Solar Energy Policies and Barriers in New York City

1. Solar Energy Policies and Barriers in New York City Prepared by The Center for Sustainable Energy at Bronx Community College for The City University of New York’s Million Solar Roofs Initiative Presented by Lara Ettenson June 21, 2007

2. Market Review • Strong case for solar in city • Steady NYC solar market growth since 2002 • Growth is likely to slow with current barriers

3. Barrier Overview • Funding • Insufficient to maintain growth • Policy Structure • Not tailored for NYC • Technical Barriers • Obstacle to expansion of PV market • Cost of PV • Comparatively higher in NYC

4. Barrier: Funding Insufficient to Maintain Growth Federal Policies • Business Tax Credit (30%, no cap) • Residential Tax Credit (30%, $2000 cap) • MACRS (5 year depreciation vs. 20 years) State Policies • Residential Tax Credit (25% - $5000 cap) • Sales Tax Exemption (4.375%) • Renewable Portfolio Standard – RPS ($13.8 million through 2009)

5. NYC PV Market Growth Scenarios Barrier: Funding Cont. • Assuming: • NYC receives funding proportional to population (42%) • $4/watt rebate level is maintained through 2013

6. Solaire - BPC Barrier: Funding Cont. Private Installations • Local Sales Tax Exemption (4%) • Battery Park City Authority Construction Guidelines • Settlement Funds • Clean Air Communities, Bronx Initiative on Energy and Environment, etc. GMDC - altPOWER

7. Gun Hill Bus Depot New York Hall of Science Source: NYPA Barrier: Funding Cont. Municipal Installations • Demonstration Projects • Settlement Funds • Office of Attorney General, Petroleum Overcharge Restitution, etc. • Local Law 86 (LL86)

8. Barrier: Funding Cont. • Causes: • Low New York Power Authority (NYPA) electricity rates • No dedicated NYPA funding for PV • One-time funding

9. Barrier: Funding Cont. NYC Public Installations

10. Barrier: State Policy Structure Not Tailored for NYC NYC infrastructure: • Large • Nonresidential/residential • High peak load State incentives: • Are residential only • For small systems (rebates @ 50kW, net metering @ 10kW) • Do not prioritize grid side benefits and peak load reduction

11. Barrier: Technical Barriers Net metering, interconnection, codes Net Metering • Residential only up to 10kW • 2 MW system cap currently being debated in Albany • PV given smallest system-wide cap @ 8.1MW (7,000 MW potential) • Farm biogas @ 32 MW cap (0 MW potential) Network Grid • Potential technical limits • Reverse power relay precautions • Ambiguous technical requirements

12. Barrier: Technical Barriers Cont. Standard Interconnection Requirements • Administrative delays 6-9 months • Contrasting reports NYC Building Codes & Inspections • NRTL testing that is unique in nation (adds significant cost) • Electrical inspection • Building inspection • Con Edison interconnection inspection • NYSERDA quality control inspection

13. $11.00 $10.50 $10.00 $9.50 $9.00 Rest of State $8.50 NYC $8.00 $7.50 $7.00 $6.50 $6.00 2003 2004 2005 2006 Barrier: Cost High Costs in NYC Average Installed PV Cost

14. Barrier: Cost Cont. Possible Explanations – High Costs NYC Interconnection requirements • Manual disconnect, reverse power relay ($15,000 and up) Additional onsite inspection • At least $1500 for residential and $2500 for commercial Higher cost of labor/business in NYC • Special equipment for NYC infrastructure NYPA management fee • 12.5% for NYPA projects

15. Barrier: Cost Cont. Rising Costs in NYC Average Installed PV Cost

16. Barrier: Cost Cont. Possible Explanations – Rising Costs NYC Global market factors • Silicon and panel shortage Relative investment in market • Larger market reduces costs and attracts business Number of installers • Economies of scale and competition

17. Recommendations

18. Recommendations for NYC • Funding • Ensure long-term, substantial support • Policy Structure • Craft policies specific to NYC infrastructure • Technical Barriers • Clarify and streamline • Cost • Provide alternative financing/incentives

19. Recommendation: Funding Explore increased funding under SBC III • Peak load management or low-income allocations Develop funding sources specific to NYC • Dedicated loan fund, surcharge, solar stock exchange Establish funding/mandates for City agencies • Mayor’s fund, PV goal, etc. Explore alternative financing • Performance contracting, 3rd party financing

20. Recommendation: Policy New York State Net Metering • Raise limit and expand to all customer classes Rebate Limit • Eliminate 50kW cap and identify additional funding source $/Watt rebates • Explore higher rebates to compensate for higher costs of business State Tax Incentives • Expand to all customer classes

21. Recommendation: Policy New York City New York City Tax Incentives • Explore NYC specific credits, exemptions, etc. Local Law 86 (LL86) • Connect to PV requirement Property Tax Exemption • Raise awareness of exemption potential

22. Recommendation: Technical Clarify technical limitations • Net metering, reverse relay Reduce administrative delays • Open dialogue, online tracking system Evaluate and recognize grid-side benefits • Peak load relief, delayed equipment replacement Remove redundant requirements • Manual disconnect, NRTL inspection

23. Recommendation: Cost Establish declining incentives • Substantial, long-term, consistent Explore bulk procurement • NYC and NYPA Lower NYPA’s management fee • Further encouraging public sector installations

24. Questions? Contact Information Lara Ettenson lettenson@yahoo.com www.csebcc.org