Why Can't I Buy New York RECs?

Have you ever wondered why you can't buy RECs for New York State? The reason is because they don't exist, at least not in the wild. There has been a vigorous debate in renewable energy circles about the most effective way to spur renewable energy development. Places like Ontario have embraced feed-in tariffs. many states have adopted REC markets, and some states have pursued a central procurement mechanism to buy renewable energy.

New York has embraced the central procurement mechanism or centrally awarded grants/incentives to spur development of renewables. There is a system benefit charge on all electric bills in New York State that say "Renewable Energy...". The exact wording varies a little by utility, but this line item collects funds for the New York State Research and Development Authority (NYSERDA) from all rate payers to support NYSERDA's energy programs. NYSERDA, in the proud tradition of New York State quasi-governmental authorities, has been the main driver of renewable energy development in the state for many years. While New York has developed a significant amount of wind capacity, it has lagged behind its neighbors New Jersey and Massachusetts in solar development.

Governor Andrew Cuomo vowed to accelerate the adoption of solar for large consumers via the NY-Sun Initiative. Although NYSERDA has historically had several solar incentives, NY-Sun is unique because it involves a competitive award process for systems greater than 50 kW. The results of the first solicitation seem to be encouraging and NY will serve as a great test case of the central procurement system as a mechanism to drive solar development.

Luckily for small scale and residential solar systems, NYSERDA also has a decentralized incentive program so that you can install solar without partnering with a developer in an auction process. In addition, New York State has a very generous tax credit for solar and certain cities, New York City in particular, offer a property tax abatement for investments in qualified solar energy systems. If you are thinking about a small scale solar system, New York state is a pretty attractive place to buy one presuming that you have a tax liability. The graphic below lays out hypothetical costs for a solar PV system installed in New York City.

New York State Solar Incentives.png

As you can see, after taxes and incentives, the cost of the system is less than 25% of the sticker price. The NYSERDA incentive is formulaic in that it's a set $/Watt value, but it can't exceed 40% of system costs after tax credits have been applied. One really good aspect of the NYSERDA incentive is that it isn't considered taxable income if it goes right to the solar developer. Instead, it represents a discount on the system price and isn't subject to income tax. You'll note in the graphic above that the Federal and State income tax credits may be slightly overstated. When the customer does their taxes, the tax basis for the system would be adjusted downward by the NYSERDA incentive, but you won't know the exact amount of the NYSERDA incentive until you apply. For ease of calculation, I just presumed the tax basis was the sticker price.

All of the New York State electric utilities have net metering so honestly, there is no excuse for New Yorkers to be lagging their neighbors in solar deployment.