Monday, June 4, 2012

An Analysis of the Benefits and Costs of Increasing Generation from Photovoltaic Devices in New York

Summary of Findings and Recommendations
The Power New York Act of 2011 directed NYSERDA to conduct a study to evaluate the costs and benefits of increasing the use of solar photovoltaics (PV) in New York State to 5,000 megawatts (MW) by 2025. As requested by the Act, the following represents NYSERDA’s findings and recommendations that are based on the conclusions of the technical analysis completed in the Study.

New York's Renewable Energy Context
New York State is a national leader in the deployment and production of renewable energy. This leadership is attributable to New York’s strategic pursuit of policies designed to develop a diverse portfolio of renewable energy resources, including solar, wind, hydropower and biomass. New York’s diverse portfolio approach capitalizes on the State's many renewable resources – this diversity is New York’s strength. The success of this approach is reflected by the fact that New York has developed more than 1,800 MW of renewable energy, exclusive of hydropower, more than any other state in the Northeast. Including hydropower, New York’s renewable energy capacity is comparable to the entire renewable energy capacity of the other eight states in the Northeast.

In a recent U.S. Department of Energy (DOE) report, New York ranked 5th in the nation for the amount of installed renewable energy capacity providing electricity to the state. New York was the only state east of the Mississippi named in the top 5, and the only Northeast state placing in the top 10.
Cost of Achieving a 5,000 MW PV Goal
There is significant uncertainty in estimating the cost of PV out to 2025. Experts project that the installed cost of PV by 2025 could range from $1.4 to $4.3 million per installed MW. This range and various assumptions about the renewal of the federal tax credit, set to expire in 2016, formed the basis of the scenarios analyzed in the Solar Study.

The Low Cost scenario is based on the DOE SunShot goal for PV cost reduction and assumed extension of the federal tax credit through 2025. The High Cost scenario is based on long-term historical trends and assumed the federal tax credit would revert to a pre-federal stimulus level following expiration of the current credit in 2016. The most likely scenario, referred to as the Base Case, is based on a survey of experts by the DOE and assumed a moderate reduction of the federal tax credit beyond 2016. The Base Case estimates $2.5 million per installed MW for large-scale systems and $3.1 million per installed MW for small-scale systems.
  • The cost of achieving a 5,000 MW goal exceeds the benefits using the Base Case scenario.
  • The cost of PV and the availability of federal tax credits through 2025 are the driving factors of cost in a 5,000 MW goal.
  • The Low Cost scenario had a net benefit while the High Cost scenario had a net cost four times as high as the Base Case.
  • In the Base Case, achieving a 5,000 MW goal would have a ratepayer impact of $3 billion over the study period (2013 – 2049), which would equal on average a 1% impact on ratepayer electric bills. In any given year, this rate impact could be as much as 3%. (Note: The study period goes beyond 2025 because PV installations in 2025 have a 25-year lifespan, and ratepayers are assumed to pay for the power generated by these installations throughout the life of the systems.The ratepayer impact under the Low Cost scenario would be approximately $300 million, whereas the impact under the High Cost scenario would be $9 billion.