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New York Relaunches Community Solar Initiatives with Expanded Opportunities for Developers

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New York Relaunches Community Solar Initiatives with Expanded Opportunities for Developers

June 2, 2023
New York is the country’s biggest market for community solar, with more than 1.5 GW already installed (enough to power more than 200,000 homes) and plans to double that by 2027.

Table of Contents

New York’s community solar incentives (all in one place)

 

NY-Sun, administered by NYSERDA, is the umbrella program for all of New York’s solar incentives. In October 2022, NYSERDA paused NY-Sun’s two main community solar programs – the Community Adder and Inclusive Community Solar Adder – in order to gather stakeholder feedback and make adjustments before reopening them. In this blog, our policy team breaks down the status of both adders and lays out the entire slate of opportunities for community solar development in New York.

NY-Sun offers eight active solar incentives, three available to all solar projects and five designed only for community solar.

  • Base Solar Incentive Dollar per watt rate for all of New York’s solar projects
  • Value of Distributed Energy Resources Tariff (VDER) Tariff rate at which energy production is compensated for distributed solar projects – the successor to Net Energy Metering (NEM)
  • Investment Tax Credit (ITC) 30% federal tax credit for solar systems that meet certain workforce requirements
  • Community Adder Additional incentive for the development of community solar farms with 10+ subscribers, labeled Community Distributed Generation (CDG) in NY-Sun
  • Inclusive Community Solar Adder (ICSA) Additional incentive for community solar farms that serve low- to moderate-income (LMI) households (< 80% area median income – or state, whichever is higher)
  • Community Benefit Adder Additional 10 cents per watt, only for ICSA-eligible projects that commit to delivering deeper community benefits
  • Remote Crediting Alternative option to CDG for projects with no more than 10 subscribers; focused on commercial customers
  • Solar for All Alternative option for low-income community solar, where customers are subscribed via their utility. Only available in certain locations and offers limited development capacity 

Below, you’ll find a breakdown of the opportunities specific to traditional community solar projects. If you’re interested in more information on the other bullets above, contact our Business Development and Policy team today.

History of the Community Adder and an updated dashboard

In 2019, when NYSERDA transitioned from NEM to VDER, it also introduced the Community Adder, the current incentive for developers to construct community solar projects. The Community Adder is awarded alongside the base incentive, which is paid out upon project completion.

When originally made available in 2019, the Community Adder was only for projects in Orange & Rockland and Central Hudson territories, but it expanded to National Grid, NYSEG, and RG&E in 2020. Today, the Community Adder is available in two separate blocks of funding: one for Upstate projects (all the aforementioned utilities) and one for Con Edison projects (in and around New York City). 

Before the Community Adder, NYSERDA offered two similar incentives: the Community Credit and Market Transition Credit. Both of those adders were fully disbursed to eligible projects by 2019, which is why NYSERDA introduced the Community Adder. Projects that have received either of the older incentives are not eligible for the Community Adder.

The Community Adder was put on hold in October 2022. One of the main reasons that NYSERDA announced the pause was the Inflation Reduction Act (IRA), which was signed into federal law last August. The IRA included a ten-year extension of the ITC and significant new ‘bonus’ tax credits with varying criteria. NYSERDA wanted to ensure that New York’s community solar incentives would successfully coexist with the IRA’s tax credits. 

However, even after more than eight months since the IRA’s passage, the industry still has many unanswered questions about the implementation of these bonus credits. NYSERDA decided not to wait any longer, and on April 18, made the Community Adder available again. The Adder now includes new funding for 800MW of community solar projects in the Upstate region. You can find more information about the incentive rates and available capacity for both Upstate and Con Edison projects on this dashboard from NYSERDA

What to know about low-income community solar in New York: ICSA and Community Benefit projects

Two years after NYSERDA launched the Community Adder, it added an additional incentive available for community solar projects that specifically serve LMI households: the ICSA. The first round of the ICSA launched in June 2021 and allocated $/watt incentives to over 400MW of projects, each of which delivered at least 20% of capacity to ICSA-eligible subscribers. 

NYSERDA was always expected to release a second round of the ICSA but put those plans on hold back in October when it paused the Community Adder. Reviewing the ICSA was a primary focus for NYSERDA during the pause, because the IRA includes a 20% bonus tax credit for projects that serve over 50% of benefits to low-income communities. The category is called Qualified Low-income Economic Benefit Projects and it’s designed to incentivize development of solar projects for low-income customers, much like the ICSA. NYSERDA decided that, because the programs are striving for the same goal, projects that receive the IRA’s low-income bonus ITC will have to forfeit the ICSA incentive; they can only receive one or the other. For more on the status of all of the IRA’s bonus tax credits, check out our latest blog recapping federal guidance from February. 

NYSERDA is expected to reopen the ICSA any day now, which will include additional funding for LMI community solar projects in the Upstate region and Con Edison territory. More details about eligibility, available capacity, and incentive rates will be confirmed upon official reopening, but here are two of the biggest changes we’re expecting based on the NYSERDA proposal (which could still change before final rules are issued) for the ICSA’s second round:

  1. For round two, eligible subscribers will have to make up at least 40% of each project’s capacity. The ICSA adder applies only to that capacity, not the whole project. Project owners can raise the ICSA portion to 60% and receive the adder for all that capacity. Beyond 60%, it depends on how much is left in the bucket of additional funds reserved for over-performing projects. Those funds will be disbursed to projects at the ICSA rate until they are gone. No matter what percentage the ICSA portion receives, 50% of that capacity must specifically be for residential subscribers.
  2. Round two will also require project owners to include a contractual agreement with the subscription provider in applications, which means that they can lock in their preferred provider right from the start. In contrast, round one allowed applicants to list multiple providers in the application phase and then determine which to go with after capacity was awarded. As an experienced subscription acquisition and management provider in New York, Solstice can help developers and project owners bring subscription opportunities to communities immediately upon award of ICSA capacity.

The Community Benefit adder is an additional opportunity – for ICSA projects only – that raises the incentive by 10 cents/watt. These projects receive ICSA capacity; the only difference is they get that extra 10 cents. To receive the adder, a project must commit to a greater discount for subscribers and deeper benefits for the community. Specific commitments can be found in the new ICSA guide, and our team at Solstice is excited to dig in and help you design strategies to meet them.

Community engagement is key to successful equity-oriented projects

Community engagement plays a crucial role in promoting successful equity-oriented projects. By partnering with trusted community organizations like the New York City Housing Authority (NYCHA) and the Urban Homesteading Assistance Board, Solstice has had an incredible impact for our development partners in New York. Our efforts have focused on delivering the benefits of clean energy to those who are most in need, with 25% of our subscribers in the state belonging to low- and moderate-income families.

In addition to bill savings, our team prioritizes the direct benefits for residents in nearby communities. This approach not only fosters local support for your development but also enables you to meet the criteria for the Community Benefit adder. For instance, our collaboration on NYCHA projects involved supporting workforce development programs that offered community members opportunities in solar installation, outreach, and subscription enrollment positions.

Solstice currently maintains partnerships with over 25 active organizations in New York, ranging from small businesses and art studios to municipalities and housing authorities. Our dedication lies in truly becoming part of the communities we serve. To exemplify this commitment, we have contributed more than $60,000 to support the initiatives of our New York community partners, facilitating their access to energy efficiency upgrades and ensuring the continued functioning of their buildings.

If you are interested in exploring the diverse incentives available for community solar in New York, our Business Development and Policy team is here to provide comprehensive guidance. We are ready to assist you at every step of the process, including detailed information on project eligibility and application procedures. Feel free to reach out to us to learn more about the topics mentioned above.

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