New York to consider enhancing payments for distributed generation
- New York is doubling down on its distributed generation focus, issuing a pair of white papers that recommend enhancing valued-based compensation under its Value of Distributed Energy Resources (VDER) mechanism.
- The compensation mechanism for solar and other distributed resources was rolled out last year, and now regulators want to consider improvements that could spur development of community distributed generation (CDG) in areas where it has not flourished.
- The proposals are contained in two reports, one focused on community solar, the other on improvements to the VDER. The state expects the changes to help stimulate an additional 1 GW of new community generation. The Public Service Commission will open a comment period to consider the recommendations.
Distributed generation is already paying off for New York, and state regulators say they want to ensure more is added. The PSC says distributed generation has helped lower carbon emissions and boosted economic activity, along with generating ratepayer savings, and helping grid resiliency.
Proposals, which the commission said would be important steps in "the evolution of the state's VDER policy," include:
- A consideration of enhanced and additional opportunities for electric customers to receive market transition credits in areas of New York where CDG market development has not been strong.
- Alternative incentive mechanisms may be developed for community solar in areas where CDG development has been successful, including Central Hudson Gas & Electric and Orange and Rockland service territories.
- Regulators want to make improvements in calculating and compensating the distribution value of distributed resources.
- Another idea is to consider the extension of net energy metering to systems up to 750 kW, in cases where onsite energy generation is primarily used to satisfy a customer’s demand.
John Rhodes, CEO of the Department of Public Service, said distributed resources will be "critical to building out an energy system" that can meet New York's clean energy goals.
"Smarter, forward-thinking compensation for these projects will assure that these markets are developed in a robust, cost-effective and sustainable way," Rhodes said in a statement. "Today’s reports recognize the necessity to refine and advance compensation policy for distributed energy in order to encourage investment in New York’s clean energy economy."
The commission recommended enhancing the incentives, known as market transition credits, to spur greater development. The enhanced credits would be available to more than 700 MW of new projects, the PSC said. The proposal also recommends adjustments to market transition credits available in Con Edison's territory for almost 400 MW of new CDG projects.
The proposals would also make increased upfront incentives available to about 100 MW of new projects in the Orange & Rockland and Central Hudson territories, "in order to nurture continued market growth while managing
overall costs," the PSC said.
- New York Department of Public Service Staff Whitepaper on Future Community Distributed Generation Compensation
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