New York’s Proposed “Demand Charge” Could Stunt Solar’s Explosive Growth

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For the last several years, New York has enjoyed some of the fastest solar energy growth of any state in the country. Friendly legislation and an aggressive green energy portfolio with lucrative goals has fueled a meteoric rise that has catapulted New York to the top third of the country in terms of power produced by solar sources. And that trend is only expected to continue, further propelling the climb.

However, the Joint Utilities Group, an association featuring six major energy industry companies that serve over 13 million people in the state, is pushing legislation that could severely hinder that. The group is currently lobbying the Public Service Commission to consider legislation that would implement a “demand charge,” a proposal which would effectively punish solar customers by making the electricity that they purchase more expensive and the energy they sell back to the grid cheaper.

Demand charges are fairly simple, and similar to “time of use” rates. These pricing structures make customers pay more for energy during peak hours in exchange for cheaper rates during off-peak hours. The goal of these rates is to get people to shift their usage and change their lifestyles to reduce their consumption during these peak hour periods when utility grids are working under heavier loads and fossil fuels are burned at a higher rate to produce the energy needed.

However, these rates can be extremely unfair to solar customers in some situations. Solar energy systems often produce at their peak each day when most homes sit either vacant, or in a low-energy state. Everyone is at work or school, so naturally these homes don’t need a lot of power. Thus, electricity rates are at their lowest. Conversely peak hours usually align with the times where production for the day is drawing to a close as the sun starts to set.

New York requires utility companies to pay customers retail rates for the energy they produce and send back to the grid, but that means the majority of the energy that’s sent back to the grid will only net the energy producer this reduced off-peak rate. Solar panels generally produce less energy during peak usage hours when energy demands increase, which means many solar customers then have to start getting their energy from the grid again. That means solar customers are charged significantly more for this energy they’re using from the grid than they were paid for what they put in earlier, purely because of the time of day.

As you might expect, this leads to longer payoff periods, reduced savings for solar customers, and increased profits for utility companies, who make more money because of when you use their power, not where it came from. This decision could also impact the solar industry as a whole—more than 9,000 people work in solar in the Empire State, and could all feel the impact of the industry slowing down. The decision would likely put a serious obstacle in the way of the state’s goal of obtaining more than 50 percent of its electricity from renewable sources by the year 2030.

These rates have already become fairly commonplace in much of California, and recent proposed changes to these rates have solar owners scrambling to make changes in order to maximize their savings. Even then, the new rate savings should only hold for approximately five years or so, which means California’s solar industry could experience a slump within the next half decade.

Take advantage of switching to solar today to maximize your savings. Call SunPower by Sea Bright Solar at (732) 253-4052 and talk to our New York solar installers about how we can help you.

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