Realizing the Potential for Community Solar in New York State: Benefits, Barriers, and Solutions

April 16, 2021


1. The Community Solar Model

Community solar allows individuals and organizations to reap the benefits of solar energy without needing to install it on their home or building. Members sign up for a specific allocation of the energy output of a solar project, and the energy produced by their share of the system will be credited to lower their electric bill.

2. Benefits of Community Solar

Community solar provides multidimensional benefits in terms of: (i) expanded and equitable access to clean energy for individuals and organizations unable to install residential or commercial solar on-site due to technical, ownership, or financial barriers; (ii) economic benefits by means of subscriber bill credit discounts, community economic development, distribution grid enhancements, and avoided grid upgrade costs; (iii) environmental benefits through avoided greenhouse gas and particulate emissions, the elimination of environmentally invasive practices associated with fossil fuel extraction, and ecosystem benefits including soil formation and habit preservation; (iv) helping to alleviate historical environmental inequities stemming from local fossil fuel generation; and (v) helping to realize New York’s targets for distributed solar deployment and electric sector decarbonization as mandated by the 2019 Climate Leadership and Community Protection Act (CLCPA).

3. Community Solar in New York State

New York’s community solar market was established in July 2015 with the issuance of an Order from the state Public Service Commission, which set forth conditions and requirements for structuring a technology-agnostic “Community Distributed Generation” (CDG) program with regard to several elements, including eligibility requirements for generating facilities, compensation schema, membership practices, project sponsor responsibilities, and the role of electric utilities. Since then, the PSC has issued additional rulings that have clarified and revised aspects of its 2015 Order on items such as the size of qualifying facilities, compensation, and the implementation of consolidated billing.

4. Historical Deployments and Pipeline

At the end of 2020, there were 371 operating community solar projects in New York, comprising installed capacity of 497 MW-AC, enough to power approximately 100,000 homes. 89 percent of currently operating capacity was installed in 2019 and 2020. Annual deployments increased from 2 MW-AC in 2016 (1 percent of all solar installations) to 266 MW-DC in 2020 (63 percent). At the national level, New York was the country’s largest community solar market in terms of 2020 installations and the second largest state market (after Minnesota) in terms of cumulative deployments. The utility interconnection pipeline for community solar projects still under development stood at 5,117 MW-AC as of the end of 2020. Due to the expiration of the Upstate Community Adder incentive in February 2021, most pipeline projects require additional funding support through incentive replenishment and/or compensation improvement to be able to move forward.

5. Geographical Disparities in Penetration

The dominant majority of both operational and pipeline community solar project capacity in New York is concentrated in Upstate and Western New York, which constituted 78 percent and 90 percent of operational and pipeline capacity respectively at the end of 2020. In contrast, the equivalent figures in Downstate territories, where a majority of the state’s population resides, stood at 4 percent and 5 percent respectively. This is primarily due to the lack of siting potential for ground-mounted projects in the Downstate region. Overall, there is a vast asymmetry between the Upstate and Downstate regions with regard to community solar penetration and access to date: only 1 percent of Con Edison’s 3.4 million customers would be served by operational and pipeline projects, compared to 33 percent in National Grid and 17 percent in NYSEG-RGE. This indicates that community solar has and will continue to struggle to reach the vast majority of Downstate New Yorkers if membership continues to be restricted to projects located in the same service territory as the subscriber.

5. Barriers to Future Growth

Statewide barriers to community solar development and deployment include: (i) local community resistance to siting ground-mounted systems; (ii) interconnection hosting capacity constraints and the associated costs to upgrade the distribution grid; (iii) interconnection timelines; (iv) incentive pullbacks and uncertainty related to compensation; and (v) lack of customer education about community solar and its benefits. Barriers specific to the Downstate region include: (i) rooftop permitting complexity and timelines; (ii) siting constraints; and (iii) regulatory barriers restricting community solar membership to projects located in the same utility territory as the subscriber.

6. Policy Recommendations

Key recommendations to address the above-mentioned barriers facing future development and deployment of community solar include: (i) accelerated investment in distribution-level infrastructure that enables DER hosting capacity expansion, and adoption of advanced technologies that can mitigate the need for expensive grid upgrades; (ii) updating the Value of Distributed Energy Resource (VDER) tariff under which community solar projects are compensated, specifically the Environmental Value (E-Value) and Demand Reduction Value (DRV), and introducing an additional component to reflect the avoided long-run transmission infrastructure costs associated with DER deployment; (iii) replenishing the Con Edison Community Credit for allocations previously made to natural gas fuel cells, and introducing a successor Community Credit on a phase-down basis; (iv) implementing a multi-year extension for the Long Island Community Credit and Community Adder; (v) state-convened discussion forums in Upstate and Western New York to address local opposition to project siting and dedicated incentives for agricultural dual-use projects (agrivoltaics); (vi) programmatic initiatives to increase awareness of community solar benefits for local communities and address commonly held misconceptions surrounding environmental risks associated with solar energy; (vii) state- and utility-sponsored education initiatives to improve customer awareness and address negative perceptions regarding community solar; (viii) the adoption of “no-touch” permitting practices for rooftop projects to reduce permitting timelines and soft costs; and (ix) eliminating regulatory barriers limiting membership to projects sited in the same utility territory and implementing cross-utility crediting to enable transfer of bill credits across utilities.

7. The Need for Cross-Utility Crediting

Siting constraints in the New York City metropolitan region, coupled with the regulatory requirement that the customer and community solar project be located in the same utility territory, currently prevent millions of New Yorkers, particularly low-and-moderate income (LMI) communities, from accessing community solar. The simplest and most obvious solution for overcoming this barrier is to allow ratepayers to subscribe to community solar projects sited outside their own utility territory, which would require the implementation of an administrative system that would enable the transfer of bill credits from customers in one utility territory, referred to as cross-utility crediting. Addressing this arbitrary barrier could enable solar access for more than 500,000 New York City households, dramatically expand community solar penetration in LMI communities, and accelerate the state’s ability to meet climate goals under the CLCPA by stimulating the development of almost four additional gigawatts of operating capacity.