If your house is powered by solar, or you’re considering switching to solar power, you’ve probably heard of the term net metering.
Net metering was enacted in 1997, and expanded on several times, as a billing mechanism that credits solar energy system owners for the electricity they add to the grid. For example, if a residential customer has a PV system on the home's rooftop, it may generate more electricity than the home uses during daylight hours. If the home is net-metered, the electricity meter will run backwards to provide a credit against what electricity is consumed at night or other periods where the home's electricity use exceeds the system's output. This way, customers can use their “banked” electricity credits at no extra cost.
Recently, the NYS Public Service Commission (PSC) decided that New York should move away from net metering, and in 2017 approved the new Value of Distributed Energy Resource (VDER) tariff to compensate certain types of clean energy projects, including commercial, industrial and community solar. VDER uses a formula to measure the value of solar energy that is too complicated for customers to understand and too unpredictable for developers to finance.
This is causing the solar industry to pull back local investment and to shift focus to neighboring states with more attractive tariff structures. According to NYSERDA, the second quarter of 2018 saw the lowest level of investment in solar in New York State since 2014.
Assembly Bill A.10474 aims to correct the significant design and implementation flaws of the state’s new VDER tariff structure and would keep net metering in place in place until 2021. The bill would mitigate against this unacceptable trend in multiple ways.
Benefits of passing A.10474
1. It directs the Public Service Commission (PSC) to establish a new compensation mechanism for assigning the monetary value to distributed energy resources that would more accurately and fairly reflect the full social and economic benefits of the latter. For example, under the new VDER method, the environmental value of solar energy is limited to carbon reduction only and does not include the air quality improvement benefits of clean energy. This is a particularly egregious omission within the context of New York City and other dense urban areas where air pollution is an important driver of negative mortality and morbidity outcomes, often with low-income households bearing the disproportionate brunt of the impact.
2. The bill will retain retail net metering for all eligible customer classes until 2021 while allowing projects to opt-in to the new VDER compensation mechanism put in place by the Public Service Commission (PSC).
3. Finally, the bill will amend the definition of customer-generators to include residential and non-residential customers eligible to receive credits from remote net-metered and community distributed generation equipment and raises the net metering cap.
Yesterday, the bill was voted on, and passed, by the State Assembly. The bill now moves to the Senate floor and if passed, will be sent to Governor Cuomo to be signed into law. This is great news for the solar industry and a great step towards reaching Governor Cuomo’s comprehensive energy strategy for New York by 2030.
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