The 2015 New York State Energy Plan calls for renewable sources, which today provide about 11 percent of the state’s energy, to meet as much as 40 percent of energy needs by 2030. Deploying renewable energy on this scale, via wind, hydro, geothermal and more, requires upgraded distribution systems. But solar, which could make up a considerable amount of the load, does not since its distribution does not have to travel long distances on power lines.
Spurred by escalating energy costs, dropping prices for solar energy systems and government incentives, New Yorkers already have installed enough solar energy systems to generate enough electricity to meet the needs of at least 51,000 homes, according to a report by the New York State Energy Research and Development Authority, or NYSERDA. Statewide, the solar energy capacity quadrupled from 2011 to the end of last year.
The vast majority of that solar activity is downstate, however, where energy costs are higher. According to NYSERDA, solar energy generation tripled in Western New York over the last three years, but the solar systems in the area’s eight counties represent just 5.5 percent of the installations statewide.
Economic incentives — on both the government and personal level — make solar more attractive than ever for homeowners and commercial building owners.
Time to recoup costs
According to online solar marketplace Energy Sage, the average return on investment (ROI) time for a solar installation in New York state is now 7 years. That is half of the time it was just a few years ago.
The reduction is due to Solar Tax incentives in New York, combined with reductions in the cost for panels and installation as the industry has matured. The cost for new solar energy systems fell approximately 8 percent last year and a whopping 49 percent since 2010, according to the Solar Energy Industries Association.
Tax incentives in New York
The New York Solar Tax Credit can save you up to 25 percent (with a maximum of $5,000) of the cost of a solar system installed in the state. The system has to be installed by an approved solar contractor, like RGS Energy, and the building owner must have a tax liability in New York. The credit is subtracted directly from the tax liability, dollar for dollar. In addition, if the credits exceed the taxes due, any excess credits can be rolled over for up to five years. Furthermore, those who lease a solar system can claim credits for up to 15 years, depending on the terms of the deal.
Under the Megawatt Block Incentive for residential and smaller commercial solar projects, the state is divided into three geographic or utility network districts: Con Edison territory (NYC and Westchester County), Long Island and Upstate. In the three utility districts, the Megawatt Block Incentive subsidizes the costs of a solar energy system installation based on how big the solar energy system is and how much solar energy is already being produced in the area. There are caps in place by geographic area and amount of solar available from others. This benefit also requires installation by a state certified contractor.
Net metering allows solar system owners who are tied to the grid to even out the peaks and valleys in their electricity production by buying from and selling to the power grid. If the solar panels installed are producing more electricity than the owner or residents need, the excess is fed into the utility grid and the meter actually runs in reverse. So, a utility bill could wind up showing a credit based on the net number of kilowatt-hours given back to the grid. Through net-metering, homeowners with solar PV systems sized to generate more electricity than they regularly use further recoup their installation costs. In addition, since the credits cannot be transferred into cash, they can be gifted to another home’s bill or even the local school. There is a maximum of how much energy can be generated and sold back; PV systems may not exceed 110 percent of the building’s historical aggregated 12-month grid consumption.
Sales tax adds a considerable amount to the price of purchasing solar panels or system components. So, New York enacted legislation in July 2005 exempting residential solar energy systems from sales and compensating use taxes. The exemption was extended to nonresidential systems in 2012 and to systems owned by third parties in 2015.
Renewable energy incentives in NY
The renewable energy plan introduced in 2015 calls for added generation from solar, wind, hydro power, geothermal and biomass. Of those, solar is one that could provide significant energy in a short period of time. Solar does not require large scale efforts. Besides placing solar panels on roof tops, there is the possibility of small neighborhood solar arrays that are jointly accessed and shared. This type of distributed renewable generation, or microgrids, could make the entire electric system more efficient and less likely to suffer large-scale outages since the power recipients would not rely on the large transmission lines to receive their electricity.
To support the renewable energy market, the state has goals set for how much renewable electricity must be purchased, which will also ensure use of renewable energy is rewarded.
Additionally, in April 2014, the governor committed nearly $1 billion to NY-Sun, the state’s solar initiative, which will expand deployment of solar capacity and transform the state’s solar industry to a sustainable, subsidy-free sector. It is a scale-up project aimed at making the state’s solar industry self-sufficient, no longer requiring government subsidies as the cost of solar becomes comparable to the cost of other forms of electricity from the grid.
RGS Energy can help you understand all of the incentives available to New Yorkers who install solar energy systems. For more information or for an installation quote, go to RGSEnergy.com.