New York Updates Distributed Energy Tariff and Sets Course for Further Deliberation

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Foley Hoag LLP - Energy and Cleantech Counsel

Hours before a technical conference on potential future pathways for solar development in New York State, the New York State Department of Public Service (“DPS”) unexpectedly updated the Environmental Value (“E-Value”) component of State’s Value of Distributed Energy Resources (“VDER”) Tariff “Value Stack.” However, the update was not the one advocated for by the solar industry based upon the December 2020 cost of carbon guidance from the State’s Department of Environmental Conservation (“DEC”), but rather, the move from DPS was an administrative update based on the increase in the social cost of carbon as calculated by the Interagency Working Group on the Social Cost of Greenhouse Gases.

DPS Staff’s update at the technical conference raises the E-Value to $0.03103 per kWh. This value is fixed for the 25-year period of a project’s Value Stack compensation and will be available to all projects that achieve eligibility on or after April 21, 2021 by paying 25% of their interconnection costs, or by executing an interconnection agreement if the 25% payment is not required. Staff from the New York State Energy Research and Development Authority (“NYSERDA”) and the DPS emphasized during the technical conference that the updated E-Value will not be applied retroactively. The April 21, 2021 technical conference was the first of two scheduled conferences to be hosted by DPS and NYSERDA aimed at exploring opportunities for solar development through and after achievement of the Climate Leadership and Community Protection Act’s (“CLCPA”) six-gigawatt (“GW”) distributed solar target by 2025. NYSERDA and DPS Staff presented options for the solar market post-6 GW, focusing on a market-based, marginal abatement cost approach initially advanced by DEC’s value of carbon guidance. While the details surrounding any such approach are far from known, Staff explained that such model would price the externality value (and therefore the incentive) through competitive market discovery, rather than through a set, pre-determined, fixed price. The fixed incentive option was presented as an administrative cost alternative. NYSERDA Staff invited stakeholder feedback on these options, including such considerations as whether NYSERDA or the utilities should conduct open solicitations to determine the marginal abatement cost and what those contracts would look like.

The technical conference was the first step on the road to an eventual VDER update. Staff’s presentation will be available on the DPS DMM in Case 15-E-0751 (the “VDER Preceding”). Staff noted that the Demand Reduction Value (“DRV”) and Locational System Value Relief (“LSRV”) components of the Value Stack are being considered, and may be updated, in the utilities’ Marginal Cost of Service Studies in Case 19-E-0283, rather than the VDER Proceeding. Stakeholders are invited to comment on the presentation up until the second technical conference on May 7, 2021, where stakeholders will have the opportunity to present and respond to the items presented on April 21, 2021. Following the second technical conference, DPS Staff will issue a report summarizing the feedback received during the stakeholder process. Staff anticipates that such report will be filed in the VDER Proceeding by the end of May, with a formal Staff Whitepaper to follow later this summer. After a notice and comment period, the Public Service Commission is expected to issue an Order that would formalize the compensation mechanism for distributed energy resources going forward.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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