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Commercial solar market sees drop after new compensation adopted

Applications for new hookups and total power generated declined since the new plan was enacted by LIPA.

Mike Voltz, director of energy efficiency and renewables

Mike Voltz, director of energy efficiency and renewables at PSEG Long Island, shown Aug. 8. Photo Credit: News 12

Two key measures of the commercial solar market have seen a marked drop on Long Island since LIPA trustees voted in December to adopt a complex state model for compensating customers for the power their systems produce.

Data released by the state and PSEG Long Island show year-to-date drops in new applications for solar hookups to the grid and declines in the total amount of power they produce, since the new state-devised scheme was enacted by LIPA in May.

The data also show applications spiked in the months leading up to adoption of the new plan, suggesting a rush to get applications in before the new system took effect. The plan, which is called value of distributed energy resources, or VDER, replaced a popular method called net metering. 

Net metering gives customers a one-for-one value for the energy they sell back to the grid from their rooftop solar systems. The VDER system compensates solar producers for the energy their systems make based on a complex array of factors, such as geographic location and environmental benefits. 

“That flood was in anticipation of the change going into effect May 1,” said Mike Voltz, director of energy efficiency and renewables at PSEG Long Island. Voltz noted that on a year-over-year basis, the monthly numbers this year are only slightly below those of last year, when installations averaged around five a month.  

But the sharp decline since May led solar installers to implore LIPA trustees to vote to overturn their decision to implement the state program.

“This crisis started here in this room,” Charles DeStefano, commercial sales manager for Long Island Power Solutions of Islandia, told trustees recently. He pleaded with them to repeal the new plan to restart the market. “We don’t need to have this crisis,” he said. “This can be taken care of today. You have the power to make this go away.” 

In the first four months of the year, there were 91 applications for commercial solar installations under the old net metering program for commercial projects, including a record 41 the month before VDER took effect.

But for the months after May, the figures dropped to five applications per month or fewer, including just three in September, for a total of 17 from June to September.

State figures further highlight the commercial declines. The total capacity of commercial solar projects from May to August of this year dropped to around 2,200 kilowatts, compared with just over 4,000 kilowatts for the period last year. Residential solar capacity increased during that time, to more than 20,000 kilowatts from about 17,000 last year, according to the state figures. Residential applications were also up slightly, while commercial applications from May through August were down to seven from more than 25 a year ago.

Arthur Perry, chairman of the Long Island Solar Energy Industry Association, a business group, said at a LIPA trustee meeting that most commercial applications come in the fourth quarter, and asked for LIPA to reach out to state regulators to exempt systems under 750,000 kilowatts from the VDER scheme.

Mark Fischl, vice chairman of the LIPA board and chairman of its renewables committee, said he was "investigating" the notion of adjusting LIPA's plan. "I do think it may make some sense," to examine a recent state option under consideration to exempt systems under 750,000 watts. No decision had been made, and it would require investigation and full approval by LIPA's board, he said. 

Voltz said PSEG would enact a change suggested by the industry, which is under consideration by the Public Service Commission, so long as the state and LIPA board approve it.

“We would consider that if the rest of state went that way, but we want to look at other options to see which are most equitable,” for all LIPA’s 1.1 million customers, Voltz said.

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