Distributed Energy Resources

LIPA proposes two paths to expand community solar on Long Island

The Long Island Power Authority (LIPA) in New York is rolling out a new, two-pronged community solar program.

Both community solar programs have been proposed and are now in the public hearing phase, after which they will go before LIPA’s board for a vote. “The LIPA Trustees are supportive of the new programs,” Tom Falcone, CEO of LIPA, said.

LIPA is a state agency and its previous community solar program, which ended at year-end, followed guidelines New York has set up to meet Governor Andrew Cuomo’s clean energy goals, which include a doubling of distributed solar resources by 2025 and reaching 100 percent carbon dioxide-free electricity by 2040.

LIPA recently changed the way it incentivizes community solar, replacing net energy metering with New York’s Value of Distributed Energy Resources (VDER) methodology. The VDER program aims to create a “value stack” to reflect the total value of distributed resources by including benefits that might otherwise be overlooked, such as the capacity value of residential solar panels or the value that might accrue from adding solar panels instead of upgrading transmission and distribution assets.

However, it is not viable to build a community solar project on VDER alone, so LIPA has added a “community adder” rebate to its VDER program and increased the existing “community credit” component of the value stack, Falcone said.

For small community solar projects, those under 750 kilowatts (kW), the proposed rebate is $200 per kW. In addition, the community credit available to all community solar projects will go up to 5 cents per kilowatt-hour (kWh), up from 2.25 cents per kWh.

LIPA also is proposing another incentive to help further reduce the cost of building community solar projects. Under the proposal, billing and accounting for incentives would be handled by their service provider, PSEG Long Island, relieving the developers of community solar projects of that expense, which LIPA estimates at 1.5 cents per kWh. LIPA expects that program to be in place by January 2021.

While LIPA’s assets are publicly owned, PSEG Long Island, a subsidiary of Public Service Enterprise Group, operates LIPA’s electric system under contract as a means of realizing operational economies of scale.

New York State has a goal of having 6,000 megawatts (MW) of distributed solar installations in place by 2025. Long Island’s share of that total is 750 MW.

To date, LIPA has nearly 600 MW of distributed solar projects in service. The overwhelming majority of those projects are behind-the-meter solar rooftop projects. Only 3 MW are community solar projects. With its two new community solar programs, LIPA hopes to double its community solar project pipeline from 34 MW to over 70 MW.

The second proposed change to LIPA’s community solar incentives takes a different approach than VDER. “The second program is an auction,” Falcone said.

After studying LIPA’s community solar program with stakeholders and outside consultants, LIPA realized, “We know who our customers are,” Falcone said. “Why don’t we offer an option where we just buy the solar power and handle all the other stuff, customer acquisition, billing?”

Under the PSEG Long Island Solar Communities program, LIPA, through PSEG Long Island, plans to conduct an auction for 20-year power purchase agreements (PPA) for community solar projects between 200 kW and 5 MW. Bid costs would be capped at 16.4 cents/kWh. The first feed-in tariff (FIT) auction program begins June 1, 2020, and the first awards are expected in October and quarterly thereafter.

The first auction would be for 25 MW of resources with 20 MW dedicated for low-and moderate-income (LMI) customers. If the program is successful, there is an option to expand it to 40 MW. The additional 15 MW would be split between LMI and other customers.

The overall goals of the auction program are to at least double Long Island’s community solar market and to provide discounts to over 3,000 LMI customers.  These goals align with a key component of major climate legislation passed last year in New York: ensuring that the economic and environmental benefits of transitioning the state to a clean energy economy are shared among all New Yorkers.

The idea of the auction-based Solar Communities program, says Falcone, is to expand community solar projects by bringing down costs. Developers would be able to focus on building projects. PSEG Long Island would handle customer acquisition, billing, and other administrative tasks that can add to a developer’s all-in costs. In addition, a project with a power purchase agreement is easier and less costly to finance, which also helps to bring down costs, Falcone said.

“We are trying to reduce costs of community solar by using an auction to do the things we are equipped to do at a lower cost,” Falcone said. “It is a very viable way of reducing community solar costs on Long Island.  We expect the auction to result in a lower cost to our customers than the VDER community solar program.”

Separately, LIPA’s Board of Trustees approved a PPA for a 22.9 MW (AC) solar power project being developed by a joint venture of NextEra Energy Resources and National Grid Ventures in Calverton, in the Town of Riverhead. When the solar project comes online, expected in December 2020, LIPA says the cost will equate to less than 16 cents per month for a typical residential customer. The power contract now goes to the Office of the State Controller and the Attorney General for their signatures.