It is difficult to argue against the notion that a solar revolution is currently underway in the U.S. The price for a solar module has dropped 75% since the year 2000, and solar photovoltaic (PV) installations have been expanding at record-breaking levels, with the fourth quarter of 2014 being the second best quarter ever in terms of new PV installations. At the close of 2014, the U.S. reached 18.3 GW of installed capacity of solar PV and 1.7 GW of Concentrated Solar Power (CSP). While these numbers signal a (literally) bright future for the solar PV market and progress for the field of renewables as a whole, the movement could and must be further buttressed through regulatory changes that allow these solar systems to flourish. Across the Atlantic, Germany has done precisely that. Indeed, soft costs, which include any costs (such as permitting and processing) not associated with the actual hardware module, account for as much as 64% of total installed solar system costs. In Germany in 2012, 47% of the total installed 73 GW of renewable energy capacity was owned by energy cooperatives and individuals. There are about 1.4 million PV systems installed nationwide, a big contributor to the country’s whopping 35 GW of installed solar capacity.
In Germany, the transformation of the power sector away from nuclear energy and other conventional fuels to renewable energy has been both a top-down and bottom-up movement. The contribution of both energy cooperatives and individuals to this bottom-up movement through favorable laws and regulations cannot be understated. The Renewable Energy Sources Act, which started with the Feed in Tariff Law in 1991, has ensured that such clean distributed projects are guaranteed grid access and connectivity, and also that they receive grid priority over conventional fuels. Connectivity laws are easily understood, straightforward, and relatively unproblematic. The U.S. on the other hand, has a flurry of net metering laws and a series of legal battles that could detract utilities from the promise land of profit-load growth. In New York, net metering laws, which allow customers to measure how much they are producing and selling back to the grid, are currently limited and have certain restrictions that create a murky regulatory framework. For example, renewable energy credits distributed by the state for eligible projects cannot be shared among different parties, making it difficult to share financial incentives or benefits for the project. This creates barriers to exactly the kind of community-owned assets that Germany has had so much success with.
The Reforming the Energy Vision approach currently underway in New York and led by the Public Service Commission (PSC) is being lauded for its progressive goals that seek to create regulatory changes that will enable distributed generation and customer side solutions to play a much greater role. The PSC sees this as central to a stable and smarter future grid and as a tool for dealing with grid congestion and peak demand. However, if it truly wants to achieve this, it must tackle the barriers to bottom-up clean energy growth and empower customers to play a larger role in their energy procurement. Such changes should include streamlining the permitting process for distributed generation projects, clarifying net-metering rules and removing barriers to community-owned assets, and mandating more data availability and transparency from the state’s utilities in order to level the playing field for all actors in the energy space. Regulatory uncertainty creates legal issues, riskier investments, and procedural backlogs, and through reform, New York can move one step closer to a greener and more stable energy future that the REV proceedings have so prolifically envisioned.
By: Marcela Miceli
New York University, Center for Global Affairs
M.S. in Global Affairs
