LIPA plans to adopt new rule on solar power compensation

A solar farm on Edison Avenue in West Babylon. LIPA's plans to adopt new rules on solar power compensation will stifle solar growth, critics say. / Newsday / Thomas A. Ferrara

LIPA plans to adopt state rules that would alter a popular mechanism to compensate customers for energy produced by their solar and other green-energy systems, turning to a complex scheme that values resources based largely on how they benefit the electric grid.

Critics of the plan say they worry it could introduce a level of complexity and uncertainty to a successful program in a way that...

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LIPA plans to adopt state rules that would alter a popular mechanism to compensate customers for energy produced by their solar and other green-energy systems, turning to a complex scheme that values resources based largely on how they benefit the electric grid.

Critics of the plan say they worry it could introduce a level of complexity and uncertainty to a successful program in a way that could stifle solar growth. But LIPA minimized the concerns, saying it would compensate projects on their merits.

In some cases, LIPA said, solar power producers could get a lower value for the energy they produce, but LIPA also noted more ideally situated systems could earn a higher payback.

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At least initially, the proposed plan would chiefly affect new customers, primarily large commercial entities that add solar or other so-called distributed energy resources after January. LIPA estimated that only around 200 large customers would be subject to the new rules.

But the changes will eventually make their way to the residential solar level, altering energy-value schemes for systems built after January 2020.

LIPA customers have long enjoyed a so-called net metering program for their solar systems, receiving full credit for the value of energy they send back to the grid. The energy is metered and credited in a “bank,” and customers get the full value back when their systems aren’t producing and they take power from LIPA at night or on cloudy days.

But the new plan proposes to change that for future customers.

Residential customers with existing “net-metered” solar systems installed before Jan. 1, 2018, would continue under the current scheme for the life of their systems.

Residential systems installed between Jan. 1, 2018, and Jan. 1, 2020, would continue under the current scheme for 20 years. After that point they’d be converted to any new statewide system in effect. Plans for a new mass-market residential solar system are under development by the state in a phase-two rollout expected after 2020.

Assemb. Steve Englebright (D-Setauket), the original sponsor the state’s popular existing net-metering act, took a dim view of LIPA’s plan.

“If it isn’t broken it shouldn’t be fixed,” he said, adding that the original net metering bill “has been very successful in large part because it was very straightforward and didn’t have such complexity that it was off-putting.

“By introducing excessive complexity and uncertainty” the new net metering scheme, Englebright predicted, “will slow down our progress toward a solar future.”

The authority will hold public hearings on the proposal on Nov. 27, and its board will vote on the measure at its Dec. 19 board meeting. The new methodology is scheduled to take effect Jan. 1, pending board approval.

LIPA stressed that commercial customers will have options. They can turn to other LIPA green-energy pricing models, such as its feed-in tariff or power-purchase agreement models, where available, a senior LIPA official said. The authority estimates that around 200 large commercial customers would be subject to the new state program, called a “value stack,” which places a value on the energy produced by their systems based on four major factors, including its location, environmental benefits, and demand-reduction potential.

If it’s approved, LIPA would be adopting a plan mandated by the state Public Service Commission for all investor-owned utilities across the state earlier this year. LIPA isn’t subject to PSC mandates, but an official noted, “We do generally try to have one state policy. We diverge where it makes sense to diverge.”

Under the new program, the state is seeking to assign what it describes as a more “accurate” price value on the energy the systems send back to the grid, based on value to the utility, either from a geographic or environmental benefit. For instance, systems that can help alleviate constraints in high-use areas by providing, say, west-facing solar panels to address afternoon peak use to add more power after 4 p.m. would potentially have more value than those in less-constrained areas with a more conventional south-facing orientation.

Solar and environmental groups have been critical. They noted the new rules fail to adequately value the full benefits of green-energy systems to the grid. In a published blog, the environmental group the Natural Resources Defense Council called the plan “flawed,” saying it “undercounts the value of solar resources” and “makes it impossible for many solar projects to predict part of their revenues from the policy.”

But the LIPA official dismissed such criticism. “I think it will encourage building the right projects in the right locations with the right design,” he said.