It has been eight years since New York announced Reforming the Energy Vision—the state’s strategy for transforming its energy system into one that is cleaner, more resilient, and benefits all New Yorkers. In the intervening years, New York has set ambitious goals for energy efficiency, transportation electrification, and the development of renewable energy resources. As a result of this effort, just this past year, New York announced it was on a path to achieving 100% clean electricity by 2040.
Much of New York’s success can be attributed to the policies and programs it has created to incentivize deployment of distributed energy resources (DERs), such as rooftop solar and community solar farms. One of the biggest and most successful programs is the New York State Energy and Research Development Agency’s (NYSERDA) NY-Sun program, which aims to support 6 GW of distributed solar projects for commercial and industrial customers, single- and multi-family homes, non-profit organizations, municipal buildings, and community solar farms like those owned and operated by Nexamp.
In anticipation of the ambitious targets New York has for DERs, the Public Service Commission made the decision to transition from traditional net metering, to a more accurate valuation methodology.
Originally enacted in 1997, net metering allows electric customers of the state’s five regulated utilities to directly offset their energy use with their own energy generation. In 2015, New York began developing a successor rate structure that would more accurately reflect the costs and benefits of distributed energy resources to the grid, and in 2017, New York’s Public Service Commission (PSC) approved the new rate structure, called the Value of Distributed Energy Resources (VDER). VDER compensation will eventually replace net metering for all types and sizes of DERs.
The PSC’s phased introduction of VDER has proceeded accordingly:
- Commercial customers receive the Value Stack Tariff for systems installed after March 17, 2017.
- Due to extensive stakeholder feedback, residential customers whose systems are installed before January 1, 2021, have the option to choose between VDER or net metering for up to 20 years. Residential customers who install after January 1, 2021 will receive compensation under a successor tariff that is still under development.
- If a solar owners/lessors system was installed before March 17, 2017, they are automatically grandfathered into net metering for the life of their system
How does VDER work?
The difference between VDER and New York’s original net metering policy is how a solar owner/lessor is compensated for the solar energy produced by their system. While net metering is a kWh to kWh trade, VDER uses a “Value Stack” Tariff to credit solar owners/lessors
for the power their system delivered to the utility grid. An owner’s/lessor’s solar system generates electricity that is sent to the utility grid. The utility will then provide compensation for this exported electricity at the Value Stack rate by giving the owner/lessor credits on their monthly electric bill. The value of the energy credits will vary based on a variety of different factors including time of day, location and the environmental attributes of the energy produced by the solar panels.
For community solar customers who receive credits on their bill, these factors will also determine the value of their credits (NOTE: at Nexamp, we factor in the precise VDER methodologies relevant to each of our projects when we allocate a share of our community solar farm so that we maximize the solar savings you can receive on your bill).
With 2 GW of solar projects installed to-date as part of the NY-Sun program, New York is well on its way to achieving its goals of 100% clean energy!