NYC and the Renewable Portfolio Standard Part II: The Rise of Solar

After a brief, unintentional hiatus, I am back to once again dive into those PSC reports. Though earlier this year I predicted 2010 would be the year for wind power, it seems in recent years solar has seen a huge increase in New York state. Back in 2006, allocated funding for Customer-Sited Tier (CST) projects through 2009 was supposed to be $45 million, of which a little over 30 percent ($13.8 million) would go to PV and 10 percent ($4.5 million) would go to small wind projects. Fuel cells and farm biogas would each get about 25 percent of the funds, and the remaining 10 percent was earmarked for “other” sources.

Fast forward to 2009. The total funding for CST projects from 2007 to 2009 actually came to $103 million. Now, there are a couple of discrepancies in the breakdown of what the money was spent on in the RPS Mid Course report (page 52 and 53 – it appears it could be the difference between what was budgeted versus what was actually spent), but solar definitely received the lion’s share of the funds. According to the expenditure table, over $81 million, or almost 80 percent, was spent on PV. The amount spent on wind? About $965,000 – less than 1 percent. The rest of the funds went to anaerobic digesters ($19 million) and fuel cells ($2 million).

The difference between spending in 2008 and 2009 is also staggering. A whopping $59 million went to solar projects in 2009, while just $22 million was spent on PV the year before. The amount of funding for other types of alternative energy sources differed from year to year, but the margins were much smaller. Interestingly, slightly less was spent on wind in 2009 than in 2008.

The PSC report sites a few reasons for the dramatic ballooning in spending on solar. First of all, PSC claims in early 2009 federal tax incentives for PV owners went up “significantly.” At first this doesn’t seem to be the case. The first federal tax credit, implemented in 2006 and valid through the end of 2007, was for 30 percent of the cost of the PV system. This was later extended through the end of 2008. The American Recovery and Reinvestment Act 2009 further extended the 30 percent tax break through 2016 – but the big difference there was that the new law eliminated the tax credit cap, which was previously $2,000. Considering a residential PV system could easily cost $30,000+ (and sometimes much more) before incentives in New York City, getting rid of the cap makes a huge difference.

The second factor contributing to the rise in solar in early 2009 was the announcement that NYSERDA would decrease its incentives by 25 percent starting February 1. This actually backfired, because after announcing the cut NYSERDA received $24 million worth of solar project proposals in two weeks. A similar rush occurred after a second planned cut in October.

The pattern of solar dominance seems set to continue, if the latest round of stop-gap RPS funding is any indication. In late January, PSC announced an additional $21 million for the program while it figures out what the heck they’re going to do with RPS moving forward. Of those funds, over half ($12 million) will go to solar – and a measly $300,000 is set aside for wind. Guess I may have to rethink my bold prediction on wind power.

One response to this post.

  1. […] I noted in my last post on RPS, PV receives far and away the largest portion of the NYSERDA funds, so it seems to me to be a […]

    Reply

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