As a follower of community solar in New York State, you’re looking for good news. After most projects became stalled while waiting for new regulations to be announced, the industry has been looking for new information from the New York Public Service Commission (PSC).
Last month, that news came. In this blog post we’re going to look at one important change that should help community solar in New York State to take off: VDER or Value of Distributed Energy Resources.
VDER is a new model to evaluate proposed solar projects and determine the cost of the power they will generate.
What is it replacing? Net metering.
Net metering is a way of billing solar customers for only the net amount of energy they consume from the grid. For example, if you have solar panels on your home which send 1 kilowatt hour to the grid during the day, and then you use 2 kilowatt hours from the grid at night, under net metering you are simply charged for one kilowatt hour by the electric company.
Community solar uses a method called virtual net metering, which treats your panels in the community project as if they were on your roof. So when your portion of the project sends 1 kilowatt hour to the grid, it’s deducted from the electric bill for your house. Those deductions are called solar credits.
What’s the problem with net metering?
Essentially, it’s a blunt instrument. As Utility Dive puts it, the issue is that although “net metering is a simple and straightforward way to compensate distributed resources, it is not effective in locating resources where they can do the most good. When every project gets the same rate, the incentive is simply to build projects where it’s cheapest, regardless of the benefits or costs to the grid.”
The goal of New York’s Reforming Energy Vision (REV) is to build a clean, resilient, and more affordable energy system for all New Yorkers. The New York Public Service Commission believes that a new rate structure to replace net metering is necessary to ensure that new solar projects provide the most benefits to the grid—for example, by providing a mechanism to build solar where there is existing infrastructure to accommodate new projects.
What is VDER?
The Value of Distributed Energy Resources (VDER) model is a new way of valuing distributed generation (like solar) based on a whole set of criteria. According to the Natural Resources Defense Council (NRDC), these criteria include:
- value of the electricity generated,
- avoided carbon and other environmental benefits,
- capacity value (the ability to address the needs of the bulk electricity system at times of peak electricity demand), and
- distribution value (the ability to offset the need for infrastructure like substations and local power lines, which would otherwise be necessary to transmit electricity from power plants located farther from customers).
Developers need to know how much solar power is going to be worth before they can work out the economics for a new solar project. With the announcement of the VDER structure, we are one step closer to community solar in New York State. The next step will involve determining which proposed projects will best fit this new way of valuing solar power.
Stick with Our Power, your connection to community solar, to be among the first to know when new projects move forward and find out if you can become a community solar subscriber.