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June 28, 2023

NY-Sun Mid-Program Modifications Announced

Effective June 23, 2023, the New York State Public Service Commission issued Order Adopting NY-Sun Mid-Program Modifications.

The program changes arose from a directive imposed under Order Expanding NY-Sun Program (10 GW Order), issued in April 2022, requiring that the New York State Energy Research and Development Authority (NYSERDA) and the New York State Department of Public Service (DPS) jointly file a New York Sun Program Mid-Point Review (MPR Filing) within 60 days of the program having met its “mid-program review trigger.”i The 10 GW Order defined the mid-program review trigger as the earlier of: (1) the date when 50 percent of the capacity allocations authorized for Upstate New York or the Consolidated Edison Company of New York, Inc. (Con Edison) service territory had been committed through incentive awards or (2) December 31, 2025. The NY-Sun Program met the mid-program review trigger as of November 17, 2022. 

With the MPR Filing requirement, NYSERDA and DPS were tasked with filing a report that analyzed: (1) updated project and interconnection costs, (2) the types of projects being developed in response to the incentives offered, (3) market and policy factors that may be driving increased costs, and (4) whether any changes to the Environmental Value (E Value) component of Value Stack compensation, base incentives, or adders are warranted in response to the previous factors.

In the MPR Filing, which was filed with the Commission on January 17, 2023, NYSERDA and DPS included various statistics regarding the NY-Sun Program as of November 17, 2022: 

  • $1.375 billion remained in uncommitted funding of the $3.267 billion budget authorized for the NY-Sun Program to date.
  • 5,999 MW of solar projects had been committed or completed out of the total 8,195 MW in total MW block program capacity authorized to date.
  • The Upstate Community Adder and Con Edison Community Adder were each fully committed, eight projects totaling 7.0 MW received the Parking Canopy Adder, 24 projects totaling 1.7 MW received the Rooftop Canopy Adder, and 13 projects totaling 65.6 MW received the Landfill/Brownfield Adder.
  • NYSERDA had not received project applications qualifying for the Prevailing Wage Adder because all projects submitted to the commercial/industrial (C/I) project blocks had their initial utility interconnection applications submitted prior to the date of the 10 GW Order.

NYSERDA and DPS also reported: (1) a mix of community solar projects, remote crediting projects, and behind-the-meter projects were submitted to NY-Sun during the seven-month period between the issuance of the 10 GW Order in April 2022 and November 2022; (2) higher project costs have been identified industry-wide due to increased global demand and international supply constraints, economy-wide inflation, increased labor and financing costs, and difficulty identifying suitable interconnection locations; and (3) the impacts of the Inflation Reduction Act (IRA) are unquantifiable without additional federal guidance. Accordingly, they made six recommendations to the Commission for modifications to the NY-Sun Program. NYSERDA and DPS recommended no changes be made to the Value of Distributed Energy Resources (VDER) Value Stack compensation mechanism at this time, noting that an adjustment to the E Value is unnecessary, as a NYSERDA-administered program allows greater flexibility and adaptability while protecting ratepayers.

With the June 23, 2023, Order, the Commission generally approved the recommendations set forth in the MPR Filing, including:

  • Granting NYSERDA the authority to adjust NY-Sun incentive levels in response to IRA guidance and market conditions 
  • Authorizing modifications to the eligibility for the Prevailing Wage Adder to allow more projects to qualify
  • Authorizing the creation of a Floating Photovoltaic (Floating PV) Adder
  • Removing system production adjustments from the upstate C/I incentive structure

The Commission did not approve the recommendation for multiple discount rates via consolidated billing within a single community distributed generation (CDG) project. However, it did direct utilities to convene a technical conference on the topic within the next 60 days and to subsequently submit a filing within 120 days to the Commission detailing if and how the utilities could implement multiple discount rates for consolidated billing customers.

Some commenters, including solar trade associations, also asked the Commission to revisit the VDER compensation mechanism, particularly the Demand Reduction and Locational System Relief Values as well as the E Value, but the Commission refrained from making any of those changes to the VDER with the current Order.
The Order also acknowledged that the IRA incentives on the federal level could enable New York State to exceed its 10 GW goal for distributed generation and directed NYSERDA to file a report within the next 60 days that provides an estimate of the additional amount of distributed solar capacity that NYSERDA could support with the previously approved budget, provided that the capacity is limited to CDG projects and at least 40 percent of the capacity is allocated toward residential subscribers in disadvantaged communities.

Barclay Damon attorneys will continue to monitor this and other developments affecting the renewable energy industry in New York State.

If you have any questions regarding the content of this alert, please contact Brenda Colella, Regulatory Practice Area co-chair and co-team leader of the Renewable Energy and Energy Markets Teams, at bcolella@barclaydamon.com; Genevieve Trigg, partner, at gtrigg@barclaydamon.com; or another member of the firm’s Regulatory or Project Development Practice Areas.
                                                                                    

iSee “NYSERDA Submits Its 10 GW Distributed Solar Roadmap to Expand the NY-Sun Program,” Barclay Damon LLP, December 21, 2021, https://www.barclaydamon.com/alerts/-nyserda-submits-its-10-gw-distributed-solar-roadmap-to-expand-the-ny-sun-program

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