Proposed legislation in the State of New York would seek to advance the growth of solar energy by allowing renewable energy facilities in areas that might not otherwise permit such installations. For instance, in a previous blog post we discussed proposed legislation that would limit homeowner’s associations from prohibiting solar development and that would mandate “shading” of solar installations be considered during land use applications. Similarly, in July of 2015 the New York Public Service Commission (“PSC”) issued an order outlining its Community Distributed Generation policy, which promotes small-scale solar energy facilities and net metering in areas not prone to solar development (e.g. urban areas). Accordingly, residents in these areas will now be able to obtain net metering benefits similar to those in more rural areas. Phase 1 of the PCS’s Community Distributed Generation project has ended, and Phase 2 has begun, which will allow a broader range of projects to the benefit of New York residents and solar developers.
Community Distributed Generation
What is Community Distributed Generation? Simply put, it’s a cooperative of people (a “group”) that utilize the same solar energy facility. Under the new Community Distributed Generation order, such a group would permit each “member” to net meter from a single solar generation facility. Thus, any solar generation in excess of consumption would create a credit that the utility company would track and distribute to all members of the group in accordance with the applicable Community Distributed Generation contract.
Of course, all New York State net metering laws would apply to the distribution and connection of the subject solar facility (see Public Service Law §§ 66-j and 66-l). Importantly, the Community Distributed Generation order provides very specific guidelines related to the creation and operation of a Community Distributed Generation group including guidelines for each member and specific energy distribution requirements. For instance, a group must associate or contract with some form of business, not-for-profit, or governmental entity that would become the “Project Sponsor.” The Project Sponsor is responsible for constructing the facility, interconnecting to the utility grid, and owning and operating the facility in accordance with New York’s net metering laws. Essentially, the Project Sponsor is responsible for managing the group membership and interacting with the applicable utility company.
New York Opportunities
The Community Distributed Generation program’s goal is to allow a wider range of opportunities to benefit from solar energy systems, including New Yorkers who previously supported clean energy development through utility bill surcharges but otherwise were unable to benefit from New York’s net metering laws. Such users may be located in urban areas where solar energy facilities are restricted in their location and size. These residents may only participate in solar generation and net metering by a Community Distributed Generation group. For example, multi-tenant developments where tenants are not otherwise able to benefit from solar net metering can now utilize Community Distributed Generation to harness solar energy benefits.
To this end, the Community Distributed Generation order has identified strategic locations in New York where Community Distributed Generation projects should be explored. In fact, each utility company operating in the state is required to establish “opportunity zones” where locating such projects would be most beneficial.
Conclusion
Phase 2 of the Community Distributed Generation project began on May 1, 2016. Aside from allowing a broader range of Community Distributed Generation projects, the PSC has noted that Phase 2 projects should advance the interests of low-income customers. Further, Phase 2 will increase the number of projects that come online and likely provide clarification of applicable regulations. Developers and utility customers throughout New York should be aware and take advantage of Community Distributed Generation opportunities as Phase 2 rolls out.