United States: New York's Inflation Reduction Act "Surplus" And How To Expand Distributed Solar Beyond 10 Gigawatts

The New York Public Service Commission ("PSC") is considering recommendations by the New York State Energy Research and Development Authority ("NYSERDA") to use existing NY-Sun Program funding to deploy distributed solar generation beyond the state's current 10-gigawatt ("GW") goal.

In a January 5, 2024 report, NYSERDA determined that federal efforts to implement the Inflation Reduction Act of 2022 ("IRA") – enacted after the PSC established the 10-GW goal – would contribute to an estimated $421 million budget surplus for NYSERDA's NY-Sun Program. However, NYSERDA also noted that "the program end date is over seven years away, and . . . considerable uncertainty remains in the solar market, national policy landscape, and national and global economy."

NYSERDA proposed using approximately $75 million of that surplus to cover a projected NY-Sun budget shortfall, leaving an estimated $346 million to allocate towards incremental solar capacity beyond the 10-GW goal.

The report analyzed scenarios for deploying such incremental funds – including expanding the Inclusive Community Solar Adder for opt-in community solar projects and increasing procurement under opt-out Statewide Solar for All programs. The resulting incremental solar capacity ranged from 557 megawatts ("MW") to 1,254 MW across the various scenarios.

As part of its report, NYSERDA requested PSC authorization to (1) use the existing NY-Sun budget to deploy distributed solar beyond the 10-GW goal, (2) cover the $75 million NY-Sun budget shortfall, (3) include incremental program funds beyond those needed to reach the 10-GW goal within the Solar Energy Equity Framework ("SEEF") to target community solar projects that serve disadvantaged communities, and (4) count certain residential customers within the SEEF's 40% minimum capacity requirement for disadvantaged communities.

Notice of these requests was published in the New York State Register yesterday and comments are due April 29, 2024. We expect parties to weigh in on the proper and most cost-effective use of the estimated surplus and any contingency plans for NY-Sun in the event such surplus does not materialize.

It is reasonable to expect a PSC order on this matter in July or August of this year, and any NY-Sun program updates to follow before the end of 2024.

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