The Empire State Solar Initiative: ESSI

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1. The Empire State Solar Iniative: ESSI

In 2009 I Heart PV is pushing for a new financial incentive program for solar photovoltaics (PV) in New York State. We call this campaign the Empire State Solar Initiative, or ESSI for short.

ESSI calls for the creation of financial incentives for residential, commercial, industrial and nonprofit PV system owners that would be both long-term and substantial enough to push PV into the mainstream over the next decade.

The program would:

• Add at least 2000 megawatts of PV capacity over a ten-year period. This amount would be capable of meeting about 5 percent of our state’s maximum electricity demand, and would represent a 100-fold increase above current levels (today we have less than 20 megawatts of solar installed in the state.)
• Drive down the high cost of PV to a level where it is competitive with or even cheaper than conventional fossil fuel and nuclear sourced electricity.
• Create tens of thousands of jobs locally by attracting and nurturing new and existing industry.
• Reduce greenhouse gases that contribute to climate change and air pollutants that negatively impact our health; and,
• Increase New York’s energy independence by decreasing fuel imports.

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2. Why ESSI is Necessary

The main reason why photovoltaics remain a marginal energy technology is cost: plain and simple, PV is currently more expensive than conventional electricity.

However, this is changing. Conventional electricity continues to become more expensive year after year as demand increases and cheap fuel supplies diminish.

At the same time PV is becoming less expensive as a result of three interrelated factors:

• Innovation in the way panels are produced and how they function is cutting down the high costs of solar manufacturing and increasing performance.
• The expansion of the global PV panel manufacturing industry is creating ‘economies of scale’ that make the production and implementation of existing technology cheaper.
• The local growth of city, state and national solar markets is increasing competition, experience and the efficiency of the local PV installation sectors. These local developments are cumulatively driving down installation costs in different areas. This third factor also accounts for variations in the cost of investing in PV between different countries and states. In general, larger, more developed local markets are delivering PV at a cheaper cost than smaller, less mature markets.
• Technological improvement increases as solar markets expand because investors and innovators are attracted to active or growth sectors that promise long-term profits. In short, a fast growing solar market sends a clear signal that money can be made from investments in new technology. (This dynamic is not unique to solar. Just consider the relationship between growth and innovation that has characterized the emergence, for example, of the personal computer and cell phone in recent history.)

Government’s Critical Role

• Making PV a mainstream source of electricity in the next decade requires that we make the technology affordable as quickly as possible. This will occur automatically as the solar industry grows both locally and globally. At this point governments play an essential role in accelerating this process by actively incentivizing solar investment today.
• In order to gain a leadership position and avoid surrendering our advantage to other states and countries, New York should immediately implement a substantial, long-term financial incentive program that will boost solar PV adoption today, and make the Empire State a center for solar industry and innovation.

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3. ESSI’s Incentive Engine: A “FEED-In Tariff” for New York State

I Heart PV seeks the creation of a New York State FEED-In Tariff to realize the Empire State Solar Initiative’s goals.

New York State’s current incentive program for PV consists of a combination of upfront rebates and tax credits. While the program has offered generous resources for many solar system owners throughout the state in the past, the overall approach has supported only incremental growth in PV adoption. This is because the program’s scope has been mostly limited to small system development (80 kilowatts and under). At the same time, funding for the program has not been committed on a long-term basis. For these reasons today’s program is incapable of achieving the Empire State Solar Initiative’s goal of pushing PV into the mainstream over the next decade, growing local industry within the state and significantly driving down costs.

In order to achieve these ends, a much stronger incentive approach will be required.

Different states and countries have implemented a variety of incentive schemes over the past decade to spur development of PV and other renewable energy sources. The policy that has proven most effective in recent years, however, is the FEED-In Tariff (FIT). Therefore it is this model that the I Heart PV campaign supports in its efforts to realize the Empire State Solar Initiative’s goals.

The recent experiences both internationally and now closer to home provide a strong basis for supporting the creation of a FIT for New York. The model has been responsible, most notably, for Germany’s status as the world’s leading renewable energy adopter, and the impressive growth rates that have occurred in other European countries more recently, such as Spain, Italy and France.

The FIT model is now beginning to gain momentum on this side of the Atlantic:

• Ontario, Canada is in the process of implementing a new FIT that is similar in extent to those active in Europe;
• Earlier this year Gainesville, Florida became the first city in the U.S. to adopt a FIT for PV;
• California is considering expanding a limited FIT that it introduced in 2008;
• Vermont was the first state to pass an advanced FIT in May 2009;
• No fewer than 14 states, including New York, have introduced legislation in the past year calling for the creation of a state FIT.

The Feed-In Tariff has 3 core features:

1. It permits owners of clean power technologies such as PV, wind and other sources of electricity to ‘feed in’ or sell some or all of the power that they produce at a fixed rate to the local utilities for guaranteed periods of 15-20 years.

2. These producers are paid a premium for their electricity that is higher than the selling price of conventional fossil fuel and nuclear generated electricity. This premium is equal to the cost of generating power with each technology plus a reasonable annual rate of return on investment.

Under this scheme, the tariff for PV is typically 3-4 times higher than that which is offered to producers of dirty, conventional electricity.

3. Since the purpose of any incentive should be to jump start clean energy and drive down costs, FITs are not permanent. Instead the tariffs decline over time and are eventually phased out completely. This means that someone who invests in a PV system in 2009 will be able to sell power at a tariff that is higher than someone who makes an investment in subsequent years.

This declining structure is essential because it encourages early adoption and forces PV manufactures and installers to reduce costs over time.

Who pays for an FIT?

The premium that utilities are required to pay for renewable electricity is ultimately passed on to and spread among all electricity customers in a given city, state or country, or on whatever level the FIT has been implemented.

But costs to consumers have not proven excessive where FITs have been adopted. For example, in 2008, Germany’s national FEED-In Tariff increased household bills by an average of only 3 euros per month. Gainesville’s new FEED-In Tariff for PV will only add an estimated 93 cents to the average monthly bill in 2009.

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4. Realizing ESSI: The New York Renewable Energy Sources Act

In 2009, the New York Renewable Energy Sources Act was introduced as legislation in both chambers of the State Legislature (the Assembly and the State Senate.) If made into law the Act would mandate the creation of a FEED-In Tariff for New York State that would include PV and other clean energy sources.

The Assembly bill is numbered A00187 and was introduced by Assembly Member Andrew Hevesi of the 28th Assembly District in Queens. View the bill here.

The identical Senate bill is numbered S2715 and was introduced by State Senator Antoine Thompson of the 60th Senate District in Buffalo. View the bill here.

Hundreds of bills are introduced every legislative session, but only a fraction of them ultimately pass and are signed into law. The fate of any legislation is decided by the priority that legislators in both chambers assign to it. Priority is determined by many factors, but key among them is the level of support that the legislation gains among New York voters.

Since the New York Energy Sources Act is a new piece of legislation never before introduced in our state, it faces an uphill battle on its path to becoming a law. For it to move forward it is absolutely critical that citizens throughout the state exert their influence on the process by directly urging their legislators to support the bill through FEEDBACK. That means letters, phone calls, visits and other direct forms of communication that send a clear message.

The I Heart PV campaign is mobilizing to create a surge of feedback in support of the New York Energy Sources Act. The more of us who participate and get involved the greater the odds of victory. Without participation the Act will go nowhere, and therefore New York will not implement a Feed-In Tariff.

It’s up to all of us to make the Feed-In Tariff a reality. I Heart PV has created a few tools that will help you and members of your community make your voices heard. You can find them by clicking on the “Make it Happen” bar below.

Start giving feedback today and help make the Empire State a solar-power capital!

THANK YOU FOR YOUR ACTION!

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