On this first day of summer 2010--the day when we receive the longest number of daylight hours each year--the fate of the (bipartisan) New York State Solar Industry Development and Jobs Act of 2010 hangs in the balance. It all comes down to Albany lawmakers, who now face the decision to either advance New York's economy with the opportunity to create over 22,000 new clean energy jobs and $20 billion in economic development or maintain the status quo, letting nearby states and other countries moving solar energy development forward in the ever expanding clean energy economy.
What's the hold up?
In the 11th hour of the legislative session, some investor-owned utilities issued an opposition letter to the New York Solar Industry Development and Jobs Act. The letter is riddled with inaccuracies and worst-case-scenario hyperbole, presents unexplained and false or misleading figures as fact, and demonstrates a basic lack of understanding of how the bill works. Solar advocates (including the NRDC) have spent the last four months in open and constructive dialogue with all stakeholders, and our message that follows is intended to set the record straight. Below are a few of the major points offered up in the utility opposition memo ('fiction') with our response immediately following ('the real story'):
Fiction: The bill will dramatically increase energy costs borne by consumers and will further guarantee that New York remains a high cost state.
The Real Story: The utilities that have benefited while New York consumers have paid some of the highest electricity prices in the region are worried that customers may be given an option to control their own energy costs. The bill requires New York utilities and other electricity suppliers to make a modest investment today in a stable-priced, clean energy resource as a hedge against volatile and ever-rising fossil fuel costs that are routinely passed on by utilities to their customers. Rather than the problem, greater investment in New York’s abundant solar resource is actually part of the solution to breaking the cycle of double-digit utility rate increases. Solar electricity production is well-matched with New York’s summer peak demand needs, displacing the most expensive (and dirty) power supply. Moreover, solar generation can be located in the most constrained areas of New York’s grid, relieving congestion and avoiding expensive distribution system upgrades. Contrary to the utilities’ claims, the incentives required to bring increasing amounts of solar energy on-line are small, and decline over time. A rigorous economic analysis by CrossBorder Energy reveals that, over the life of the program, the average household monthly bill increase is less than the cost of a postage stamp (39¢/mo.), and never exceeds $1.00. This equates to less than one percent of the expected economy-wide total spending on electricity over the 14-year life of the program, delivering real consumer savings by cutting into the projected ten percent increase in fuel and utility grid costs over the same time period.1 The utilities are throwing around unsubstantiated claims of program cost impacts in a last minute scare campaign.
Fiction: The bill will discourage further economic development in New York State.
The Real Story: The New York Solar Industry Development and Jobs Act will provide a lifeline to New York’s struggling businesses by enabling them to control a portion of their energy costs with a predictably-priced and reliable on-site generation source. By taking advantage of the market-based incentives offered under this bill, coupled with already available federal tax benefits and net metering, solar developers can for the first time offer New York businesses long-term contracts at rates that are at or below their current retail rates. These energy savings will continue to grow over time, allowing local businesses to reinvest their precious capital in new equipment and the skilled employees they need to remain competitive – rather than be lost to ever-increasing energy bills.
Further, the bill will be an engine for economic activity, leveraging billions of dollars of private capital investment in New York’s nascent green economy. Solar creates more jobs per megawatt-hour produced than any other energy technology. The majority (approximately 75%) of solar jobs are related to construction and installation, representing local jobs that cannot be outsourced. The Vote Solar Initiative estimates that A.11004a/S.7093b will create approximately 22,000 new jobs of this type across the solar value chain. These are high quality jobs representing a broad range of education requirements, salary levels and fields. The remaining 25% of solar jobs are related to manufacturing, an additional job creation opportunity that New York can expect to harness by building a strong in-state market. Time and again, major manufactures from the U.S. and abroad make their factory site location decisions based on the size and predictability of the in-state solar market. In short, implementing strong policies like the Solar Jobs Act is a tried-and-true formula to attract manufacturing jobs and R&D partnership with local universities.
Fiction: The renewable energy programs that already exist will provide sufficient incentives to encourage solar energy development.
The Real Story: New York is lagging behind other states throughout the Northeast in its support of solar energy (see chart below). Unless the legislature passes A.11004a/S.7093b, the state risks falling even further behind its neighbors in the race to develop a vibrant new economy built around clean energy technology.
Figure 1: Existing State Solar Goals (in Megawatts)
Despite having a tremendous in-state resource potential and some of the highest electricity prices in the United States – two of the most important factors in determining solar market viability – New York’s solar industry has too long been consigned to niche market status. The current solar incentive program administered by the Public Service Commission continues to be so episodic, poorly funded and limited in scope that only a handful of state residences and businesses will ever be able to participate. Without this bill, large commercial, industrial and public sector customer-sited applications, as well as utility-scale grid-connected projects – ubiquitous just across the Hudson River – will remain all but non-existent in New York State.
Fiction: The bill will create a duplicative and complicated new renewable program, further straining the administrative resources of the Public Service Commission.
The Real Story: The bill establishes a market-based solar incentive program that is already widely and successfully implemented across the Northeast region. It relies on competitive procurement processes for the purchase of renewable energy credits from solar system owners and developers, and it is well within the existing competencies of the utilities, LIPA and NYPA. Further, the bill is silent on the relationship between the mandated annual solar deployment targets and the existing Renewable Portfolio Standard administered by the Public Service Commission. It is within the PSC’s discretion to determine that the solar targets will be achieved in furtherance of the existing state policy that 30% of all electricity requirements be met through renewable energy sources. Thus, rather than a duplicative program, the solar carve-out is clearly a complementary mechanism that fills an existing gap in the state’s renewable energy policies. Other states have found that administering a solar credits program such as the one envisioned in the bill actually requires less administrative support than programs where prices for incentives must be determined by administrative agencies such as the Public Service Commission.
Next Step
Lawmakers in Albany need to know that this is an important Bill for the future of New York's economy--providing the right framework and incentives to build a world-class solar industry right here in the Empire State--with benefits including tens of thousands of new job opportunities, consumer energy savings and helping to clean our environment. Please go here to pass this message along to your local New York State Assembly member and Senator.