Utilities, developers strike deal on solar pricing in N.Y.

By Saqib Rahim, Peter Behr | 04/20/2016 08:37 AM EDT

New York state’s major electric utilities and three leading solar power developers yesterday announced an agreement on a new net-metering plan, a move that links two sides that elsewhere are in a pitched battle over the fair cost that owners of distributed solar units should receive for surplus carbon-free power they sell back to the grid.

The agreement preserves full retail electricity price credits for individual rooftop solar owners until 2020, while phasing in increased payments to utilities from developers of large solar installations.

The proposal was submitted to the New York Public Service Commission as a component of New York’s Reforming the Energy Vision (REV) policy, which recasts utilities as delivery services for customer and third-party electricity providers. It was signed by Consolidated Edison, the state’s largest utility; owners of four other utilities upstate; and SolarCity, SunPower and SunEdison following a negotiation facilitated by the Advanced Energy Economy Institute.


"We’re working together to keep our state’s solar market vibrant while enabling us to maintain the robust power grid that solar energy requires, and in a way that is fair to all customers," said John McAvoy, ConEd’s chairman and CEO. "Utilities and solar companies have found common ground to enhance our environment, the economy and electric reliability."

"I think it’s a really interesting proposal that I hope all the rest of the stakeholders can now examine," said Anne Reynolds, executive director of the Alliance for Clean Energy New York, an advocacy group that includes environmental organizations and clean-tech companies. "But I think the nice thing about it is it shows the developers and the utilities can have productive conversations about these tough questions, like community net metering."

"It’s very encouraging to see some of the leading solar companies and the utilities in New York collaborating instead of fighting against each other, as we’ve seen in other jurisdictions," said Jackson Morris, director for Eastern energy at the Natural Resources Defense Council. "It’s really striking that you’re not seeing what has been historically almost ideologically a butting of heads."

The agreement proposes that owners of behind-the-meter residential rooftop solar units continue to receive the retail price of electricity as a credit for power delivered back to the grid through Jan. 1, 2020. This was a top priority of the solar power suppliers, according to people involved in the agreement. After the 2020 date, the solar credit would be reduced on a schedule to be set by the commission.

Payments to utilities would start immediately by developers of large-scale "community" solar farms, which effectively reduces the subsidies that solar power owners receive from other utility ratepayers, utility officials said.

The proposal is one of many submitted to the New York power regulators. The PSC’s next step will be to convene discussion around what various stakeholders want to see in a final net-metering rule.

Solar power is a key component of New York Gov. Andrew Cuomo’s (D) goal of procuring half the state’s electricity from renewable energy sources by 2030. Proposals for large solar projects have been piling up in utility queues, totaling almost 3,000 megawatts — more than double the total in 2015, said Stephen Wemple, group director for ConEd’s Utility of the Future office.

Yesterday’s agreement is intended to provide a clearer picture of the costs developers would face on projects so that the most competitive ones would move forward, Wemple said.

To illustrate what developers would pay utilities, yesterday’s agreement projects how the makeup of a current average retail price of 18 cents per kilowatt-hour would change as the payments are phased in. After the 10th year, the developer payment would grow to 4.5 cents. In this example, the wholesale electricity price would remain unchanged at 10 cents per kWh. The utility distribution charge would be 1 cent, and customers would also pay 2.5 cents, representing the economic value of carbon-free solar power.

Complicated venture pushes ahead

New York’s REV plan is moving forward on many fronts on different timetables. June is the next major deadline, when utilities are directed to submit Distribution Service Implementation Plans (DSIPs), laying out how they propose to invite customer and third-party energy providers to connect with their systems. The net metering price is a key part of that step, and Wemple said the industry hopes the PSC will make a decision on that issue by the end of the year.

Solar Energy Industries Association spokesman Dan Whitten said the group is still reviewing yesterday’s proposal.

But Sean Garren, Northeast regional manager of Vote Solar, expressed caution. "I’m a little concerned that they seem to have come pretty far along in a pretty opaque process," he said.

"There are really only three solar companies — which are not representative of the whole industry in New York — who were at that table along with the electric utilities, who as we know have not been historically supportive of distributed generation," Garren said.

Garren also worries about the plan’s complexity. "It is relatively complicated in terms of the financial relationships involved," he said. "How are financiers and how are investors going to properly understand what the return on investment is going to be. … Are we going to be able to get people to sign on the dotted line and get solar to grow in the future?"

But the solar companies in the agreement saw only positives. "We are in the midst of one of the greatest energy transformations in history," said Tom Werner, president and CEO of SunPower. "This joint proposal for the people of New York is another strong example of how we can work collaboratively with utilities to ensure every household, business and community have access to the cleanest possible forms of energy."