Distributed Energy Resources

PSC tweaks ‘value stack’ payments to spur community solar

New York regulators approved changes to how solar facilities are paid, a move expected to make it easier to finance community solar projects.

Besides approving changes to its “value stack” payment methodology, the New York Public Service Commission on April 18 adopted credits and other incentives for community distributed generation, called CDG, that is expected to support more than 1,000 megawatts of CDG development, on top of the roughly 500 MW that had qualified under the value stack by late July.

At issue is the PSC’s Value of Distributed Energy Resources policy that aims to pay distributed energy resources for how they benefit the grid and reduce customer costs.

In an initial order, the PSC in 2017 directed that eligible DERs transition from net metering compensation to the value stack, a methodology that bases payments on the benefits created by the distributed resources.

The value stack is based on a utility’s avoided costs plus other benefits a resource may bring such as demand reduction and environmental values.

The effort is part of New York’s Reforming the Energy Vision, which is overhauling the state’s electric utility business model. It also supports Gov. Andrew Cuomo’s goal of New York getting 70 percent of its electricity from “clean” sources by 2030.

The PSC’s order was based on two whitepapers commission staff issued in December on value stack compensation and public comments on them.

Value stack compensation includes a payment for the demand reduction value a DER provides. The PSC changed how it calculates the DRV to reflect performance during a larger set of hours and to lock-in the value for 10 years.

The PSC also expanded net metering to systems up to 750 kilowatts for small commercial customers in cases where onsite energy generation is mainly used to meet a customer’s demand.

CDG projects will be eligible for a credit of 2.25 cents per kilowatt-hour over 25 years. The credit will be available for 125 MW in the New York State Electric & Gas Corp. service territory, 525 MW in National Grid and 80 MW in Rochester Gas and Electric Corp. The PSC approved a 12 cent credit for 350 MW of community solar in Consolidated Edison’s service territory.

The PSC approved the use of large, non-residential “anchor tenants” for community solar facilities, a move expected to lower project financing and customer acquisition costs.

The PSC authorized the New York State Energy Research and Development Authority to spend $43.4 million on incentives for community solar.

“The changes made in this order will improve the ability of the Value Stack and related policies to provide appropriate price signals and compensation so that developers and customers design and invest in projects that provide net benefits to the electric distribution grid and will result in appropriate compensation for those benefits,” the PSC said.

The changes will also increase the transparency, consistency, and accuracy of value stack compensation, the PSC said.