Center for R e s e a r c h , R e g i o n a l e D u c a t i o n a n d O u t r e a c h State univer s ity of new yor k a t n e w p a lt z

A Solar : Toward Further Progress Discussion Brief #6 – Summer 2011

Patrice Courtney Strong and Kathryn McKeon The solar technology industry has taken root in the Hudson Valley. Now we must build upon this > investment.

At The Solar Energy Consortium, Pat Courtney Strong serves as vice president, udson Valley homeowners are experts Industry Attraction. In this capacity she is charged with attracting businesses to on rising energy prices; so are Hudson TSEC’s renewable energy manufacturing H cluster. Pat also provides marketing and Valley motorists. The average cost of education outreach for the State Energy Research & Development heating oil has increased since Authority (NYSERDA) under the En- 35% 2010. ergy Smart Communities program. She is president of the Business Alliance of A gallon of regular unleaded gas that Kingston (NY). This group of several hundred businesses is working on re- cost $2.84 at the pump a year ago in the vitalization through the national Main Street program, energy efficiency and southern counties of the valley went for renewable energy projects, and forma- tion of a Business Improvement District. $3.93 in the summer of 2011 (up 38.3%). Renewable Energy Economist Katie McKeon has been with The Solar En- ergy Consortium for two years. Katie As these costs continue to rise natural gas 21%, and coal 21% works with her co-workers to promote we should count ourselves for- of our total energy consump- solar manufacturing business growth and tunate that many have been hard tion. Meanwhile, energy from all solar technology education and outreach to the community. She is a business advi- at work in our region developing renewables together produced sor to the SUNY New Paltz Solar Car solar energy — a key renewable only 8% of our nation’s needed Team and works on various projects to promote the economic development of alternative — not just to meet energy, slightly less than nuclear a solar manufacturing industry in New our energy needs but to build a power (9%). York. Katie has a bachelor’s degree in Economics from Siena College. new supporting element of a vi- tal regional economy. The solar The primary sources of energy technology industry has taken in 2009 in New York State were root in the Hudson Valley. Now petroleum (36%) and natural we must build upon this invest- gas (31%), with nuclear provid- ment with smart private sector ing 12%, hydropower 7%, coal initiatives and public sector poli- 4% and others (4%) provid- cies to ensure that it continues to ing the balance. However, for pay off for years to come. electricity alone in New York, there is little reliance on petro- The Big Picture leum (2%). The key sources In 2010, total energy consumed are natural gas (26%), nuclear in the United States was 97.9 (27%) and hydro (18%), with quadrillion British Thermal coal providing only 8%. Units (Btu). (To put this in per- spective, burning one barrel of Reliance on non-renewable crude oil produces about sources is a problem precisely 6 million Btu’s.) The U.S. relies because they are non-renewable; on non-renewable sources to sooner or later, they will run meet the preponderance of out. Long-term thinking sug- its national demand: in 2009, gests that alternatives must be petroleum accounted for 37%, developed now, well before we

2 (DEC) released a draft report New York State Energy Sources — 2009 which included recommenda- tions for regulating fracking. 4% 4% Under the provisions of the DEC Petroleum 6% draft, companies must release Natural Gas detailed information on their 7% process, including the chemicals 36% Nuclear they use. Permits will not be granted on state property or near Hydro aquifers, public water supplies, 12% or private wells and in 100-year Imported floodplains. Nor will fracking Coal be permitted in the Syracuse and NYC watersheds. Given recent Other layoffs at DEC, opponents ques- 31% tion the state agency’s ability to adequately monitor and regulate Source: 2009 New York State Energy. NYSERDA Fast Facts. this permitting process and are in deep crisis. But there are in commercial quantities will fracking activity. No permits other, very practical short-term require hydraulic fracturing will be granted until after the problems associated with non- (“fracking”), forcing the gas to public comment period on the renewable energy sources. the surface by pumping mil- draft, which is expected to lions of gallons of water, sand, continue throughout the fall and The cost of crude oil on interna- and chemicals into horizontal winter of this year. tional markets hovered around wells a mile or more beneath $100/barrel last year, peaking the ground. This is an enormous Coal is also abundant in the during the winter at $114/barrel. regional and statewide issue. U.S., though not in New York. This was the driver of regional Clean water is an abundant, im- However, air pollution concerns home heating oil and gasoline portant resource in the Hudson have led to public policy in our prices. Growing demand for oil Valley, relied upon not only to state limiting the use of coal in developing nations, coupled meet local needs but also those for energy production. In July with occasional political turmoil of . The value of of 2011 the EPA finalized new in oil-producing countries, the natural gas we may produce national standards for the emis- makes supply unpredictable and in this way to meet energy needs sion of mercury and other toxic puts upward pressure on prices. must be balanced against the po- pollutants from coal-burning When the cost of oil increases, tential contamination of ground power plants. These dramati- so does the cost of goods; most water from this process. In states cally increased protections items need to be shipped over- that have already approved against sulfur dioxide, nitrogen seas, flown to importing coun- the process, fracking has been oxide and other particulates. tries or trucked long distances. implicated in the contamination In her earlier announcement of Rising transportation costs of water wells and rivers. In the proposal, EPA administrator for suppliers are passed along June 2011, the federal Environ- Lisa P. Jackson emphasized that to consumers. And of course, mental Protection Agency (EPA) control of these toxic emissions national security is at risk when began a study of the linkages of would prevent thousands of control of the energy resources fracking to water pollution in deaths and tens of thousands of upon which we greatly rely is , North Dakota, Pennsyl- cases of disease a year. not in our hands. vania, Colorado, and Louisiana. In November 2010, New York Global warming is another com- There is an abundance of natural adopted a moratorium on drill- pelling environmental concern. gas in the United States, a con- ing, but in July 2011 Governor The U.S. will require even more siderable amount of which is in Cuomo lifted the moratorium energy as our economy contin- the Marcellus Shale formation and the state Department of ues to recover and grow. Greater in our region. But producing it Environmental Conservation consumption of non-renewables

3 Many in the U.S. are questioning the safety of our current nuclear facilities and are increasingly skeptical of plans to build more.

produces increased carbon the United States, four-fifths of ment of large-scale solar and emissions — a leading cause American electricity — twice wind power plants by munici- of climate change. Renewable as much as today — must be palities, school systems, public power generation offers power generated from clean energy agencies, and energy project with significantly lower emis- sources by the year 2035.” developers. sion of carbon dioxide. The New York State Energy These legislative actions are in The potential of nuclear energy Plan, last published in 2009, is accord with pledges made by has received renewed attention scheduled for updating by 2013. Governor Andrew Cuomo to in recent years. Some nations Goals include: improving the invigorate the state’s commit- have made very heavy com- reliability of the state’s energy ment to developing renewable mitments to nuclear power. In systems; insulating consum- energy sources as an economic France, for example, almost ers from volatility in market development strategy. He said: 75% of energy is provided from prices; reducing the overall “New York spends approxi- this source. However, waste cost of energy; and minimizing mately $65 billion annually on disposal remains an intractable public health and environmen- energy, of which 53% or close problem. Moreover, with the tal impacts, in particular those to $35 billion leaves the state recent tsunami in Japan and the related to climate change. The to pay for energy imports. The nuclear disaster at Fukushima plan also identifies policies and strategy of reducing energy which followed, the use of programs that, if implemented, costs and our dependence on nuclear technology for energy are designed to maximize out-of-state sources of energy production world-wide is under cost-effective energy efficiency provides many opportunities to increased scrutiny. Many in the and conservation activities to create new jobs.” U.S. are questioning the safety meet projected energy demand of our current nuclear facilities, growth. Renewable Alternatives and and are increasingly skeptical the Solar Option of plans to build more. In New The New York State Legislature In the U.S., hydropower is York, Governor Andrew Cuomo in 2011 took important action the most utilized renewable has strongly voiced opposition related to the state’s energy resource: it is the source of 35% to the continued operation of economy and its sustainability. of all renewable energy used. the Indian Point nuclear facility While the failure to pass the New York State gets 18.1% of in Westchester County. NY Solar Industry Develop- its power from hydro. Our lead- ment and Jobs Act (Englebright ing position among the states The Commitment to A5713) was a disappointment in renewable energy use results Renewable Energy for the Hudson Valley region, from our early development of The argument for the develop- the Power NY legislation did hydropower. ment of renewable resources pass (A8510, Chapter Law to provide us with safe, secure, 388 of 2011). It includes a Wind power is a clean, reliable reliable, and clean energy alter- new power plant siting pro- and, when properly sited, effi- natives is unassailable. Presi- cess, establishes a financing cient renewable energy technol- dent Barack Obama has made mechanism for a comprehen- ogy. Wind energy deployment it a national goal to reduce the sive energy-efficiency retrofit is increasing in New York State renewable/non-renewable en- program, and includes a solar and is supported by NYSER- ergy source ratio. On March 30, study provision. Additionally, DA’s Renewable Portfolio Stan- 2011 at Georgetown University net metering legislation has dards, which provide financial he said, “To assure a viable, been signed into law, provid- incentives for turbine installa- prosperous, secure future for ing incentives for the deploy- tion. This program has already

4 Consider this: During the 2003 Northeast blackout that caused $8 billion in economic losses, as little as 500 MW of solar PV deployed in the Midwest and Northeast could have filled the need.

supported the construction and gies have been on a significant coincides with peak energy de- operation of 1,175 MW of wind downward trend, from approxi- manded by utility customers, al- power and has projects totaling mately $8/watt in 2000 to $5/ lowing solar energy to directly an additional 281 MW in the watt (for residential systems) reduce a key strain on the grid. planning stage. today. In some markets, when solar energy is compared to the As Joe Romm has pointed out, According to the U.S. Depart- energy produced by peak power the beauty of solar photovolta- ment of Energy, geothermal plants, grid parity has already ics (PV) is that its availabil- heat pumps use a quarter to a been achieved. The U.S. De- ity matches up perfectly with half less energy than conven- partment of Energy, which has demand on the sunniest summer tional systems. They may re- made lowering the cost of solar days of the year. Richard Perez, duce heating costs by 50–70% technology a national priority, an energy expert from the and cooling costs by 20–40%. projects a further three-quarters University of Albany, put it However, such systems are reduction over the next twenty succinctly: “We should be using expensive, carrying a 6–12 year years in the cost of producing a the source of the problem to payback period. Moreover, kilowatt hour of solar power. create the solution.” because geothermal production of electricity requires subter- Solar power has significant ben- Consider this: during the 2003 ranean temperatures of at least efits. One of utility companies’ Northeast blackout that caused 400 degrees, their use is often largest concerns is black- and $8 billion in economic losses, not practical in the Northeast, brown-outs caused by high de- as little as 500 MW of solar PV where great depth is required mand on the system. Drawing deployed in the Midwest and to reach these temperatures. upon experience in California, Northeast could have filled the Deployment in New York has solar power peak generation need. therefore been slow; incentives remain necessary. NYSERDA Projected Cost of Solar Power (in cents per kWh) reports 63 projects completed since its program began in $0.25 Solar eld generation 1999, with another 46 in the planning stage. Residential generation $0.20 Solar energy for residential use is currently more expensive than these other technologies, $0.15 with longer payback periods for investment. As solar technology advances, its cost is expected to $0.10 grow closer to achieving “grid parity”, that is, the cost of creat- ing solar energy will approach $0.05 equivalence to the cost of en- ergy from non-renewable sourc- es. In fact, the installation costs $0.00 associated with solar technolo- 2009 2012 2015 2018 2021 2024 2027 2030

Source: White House. Blue Print for a Secure Energy Future, March 2011.

5 Solar energy can be produced of buildings in the city “could noted the national tendency of anywhere in the U.S. where meet 49.7% of the current “going from shock to trance sunlight is unobstructed. As estimated daytime peak demand on the issue of energy security, solar cells become more ef- and about 14% of the city’s rushing to propose action when ficient, residential system size total annual electricity use.” gas prices rise, and then hitting will decrease. When coupled While all renewable technolo- the snooze button when they with efficient energy storage gies will play a necessary role fall again.” technologies (still in devel- in the transition away from opment), solar systems will fossil fuels, it is clear that solar There is an important economic become an even more useful holds great promise for making development side to this equa- asset to the power grid. As solar a major contribution. tion as well. Governor Cuomo deployment increases, domestic has encouraged and supported manufacturing of solar technol- The Market Barriers to a regional approach to renew- ogy will also increase, helping Change ing the state’s economy and has to revitalize our economy and While there is a push towards identified multiple facets of the provide jobs for our citizens. renewable energy consumption solar industry in the Hudson and away from fossil fuel reli- Valley for particular focus. Solar technologies are suit- ance, large-scale realignment While still governor-elect, he able for both rural and urban still faces substantial obstacles. wrote of his intention to: environments. A recent study A lack of consistency in public “take advantage of a budding by a City University of New commitment to change is driven solar energy industry in the York research team shows that by the volatility of prices for state — from small companies under typical weather condi- non-renewables. President like Solartech Renewables in tions, panels placed on the roofs Obama put it best when he the Town of Ulster that plans

6 In an environment of intense foreign competition, TSEC works with local and state agencies to help foster companies’ growth in the Hudson Valley solar industry cluster, promoting business sustainability.

to create 100 new jobs there Industry Partners (proportion of total) within the year and as many as 300 more over the next PV Cell five years — to solar energy Manufacturer research backed by some of the Other PV Module Manufacturer state’s most prominent research Geothermal PV Equipment universities.” Manufacturer Solar Appliances TSEC and the Hudson Valley Solar Cluster PV Materials The work of The Solar Energy Solar Thermal Consortium (TSEC) has been Building E ciency critical to the creation of the System Integrator solar manufacturing cluster in LED Lighting our region. With the support of Battery Developer Congressman Maurice Hinchey, TSEC began as an all-volunteer Source: TSEC staff of technology executives regional economies that begin competition, TSEC works with in the summer of 2007. It has to accrue comparatively early in local and state agencies to help become a state and federally their development. The syner- foster companies’ growth in the funded non-profit recognized gies such clusters engender Hudson Valley solar industry by the National Renewable increase the pace of innova- cluster, promoting business Energy Laboratory as an tion and productivity, while sustainability. TSEC provides industry-led consortium work- boosting employment. They can all of its partners with technical, ing towards the advancement create new industrial sectors operating, and business support of solar manufacturing, one of while strengthening older ones, to counter the temptation for only eighteen such consortia and focus economic policies on companies to move outside the in the world. The consortium’s critical business interactions. region. objectives include: advancing solar innovations, creating solar TSEC works closely with 95+ The Hudson Valley has a solutions, attracting solar-relat- industry partners in areas from history of involvement in ed manufacturing to New York, raw materials to system aggre- semiconductor research and supporting the dissemination gation and installation, estab- manufacturing. The consequent and adoption of advances in lishing a supply chain within availability of infrastructure and solar technology, and delivering the state. TSEC estimates that technical talent, combined with solar outreach and education to these efforts helped create TSEC’s industry support and the community. nearly 600 manufacturing focused federal and local eco- jobs since its inception. In an nomic development efforts, has Industry clusters provide a environment of intense foreign resulted in the establishment number of benefits to local and

Solar Supply Chain

Materials Equipment Cells Modules Balance of Installations Systems & Appliances

Source: Lux Research

7 It is important to the success of the industry that solar energy tech- nology purchased in the United States is manufactured here, as well.

of a vital and growing photo- project teams. Sematech and allows the owner of commercial voltaic manufacturing industry the College of Nanoscale solar property to receive a cluster in our region. Science and Engineering 30% grant in lieu of taking the (CNSE) in Albany, along with solar Investment Tax Credit Current Policy: National their university and industrial (ITC). The ITC functions as a and State partners, received PVMI 30% uncapped tax credit for residential solar systems under National Policies grants. Recently, the DOE also created the SunShot Initiative, Section 25D and commercial Over the past decade, the U.S. a $27 million program aimed solar systems under Section 48 Department of Energy (DOE) at making solar technologies of the Internal Revenue Code. has invested more than $1 bil- more cost-competitive. The The ITC is in effect through lion to pursue an integrated set initiative’s goal is to lower the December 31, 2016. Since its of research and development cost of solar energy systems inception as part of the ARRA, investments to advance solar 75% by 2020. the program has funded the energy technologies and bring deployment of approximately down the cost of solar energy The 2009 American Recovery 1100 projects in 42 states (both systems. Innovations in both and Reinvestment Act (ARRA) solar electric and solar thermal) science and technology have included a competitive tax cred- and supported the creation of helped reduce solar energy it for advanced energy manu- thousands of jobs and billions costs by more than 60% since facturing projects. New York in investment, it facilitated 1995. The DOE has worked recipients included Brookhaven the near-doubling of the solar closely with industry in a wide Science Associates, General industry in 2010. More than variety of public-private part- Electric Company, City Uni- 200 New York State companies nerships to capitalize on these versity of New York (CUNY), have participated in this federal investments. and Columbia University. The program, including companies program proved immediately in Newburgh, Fishkill, Hyde Commercialization and successful and its cap of $2.3 Park and Saugerties. The TGP Development Incentives billion was rapidly reached, has been extended until 2012. The DOE has awarded leaving more than $5 billion in $50 million to support the eligible applications unfunded. Creating Demand Photovoltaic Incubator Project, These unfunded applications It is important to the success of aimed at accelerating the represent manufacturers ready the industry that solar energy commercialization timeline to break ground once funding is technology purchased in the for promising technologies. received. A request for an addi- United States is manufactured This funding leveraged $1.3 tional $5 billion was included in here, as well. Using a national billion in private investments, President Obama’s Fiscal Year security rationale, President delivering a 24 to 1 private 2012 budget proposal. Obama recently signed into law to public investment ratio a provision that requires solar for American taxpayers. The Startup Funding The DOE energy panels purchased by the Photovoltaic Manufacturing also has a loan guarantee Department of Defense to be Initiative (PVMI), launched program, geared towards made in America. in 2011, supports accelerated larger-scale projects (not small development for the U.S. PV businesses) that assists solar New York State Policies industry by means of $125 start-ups in acquiring funding. NYSERDA The primary million over five years of Another effort, the 1603 agency that oversees programs DOE investment in winning Treasury Grant Program (TGP), that further the development

8 While there are policies in place to help propel the solar industry forward, American solar businesses are still facing challenges.

of energy-efficient and of PV totaling 150 MW; all industry here, a focus group renewable energy technologies chosen projects are or will be was convened during TSEC’s is NYSERDA. Through supported with Power Purchase Solar CEO conference held at competitive solicitations, Agreements. SUNY New Paltz in January NYSERDA seeks to develop 2011. CEO’s from the Hudson markets for energy efficiency; New York also supports net- Valley solar cluster expressed demand management; outreach metering, a practice that allows concerns in three areas: acces- and education services; electric customers with solar- sible capital funding, building research, development, and PV, wind, or anaerobic digester market demand through institu- demonstration; low-income systems to receive credit for the tionalizing non-traditional pro- services; incentives for electricity sent back to the grid. curement practices, and indirect renewable manufacturers; and There are limits, however, to subsidization through additional renewable power generation how much electricity customers tax relief. system installations. are allowed to sell back to the utility. For residential net meter- Access to Capital Encouraging Renewable ing, the cap on system size is 25 The Great Recession of 2007 Installation and Production kW; for commercial properties –2010 made it difficult for start- In 2004, the New York State the cap is set at 2 MW. Recent up companies to acquire private Public Service Commission legislation facilitating remote investors; new start-ups in the (PSC) adopted renewable net metering (Chapter 35, Laws solar industry were no excep- portfolio standards (RPS). of 2011) will allow munici- tion. Capital investments are Currently a total of 29 states palities, school systems and needed in all phases of business and the District of Columbia developers to aggregate power development: have mandatory RPS. An produced on non-contiguous ■ Short-term: solar companies additional seven states and properties for sale to the utility. face high upfront capital two territories have adopted This legislation is expected costs associated with setting volunteer renewable energy to stimulate solar technology up a factory (machinery goals. An RPS is a policy that deployment significantly. acquisition, for example) seeks to increase the proportion of renewable electricity used Lastly, residential PV installa- ■ Middle term: CEO’s of by retail customers, employing tions of up to 10kw are eligible companies that produce bal- a central procurement model. for personal income tax credits ance of system products (e.g. New York State mandates equal to 25% of the cost of the inverters) mentioned that that 30% of the state’s solar energy system, with a there is little manufacturing electricity must come from maximum credit of $5,000. (For assistance for their part of the renewable sources by 2015. PV condos or coops the PV instal- solar supply chain installations are eligible under lation size limit is 50kw.) ■ Long-term: since a business the RPS but there is currently can take years before it is no stipulation requiring a Public Policy: Next Steps capable of producing a profit, specific percentage, or “carve- While there are policies in place financing options in addition out” of the RPS to be renewable to help propel the solar industry to the DOE loan guarantees energy generated by solar PV. forward, American solar busi- are sought for large upfront Additionally, the nesses are still facing chal- investments Power Authority and the lenges. In an effort to discover New York Power Authority what Hudson Valley companies have both issued requests for see as the greatest obstacles to proposals for the installation achieving a thriving U.S. solar

9 To meet these challenges, CEO’s suggested more working capital loans, state- and federal-sponsored loans/grants, more local financ- ing and more long term financing of solar projects.

To meet these challenges, ARRA put source restrictions suppliers to meet a solar energy CEO’s suggested more work- on projects it funds, but focus compliance level, either by ing capital loans, state- and group participants reported that generating solar energy or federal-sponsored loans/grants, this was not sufficient. They by purchasing credits from more local financing and more argue that policies need to others who do so. One SREC long-term financing of solar cover a broader scope of federal is earned every time a solar projects. They suggested that and state procurement agencies. system generates 1,000 kWh of long-term financing might Examples include: electricity; the SREC may then include 20-year project installa- be sold to someone looking to tion financing and more power REMI: In New Jersey, a purchase it. SRECs can become purchase agreements. Under thriving market for solar a lucrative source of income such agreements, installers own technology, “Buy New Jersey” that will offset or exceed a system on the customer site provisions are part of the the cost of a solar system. and the customer buys renew- State’s Renewable Energy However, prices are set through able power from them. Manufacturing Incentive auctions, and are subject to (REMI). REMI makes New market conditions. Currently, Building Demand Jersey-manufactured solar New Jersey has a flourishing Market demand is at the heart products eligible for a rebate. SREC market; while the prices of the American solar market; To be classified as a New fluctuate, a New Jersey SREC without strong demand, the Jersey-manufactured product, is sold for around $600. industry will not flourish. There 50% of its cost must be are many policy options that attributable to components, FiT: A Feed-in-Tariff (FiT) will assist in the creation of overhead, raw materials, and also fosters solar system market demand, putting the labor from New Jersey. There demand. The most common United States and New York on are also customer incentives solar incentive policy in the a more even playing field with available under this program. world, FiTs are currently other places creating solar sec- A policy similar to this in in place in 63 jurisdictions tors in their economies. New York would reward New across the globe, including York manufacturers, making a dozen U.S. states that are Until its cost can compete the NYS solar market more building renewable sectors. A with that of fossil fuels, there attractive to investors and FiT encourages the adoption needs to be focused support for consumers. of renewable energy sources generating demand for power and helps accelerate the move from solar sources. Many SRECs: Solar Renewable toward grid parity by paying countries and states have put in Energy Credits (SRECs) are an a premium price to renewable place demand-inducing policies alternative approach that may electricity generators (including in support of domestic solar provide a solar customer with homeowners and businesses) technology manufacturing. a consistent income. These are for any renewable electricity “Buy-American” provisions used in Delaware, Maryland, they produce. Typically, are advocated as the best way Massachusetts, New Jersey, regional or national electric to compete with foreign sup- Ohio, and Pennsylvania. North grid utilities are obligated pliers. Currently, the Defense Carolina also sells into the to purchase the electricity Department is required to buy SREC market. A country or a produced this way. Different American-made panels and the state may require electricity tariff rates are set for different

10 Streamlining the permitting process for installing solar systems makes the process more affordable.

renewable energy technologies, with clearly defined require- methods include: joint procure- linked to the cost of resource ments, expedited processing ment with other utilities, PPA or development in each case. for standard installations, and utility-owned; electronic auc- These cost-based prices enable offered the option to submit tions; standard offers; franchise a diversity of projects (wind, paperwork online. Some lo- bidding; combined purchasing; solar, etc.) to be developed cal governments are going a reverse auctions; and forward while investors obtain a step further and working with pricing with volume guarantees. reasonable return on renewable other jurisdictions in their energy investments. regions to make the permit- Joint Procurement ting requirements and process A successful strategy for the Streamlined Permitting: consistent across jurisdictions development of large-scale util- Streamlining the permitting and throughout the state. The ity resources for both genera- process for installing solar DOE’s recently-issued Rooftop tion and transmission is joint systems makes the process Solar Challenge initiative sup- procurement. These efforts have more affordable. Generally ports these efforts. been most successful where a a building and/or electrical legal framework exists through permit are required before Permit fees are often the focus which the process may be man- installing a photovoltaic (PV) of concern, but a broader view aged. In contrast, new consortia system and a plumbing and/ of costs includes those to of utilities that have tried to or mechanical permit before the contractor, jurisdiction, aggregate their efforts have installing a solar water heating and system owner. Waiving encountered problems from (SWH) system. The permitting or discounting fees for local participant attrition, changed procedure ensures that a solar building permits, plan-checking expectations over time, and installation meets engineering or design review can support faced the difficulties of properly and safety standards. Following local solar market growth. Even allocating risks and rewards installation, an inspector will more important, however, are among participants. verify that the installation online document submittals and complies with code. When the predictable review schedules, Electronic Auctions final inspection is completed for these can yield greater sav- E-procurement such as elec- and approved, the system ings to a project than waiving tronic and web-based systems can begin operation, so long fees. The key is to develop a may reduce costs for buyers as it is also approved for process that reduces costs to all and sellers by increasing trans- interconnection by the serving stakeholders while maintaining parency, efficiency, competi- utility. or improving public safety. tion and access to all potential participants. Electronic These processes exist to assure Non-traditional procurement may serve, too, public safety and allow local Procurement Practices to automate aspects of supply governments to track installa- Non-traditional procurement chain management, lower tions in their communities. At methods are another way to business-to-business transac- the same time, the process of attract more consumers to solar tion, costs and improve buyer obtaining permits can substan- generation systems. Under and seller communication tially increase the time and cost traditional solar resource pro- through a shared web-based of installing a solar system, of- curement, a request for proposal infrastructure. However, they ten becoming a major obstacle (RFP) is issued and a power have not been tested for large to solar market development. purchase agreement (PPA) capacity acquisitions or long- Several cities have streamlined is negotiated with the win- term contractual commitments. the solar permitting process ning proposal. Non-traditional

11 Solar Energy CEO’s argue that state and regional tax incentives should be increased and tax benefits should equal or surpass offshore offers for support.

Standard Offers using more conventional and is, in fact, many times more The Public Utilities Regulatory static paper-based bidding and than the manufacturers’ margin. Policies Act (PURPA), passed procurement. Recruitment of foreign compa- by the U.S. Congress in 1979, is nies to the nation and state that commonly known as Standard Forward Commitment are in competition with New Offers. Lawmakers sought to Procurement Model York companies through the develop smaller-scale technolo- Providing the market with use of NY and federal incen- gies from renewable resources advance information of future tives (ESD, section 48C, etc.) and those that could improve needs, early engagement with is a cause of great concern to the generating efficiency of ag- potential suppliers, and the in- domestic manufacturers. ing utility facilities, particularly centive of a “forward commit- through cogeneration of both ment” to purchase a product or State Legislative electricity and thermal energy. service that currently does not Objectives To do this, Congress imposed exist, at a specified future date, To continue to cultivate and an economic restraint on the can be delivered to agreed per- sustain the growing solar indus- development of these new formance levels and costs. The try in the state of New York, a generation resources; it required model is perceived as a way to broad coalition, including the that they be able to produce manage risk in the marketplace New York State Solar Energy electricity at an “avoided cost,” by making the market aware of Industry Association (NY- calculated at or below the price genuine needs and requirements SEIA), was working closely a utility would otherwise pay and offering to buy products with Ulster County Assembly to build its own resources or that meet these needs once they member and Energy Commit- purchase power from another are available at prices commen- tee Chair Kevin Cahill and the source. The new class of non- surate with their benefits. This Office of Governor Andrew utility generation thus needed model is being tested by some Cuomo as the 2011 legislative to meet a stringent cost hurdle, public sector agencies, but session drew to a close. The particularly in regions and seems better suited for obtain- goals: territories where the system ing components or services ■ Creating a fully-funded pro- average cost of generation was rather than large-scale utility- gram to install 5,000 MW of perceived as low. grade generation resources. solar PV capacity by 2025 Taxation Reverse Auction ■ Building support for generat- Flipping the role of the buyer Hudson Valley Solar energy CEO’s feel high state and local ing 2,000 MW of solar/ther- and seller, reverse auctions mal in the state as a replace- have the buyer driving the taxes divert money from com- panies’ R&D efforts. State and ment for oil and natural gas auction. Online auctions can by the year 2020 provide price transparency and regional tax incentives should control that the paper-based be increased, they have argued, ■ Ensuring the success of New RPF process may not always and tax benefits should equal or York’s first solar/thermal provide. Quoting performed surpass offshore offers for sup- incentive program that will in real-time via a web-based port. Taxation of commercial provide $25 million over five platform results in dynamic PV systems is nonproductive years through the Renewable bidding, helping to achieve when the state is trying, with Portfolio Standard program rapid downward price pressure other tax policies, to encourage to encourage the installation that is not normally created them. The combined 8%+ state of systems to heat water us- and local sales tax in New York ing solar energy

12 Additionally, advocates were has long been the country’s solar cluster. Moving forward, championing Assembly Bill second-largest state market it is important that the four is- 5713, also known as the Solar behind California, but has only sue areas identified by the CEO Jobs Bill. The legislation cre- recently begun to develop a focus group be addressed to ates a SREC Program like the utility market. With a large RPS retain solar businesses and jobs one described above, designed solar requirement that ramps up already established here, and to stimulate the installation increasingly in later years, the grow new ones. Greater access and generation of solar energy state is poised to lead the East to capital, increased market de- in New York State. A Renew- Coast utility market.” mand, better procurement poli- able Energy Credit model will cies, and additional tax relief provide investment stability CONCLUSION are the needs that must be met through long-term contracts and The 2011 Power New York to entrench the nascent regional competitive bidding in open Bill was a major step forward solar industry. With the right auctions. This program remains in energy policy in New York. policies in place, the New York on the legislative agenda Importantly, at the initiative of solar sector will surely flourish; (A5713, now in the Ways and Energy Committee chair Kevin positive effects on the environ- Means Committee). If adopted, Cahill, it included MW targets ment and on our economy will it would enable New York in the study it mandated for follow. If positive steps are not State to help fulfill the goal set the further development of PV taken now, however, competi- by the Governor’s Renewable energy in the state. The Solar tive policies in other states and Energy Task Force to facilitate Energy Consortium, along other countries will cause New the installation of 100 MW of with other solar advocates like York to lose the gains it has solar, with the possible creation NYSEIA, continues to work made in nurturing a strong solar in New York of 20,000 clean on growing the Hudson Valley industry in our state and region. energy jobs and generation of more than $20 billion for the state economy.

Aside from the proposed legis- lation, it is important to look for guidance to the states that have the highest numbers of solar installations. In 2009, these were: California, New Jersey, and Florida. In 2010, the Em- pire State fell out of the top 10, 2010 Installations, Photovoltaics Concentrating Solar going from seventh to eleventh Top 10 States (MWdc) Power (Mwac) place (Texas was 10th). California 258.9 - New Jersey is the sixth-largest New Jersey 137.1 - solar market in the world. Nevada 61.4 - If solar capacity were to be Arizona 54.0 1.5 calculated on a per-square-mile basis, New Jersey would lead Colorado 53.6 1.0 the nation. This leadership Pennsylvania 46.8 - is not just because of excep- New Mexico 42.8 - tional solar resources. It reflects Florida 35.2 75.0 political will and an informed renewable energy policy. As North Carolina 30.7 - detailed by Shayle Kann, Man- Texas 22.6 - aging Director of GTM Solar Rest of U.S. 135.2 - Research in his recent U.S. Utility PV Report, “New Jersey Total 878.3 77.5 Source: The Top 10 Solar States of 2010, Calfinder 2010

13 Sources: pbull/solar_bill_can_make_ (http://www.nytimes. “Directory: Cents Per ny_industr.html). com/2011/06/03/business/ Kilowatt-Hour.” Pure En- energy-environment/03iht- ergy Systems Wiki. (http:// Caldwell, Jake and Richard RBOG-Kanter03.html). peswiki.com/index.php/ W. Caperton. 2010. “A New Directory:Cents_Per_Kilo- Clean Energy Deployment Lux Research. 2011. (www. watt-Hour). Administration: Renewable luxresearchinc.com). Energy Needs More than a American Council on Re- Price on Carbon.” Center for Natural Resources Defense newable Energy. 2011. Wash- American Progress. Energy Council. “Renewable Energy ington, D.C. (www.acore. and Environment Blogs. for America: The Map.” New org). (http://www.american- York, NY. (http://www.nrdc. progress.org/issues/2010/06/ org/energy/renewables/de- American Institute of Certi- ceda_june_2010.html). fault.asp). fied Public Accountants. 2011. Journal of Accoun- CalFinder: Nationwide Navarro, Mireya. “Interac- tancy. (http://journalofac- Home Solar Power Contrac- tive Map Shows, Rooftop countancy.com/). tors and Information. 2011. by Rooftop, City’s Great Po- “The Top 10 Solar States of tential for Solar Power.” The Andrew Cuomo. 2011. New 2010: Did Yours Make the New York Times. July 16, York, NY. (www.andrewc- List?” Oakland, CA. (http:// 2011. A31 (www.nytimes. uomo.com). solar.calfinder.com/blog/ com/2011/06/16/science/ news/top-10-solar-states- earth/16solar.html). Bradsher, Keith. “China 2010-did-yours-make-the- Racing Ahead of U.S. in New Jersey’s Clean Energy list/). the Drive to Go Solar.” The Program. 2011. “SREC Reg- New York Times. August Energy Education Founda- istration Program.” New Jer- 25, 2009. A1 (http://www. tion. 2011. “This Looks sey. (http://www.njcleanen- nytimes.com/2009/08/25/ Like a Job for Solar PV: ergy.com/renewable-energy/ business/energy- Heat Wave Causes Record- programs/solar-renewable- environment/25solar.html). Breaking Electricity De- energy-certificates-srec/ mand.” (http://understand- new-jersey-solar-renewable- ---. “Pentagon Must ‘Buy ingclimatechange.com/ energy). American,’ Barring Chinese this-looks-like-a-job-for- Solar Panels.” The New York New York Solar Energy solar-pv-heat-wave-causes- Times. January 10, 2011. Industries Association. 2011. record-breaking-electricity- B1 (http://www.nytimes. Oakdale, NY. (http://nyseia. demand.htm). com/2011/01/10/business/ org). global/10solar.html). eRedux. “New York Energy New York State Energy Re- Portal: New York’s Carbon Broder, John M. and John source & Development Au- Footprint.” (http://eredux. Collins Rudolf. “E.P.A. thority. 2011. “Fast Facts.” com/states/state_detail. Proposes New Emission (http://nyserda.org/Energy_ php?id=1113). Standards for Power Plants.” information/fast_facts.pdf). The New York Times. March Geology.com. “Trends in 17, 2011. A22 (http://www. Office of Energy Efficiency Renewable Energy Produc- and Renewable Energy. nytimes.com/2011/03/17/sci- tion and Consumption in the ence/earth/17epa.html). 2002. “The History of Solar.” USA.” (http://geology.com/ US Department of Energy. articles/renewable-energy- Bull, Pierre. 2011. “Solar (http://www1.eere.energy. trends/). Bill can Make NY Industry gov/solar/pdfs/solar_time- Leader by 2025.” National Kanter, James. “A ‘Big line.pdf). Resources Defense Council. Thumbs Up’ for Renew- Office of Energy Efficiency Switchboard Blogs. (http:// able Energy.” The New switchboard.nrdc.org/blogs/ and Renewable Energy. York Times. June 3, 2011. 2011. “Solar Powering Your

14 Community: A Guide for Citation Local Governments 3.3 Courtney Strong, Patrice and

Streamlined Solar Permitting Kathryn McKeon (2011). A STAT E UN IVE RS I T Y O F NE W YO RK and Inspection Processes.” Solar Hudson Valley (CRREO US Department of Energy. Discussion Brief 6, Summer The State University of New (http://solaramericacommu- 2011). New Paltz, NY: SUNY York at New Paltz is a highly nities.energy.gov/resources/ New Paltz Center for Research, selective college of about 8,000 guide_for_local_govern- Regional Education and Out- undergraduate and graduate ments/3/3). reach. students located in the Mid- Hudson Valley between New Renewableenergyworld.com. Comment York City and Albany. One of (http://www.renewableener- To comment, write to CRREO the most well-regarded public gyworld.com/rea/home). at [email protected]. colleges in the nation, New Robine, Chris. 2011. “Fri- Paltz delivers an extraordinary Thanks number of high-quality majors day’s commentary: NY Solar The authors give a big thank in Business, Liberal Arts & Jobs act could create 20,000 you to all of the TSEC team for Science, Engineering, Fine & jobs, says solar executive.” their assistance, support, and Syracuse.com Blogs. (http:// encouragement. Performing Arts and Education. blog.syracuse.com/opin- ion/2011/06/fridays_com- TSEC would like to thank mentary_ny_solar_jo.html). CRREO Director Gerald Benjamin for his support and Solar Energy Industries As- guidance. sociation. “Solar Policies.” Washington, D.C. (http:// The authors wish to acknowl- www.seia.org/cs/solar_poli- edge the assistance of Kathleen cies). Tobin for editorial review, and The Power of SUNY, the State Martha Teck for production University of New York’s The Solar Energy Consor- assistance. Strategic Plan adopted in 2010, tium. 2011. Kingston, NY. has as one major purpose (http://thesolarec.org/). The Center for Research, reinforcing SUNY’s role as an Regional Education and enduring, enriching presence in The Vote Solar Initiative. communities across our state. 2010. “New York.” San Fran- Outreach (CRREO) conducts studies on topics of regional In SUNY, “We want to create cisco, CA. (http://votesolar. a broader sense of common org/initiatives/new-york/). interest; brings visibility and focus to these matters; fosters ground and make a lasting communities working together difference for everyone in the The White House. 2011. places we call home.” “Blueprint for a Secure to better serve citizenry; and Energy Future.” Washington, advances the public interest in D.C. (http://www.white- our region. Publication of this house.gov/sites/default/files/ Discussion Brief is one way blueprint_secure_energy_fu- that CRREO at New Paltz seeks ture.pdf). to contribute to the further development of a vibrant com- US Energy Information munity in our region. Administration. 2011. “An- nual Energy Outlook 2011: Growth of carbon dioxide emissions slows in the projections.” Washington D.C. (http://www.eia.gov/ forecasts/aeo/MT_emissions. cfm#carbon).

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across across the Hudson Valley, : conducts : advance advance the public interest RREO ndependently and with in ndependently collaboration visibility visibility and focus I business and local governments, not- for-profits C on topics of fosters communities to better serve the and citizenry; seeks to region. our