The efficiency of solar panels means that your solar system will often generate more power than you actually need. So, after you’ve supplied enough electricity for your home or business, what happens with the excess energy?
In some cases, energy storage is a popular solution for overproducing systems. With solar-plus-storage you can store excess energy on-site using a battery. However, for now at least, most people don’t have battery storage attached to their solar panel array.
So, if you don’t have a battery storage system, your excess energy will be sent back to the electric grid. In most states across the US your utility company will compensate you for this excess energy through a process called net metering. With net metering, you are credited for the kWh sent to the grid by your solar system.
In New York, however, things are a little bit different. For New Yorkers considering solar—or those already enjoying the benefits of solar panels—the Value Stack is being developed in place of net metering.
From Net Metering to VDER
As part of New York State’s Reforming the Energy Vision (REV) plan, the New York Public Service Commission has opted for a new method—known as the Value of Distributed Energy Resources (VDER).
The Commission hopes to improve on the net metering approach with the use of a more complex compensation formula wherein solar system owners are credited using the Value Stack Tariff.
Under net metering, compensation for energy sent to the grid is fairly straightforward—kilowatt hours in exchange for kilowatt hours. Under VDER, the value stack approach encompasses more wide-ranging factors such as environment and location. When it comes to the credit received on your utility bill, these diverse factors will determine the value of that credit.
How The NY Value Stack Works
As noted above, solar systems are extremely efficient and capable of generating more power than a single home or business will need. In this scenario where excess energy is generated by your solar panels—assuming the absence of an energy storage system—the excess is sent to the utility grid. This delivery of excess energy is tracked precisely and often—every 15 minutes—by the utility company
Who Is Eligible
If you’re based in an area which falls under the remit of the Public Service Commission, and you’re generating distributed energy—solar, for example—then you’re eligible. It’s important to note, however, that this does not cover the entirety of New York. If your solar panels are connected to the Long Island Power Authority (LIPA) you won’t be eligible for VDER, but rather a similar compensation method implemented separately by LIPA.
Factors Making Up The Value Stack Rate
This is where VDER really gets interesting and sets itself apart from the net metering approach used in many other states. Unlike the more simplified transaction approach used under net metering, the value of your excess energy is determined by a variety of factors with the Value Stack method. Below, we’ll take a brief look at some of the factors determining the Value Stack Rate:
- Energy Value: This accounts for the wholesale price of electricity (per kWh) when determining your compensation.
- Capacity Value: The peak hour of electricity usage is determined, allowing the utility company to ensure adequate provision of electricity during this time. As the energy from your system is produced by solar, you are compensated for the kWh price.
- Environmental Value: With the Value Stack, your positive environmental impact is determined and accounted for.
- Demand Reduction Value: If the excess energy produced by your solar system is sent to the grid during peak demand times, you will receive more credit than you would outside of peak demand times. This is because the energy is more valuable to the utility company at these high-demand times.
- Locational System Relief Value: Busier, built-up areas will have a high demand for electricity. So, if your solar system is producing excess energy in a high-demand area then you will receive more compensation than a solar system owner in a low-demand area would.
With all these variables in play, determining the Value Stack Rate for your solar system can seem quite complex—or even daunting. Thankfully, NY-Sun have built a Solar Value Stack Calculator to help simplify the process. Just click the link to head over to their site where you can plug in the relevant numbers and get an estimated value stack for your specific solar system.
VDER Implementation Phases
The Value Stack Tariff will be implemented in a number of different phases:
- Commercial customers installed after March 17, 2017 receive the Value Stack Tariff.
- Residential customers installed after January 1, 2020 receive the Value Stack Tariff.
- Residential customers installed before January 1, 2020 can opt for either the value stack, or net metering for 20 years.
- Residential or commercial customers installed before March 17, 2020 are grandfathered into net metering for the lifetime of their system.
Switching to VDER from Net Metering
If you currently receive net metering, you may switch to the Value Stack Tariff. However, you are advised to consider this move very carefully. Once you’ve switched, you will not be allowed to switch back to net metering at a later stage. In addition, remember that net metering is a guaranteed credit, whereas the Value Stack is determined by a number of variables—as noted above. Keep this in mind.
If you want to learn more about solar panels—or the credits & incentives available for solar systems—please reach out to YSG Solar today at 212.389.9215.
By Shane Croghan
Sources:
https://www.paradisesolarenergy.com/blog/what-is-new-yorks-vder-value-stack/
