On March 9, the New York State Public Service Commission approved a new pricing structure (Cases 15-E-0751, 15-E-0082) for distributed energy resources, designed to promote community solar projects statewide and to gradually phase out net energy metering. The commission also directed the state’s investor-owned utilities to deploy at least two energy storage projects by the end of 2018.

As a result of the order, rooftop solar may decline after 2020 and community solar has been fostered.

New Price Points

The PSC characterized the new “Value Stack” pricing as “an important first step in moving beyond net metering (NEM) to an improved compensation system that recognizes the full and accurate value of DER; taking into account previously unquantified values, including location and environmental benefits.”

Under the order, there are no current changes to rooftop solar. Existing net metering customers will be grandfathered through 2020. After that, compensation credits will no longer be at retail rates for new users. They will gradually decrease “until they are equal to their value,” the PSC said.

Residential and commercial owners of systems who now are compensated under net metering  will have the option to switch to “the new and more accurate compensation structure” approved last week, the PSC noted.

The rationale for the change in reimbursement, according to the commission is that, “at relatively low levels of penetration, the inefficiencies of [net metering] could be tolerated. However, as both customer interest in and New York’s need for clean and distributed generation increases … it has become increasingly vital for compensation and incentives to sufficiently encourage the deployment of distributed generation and its location, design, and operation in a manner that maximizes values to the customer, the electric system, and society.”

The real winners will be community solar developers and users. The Commission’s order mandates the New York State Energy Research and Development Authority (NYSERDA) to develop plans to make available at least $28 million in funds through New York’s Clean Energy Fund, if needed, to encourage Community Distributed Generation (CDG) investment and development.

According to the PSC, about 70 proposed CDG projects will benefit immediately and the number of CDG projects moving toward construction “is expected to increase following action on additional steps in the coming months.”

The order –which is the result of a year-long collaboration between state agencies, environmental advocates, utility representatives, consumer advocates, and the providers of solar and other forms of DER technology – represents the first phase of “a multi-year effort to create a more market-driven approach to optimizing the use of clean, distributed energy systems. Over the coming months, these same parties will participate in a second phase to further refine the values that DER provides to the energy system,” the PSC said.

“Under Governor [Andrew] Cuomo’s Reforming the Energy Vision (REV) initiative, we have adopted a series of orders that promote clean distributed energy resources,” said Commission Chair Audrey Zeeman. “Distributed resources offer tremendous value to the electric grid, but until now these values were not reflected in the energy prices paid to these resources. Today’s order will finally give distributed energy resources their due, and all New Yorkers will have a more efficient, secure and responsive electric system as a result.”

The Commission said its order recognizes that CDG systems provide opportunities to customers that prefer not to install solar directly on their property or face economic or geographic barriers to doing so.

The order also:

  • Establishes compensation values, for the first time in New York, for energy storage (battery) systems, when combined with certain types of DER;
  • Requires utilities to submit work plans to develop location ally-based prices that reflect the full value of DER in their service territories;
  • Limits the incremental cost impact on non-participating customers in each utility service territory;
  • Advances the state’s efforts to bring CDG opportunities to low-income customers and neighborhoods;
  • Directs the Department of Public Service staff to issue recommendations on oversight of DER providers for the Commission’s consideration in the same timeframe as implementation of the new compensation mechanism; and,
  • Commences Phase Two of this proceeding to accelerate further improvements to the Value of DER methodology.

“Everyone is set to benefit from this new plan. By harnessing the full potential of distributed energy resources, it creates more opportunities to improve the efficiency and reliability of New York’s electric system. This will help reduce the need for traditional electricity infrastructure and give customers greater control over their energy bills,” said Rory Christian, director, New York Clean Energy, Environmental Defense Fund., in an email to Retail Energy Buyer.

Energy Storage Projects

The PSC also directed (Case 14-M-0101) the state’s investor-owned utilities to deploy at least two energy-storage projects by the end of 2018.

“With advances in energy storage technologies, utilities should be using energy storage as part of their normal course of business,” said Zibelman. “Now is the time to determine the best locations, technologies, and uses for energy storage, and today’s order will accelerate the utilities’ deployment of this technology.”

The order requires utilities to “significantly increase the scope and speed of their energy storage endeavors (and) by no later than December 31, 2018, each individual utility must have energy storage projects deployed and operating at no fewer than two separate distribution substations or feeders.”

Utilities have been instructed “to have these energy-storage systems perform at least two types of grid functions – such as increasing the generating capacity of a substation (hosting capacity) or helping reduce the power needed when energy demand is at its highest (peak load).

In addition, the order adopts a standard for sharing and protecting aggregated customer data and requires utilities to propose standards for the evaluation of energy efficiency in buildings. Sharing aggregated customer usage allows for innovative approaches to energy efficiency and enables DER developers of distributed energy resources to make investment decisions. It will also help community planning and community choice aggregation proposals, the PSC said.

Finally, the order also requires that:

  • Utilities must provide more information and take other steps to encourage the development of DER, demand-management and other energy-saving initiatives (“non-wires alternatives”), rather than constructing substations or other infrastructure to meet future energy needs;
  • Utilities must do more to create online portals to provide information to help DER developers and projects to interconnect with the electric grid; and,
  • Utilities must improve hosting capacity maps and similar information

Already, REV has driven 750 percent growth in the statewide solar market. The goal of REV is to reduce New York State greenhouse gas emissions 40 percent by 2030 and achieve the internationally-recognized target of reducing emissions 80 percent by 2050.

 

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