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New York’s New Renewable Energy Tariffs

Paul Kando

On March 9, the New York Public Service Commission (PSC) issued an order introducing a system of tariffs based on a range of benefits distributed energy resources bring to the electric grid. According to Audrey Zibelman, outgoing PSC chair, distributed energy, creates benefits for the electric grid, which in some cases go unpaid or are underpaid.  These include peak shaving, load shifting, grid stability, reactive power and fast response —all really important as we think about moving toward a much less carbon-intensive electric sector.

Rooftop Solar in New York
photo credit: NYSERDA

The order seeks to price distributed energy resources accurately so that the electric system is truly two-way, placing demand management on equal footing with supply management. Failure to bring the electric system and industry fully into the modern world and to keep it apace with continuing developments could have disastrous consequences, including a failure to meet modern reliability needs and expectations, enormous and avoidable costs associated with the inefficient replacement of aging components, and unchecked emissions of greenhouse gasses and other pollutants, the PSC’s decision explains.

The state will place a value on distributed energy via “value-stacked compensation tariffs” based on the worth of energy, capacity, demand reduction, as well as environmental and location-specific and benefits. Net metering remains in place for existing solar systems and new residential and small commercial solar and distributed power systems installed before January 1, 2020. For the first time, the rule also establishes compensation values for energy storage systems, when combined with certain types of distributed energy.

Utilities must submit work plans to develop location-based prices that reflect the full value of distributed energy resources. The commission hopes to begin applying the new tariffs to new installations this summer.

The order is part of New York’s comprehensive Reforming the Energy Vision energy policy (REV), whose goal is to generate half the state’s electricity from renewable sources by 2030. It includes decentralizing the electric grid in response to the devastation and power outages caused by Superstorm Sandy in 2012. Distributed energy – microgrids in particular – offer a reliable back-up to the power grid during such outages. As if to underscore, 1.8 million customers in seven US states and Ontario lost power to high winds the very day the PSC issued its new order.

Jurisdictions, worldwide, are struggling with how to move forward with distributed energy resources. These conversations are often combative. In contrast, New York’s electric overhaul, so far, has been peaceful. According to chairman Zibelman, “in the beginning people sat on opposite sides of the room. It was always clear when you walked in who were the utilities and who were the distributed energy providers and where the staff was.” By the end, to her credit. it was a real conversation as opposed to a debate.

Indeed, says Gregg Sayre, acting interim PSC chair, Zibelman shepherded through at least fifteen REV-related proceedings since she began as chairman in 2013. Her work was a marvel of organizational and managerial skills. A woman's touch, one might add, to “get people to sit on the same side”.