the many hard-working policy stakeholders, and replace the opaque and flawed model underpinning their incentive assumptions.  Maybe the blog author, an Upstate native, could do that triumphant PV rooftop tour of the lands of his people.

Not so fast. Unfortunately, the program design is still based on a deeply flawed economic analysis. (Policymakers: SAM exists.  Accept no imitations.  Certainly don’t pay for any.)  Now more than ever, it still seeks to provide stability through the potential ramp down of the investment tax credit (ITC) at the expense of immediate project viability.  Frankly, it still won’t work out of the gates, nor encourage New York solar development to nearly its full potential.

Further, it fails to provide the most basic protection developers had sought. By providing remote net metering projects vs customer-sited ones different incentives but forcing them to decline according to the same steps, it will ensure the former absolutely overwhelm the latter.  Even if it had not done so, by enacting entirely inadequate incentive levels for customer-sited projects from the get-go, it runs the program a real danger of several years’ irrelevancy to behind the meter developers.

Fear not – remote net metering projects (which employ a quirk in NY law that permits remote systems to credit their energy-only output dollar for dollar against a demand-metered customer) will still go forward.  ConEd projects will still be viable in some cases. Sub–200kW projects can still get done. YieldCo-backed national developers executing with Fortune 500 counterparties may just get through the eye of the needle. Otherwise, Upstate NY projects will still not be within a stone’s throw of economic viability.

The overall effect will be to continue to drive NY development off of the rooftop and towards greenfields.  We’ve got no issue with that; we structured the tax equity for a greenfield remote net metering site after all. But other programs have found that their policies preferred not to use greenfield sites, wanted to realize the real grid and system value of locating distributed generation at the point of use, or simply enjoyed the political and economic gains of broad geographic uptake.   As currently proposed, NYSERDA’s new program will enjoy few of these ancillary benefits.

The alternative – reaching the same MW in the same budget, with the same number of steps, as compared to this most recent proposal – would look something like this.

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Unless we see something like that, and customer-sited separated from remote net metered systems, it’s going to be a short flight indeed for most upstate rooftop solar proposals.

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Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 180MW of distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. For more information, please visit www.solsystems.com.