Solar is a necessity. It is imperative that we shift our energy needs away from fossil fuels and towards renewable energy. This shift needs to happen at an industrial scale, but it also needs to happen for homeowners, and it can – right now. However, waiting on solar has consequences beyond the obvious climate challenges ahead of us.
Like everything in our world, there are forces working for and against solar. As you most likely know by now, the global supply chain has caused a number of issues across industries. From longer lead times to higher material costs, the solar supply chain is no exception. It’s important to us that we’re transparent with our customers about how these issues are affecting us as a business. Read on for what you need to know about how supply chain disruptions are affecting solar.
How is the supply chain impacting the solar industry?
Over the course of the pandemic, every aspect of global commerce has undergone major changes. These changes have caused disruptions on every level of the supply chain across industries, solar included. Not only is the supply chain an issue, but the solar industry also faces uncertainty stemming from federal policy. As a business, we’re seeing the effects of these disruptions in real time.
Rising material costs
Key elements in the manufacturing of solar panels are rising in price. Materials like steel, aluminum, and polysilicon have seen cost increases of more than 10 percent. These price increases haven’t affected the cost of most solar projects yet, but will certainly make an impact for customers starting in the new year.
Longer lead times
Over the summer, lead times across sectors reached record highs. Lead times for solar materials are still seeing delays of anywhere from four to eight weeks. This makes it difficult to maintain inventory and plan for future projects as expected.
The pandemic has also caused a global shortage of semiconductor chips, hitting the automotive and electronics sectors particularly hard. When it comes to solar, chips are particularly important for components of a solar system like electric meters and inverters.
Federal policy on solar imports
In June, U.S. Customs and Border Protection issued a Withhold Release Order on silica-based products from China’s largest polysilicon provider, Hoshine Silicon Industry, due to forced labor concerns in China’s Xinjiang region.
The panel manufacturer that BSW uses, REC, is based in Singapore and was not implicated in this terrible human rights situation. But because the panels we use are more accessible than other brands on the market (that are being held at import), they are seeing a surge in demand. Couple that with material shortages, and it means prices go up and lead times extend.
In 2018, former President Trump ordered tariffs on foreign solar panels and cells, which began at 30 percent and have since decreased to 18 percent. These tariffs are set to expire in 2022, and President Biden will have the final say on whether or not to extend them. The President’s impending decision will no doubt affect the expansion of solar in the U.S. for the foreseeable future.
We want to emphasize that despite some solar supply chain disruptions, there’s never been a better time to install solar in NYC. If you’ve been considering making the switch, we urge you to get ahead of the uncertainty while you still can. No matter what, BSW is committed to maintaining transparency and being there for you every step of the solar process.
Ready to flip the switch to solar? Schedule your free consultation.
Want to revisit your custom solar proposal? Contact our team at firstname.lastname@example.org.
Just last month, Governor Hochul committed to increasing New York’s minimum distributed solar energy goal to 10 gigawatts by 2030. New Yorkers elected leaders who passed the Climate Leadership and Community Protection Act in 2019, a law to tax polluters and invest in clean energy jobs.
Despite bold climate goals, the State is implementing policies that tax solar in NYC and make it more inaccessible. Governor Hochul has the ability to intervene before the end of the year. Let’s hold our leaders and the Public Service Commission to their word.
New York’s community solar credit has ended
The New York Public Service Commission (PSC) authorized the Community Solar Credit in April of 2020. This credit subsidized 350 megawatts of community solar projects in Con Edison’s territory — New York City and Westchester. This was an initiative that offered flexibility for community solar that hadn’t previously existed, driving growth of the market unlike ever before. But the funding source for this credit has run out.
The funds have dried up…due to the State’s financing of fossil fuels
Due to a loophole in the program, the New York Green Bank — funded by electric customers — used nearly half of the community solar fund to finance natural gas fuel cell projects. Rather than further subsidizing clean, zero-emissions energy, the State instead financed more fossil fuel systems.
What’s more, this program has essentially been left in limbo. The community solar fund has dried up, and there’s been no effort by the State or PSC to replenish it.
Earlier this year, NYSEIA and New York City petitioned the PSC to replenish the incentive to make up for the amount allocated toward natural gas projects and to further the program. The PSC announced a forthcoming report about the future of solar in NYC, expected to be released this fall. But until that happens, community solar development in NYC is stalled.
Community solar is NYC’s path towards achieving climate goals
The community solar program has been incredibly beneficial in spreading solar in NYC. With two-thirds of New Yorkers renting their homes rather than owning, home solar is not feasible for everyone. But community solar allows those who rent and those with lower incomes to benefit from clean energy without having to own the system. Con Edison estimates that there are around 9,000 electric customers in its territory that receive energy generated by community solar systems.
Further, it goes without saying that development in NYC is expensive and complex. Without support from the State’s community solar credit, many of these projects lose financial viability.
With a low percentage of homeowners and high development costs in NYC, community solar is the answer to New York’s clean energy goals.
A tax on New York solar is coming
The ending of the community solar credit is not the only way New York is undermining its goals. NYSERDA announced last year that Phase One Net Metering (net metering as it is now) will no longer be available for solar projects starting January 1, 2022. Also starting next year, Con Edison will be charging new solar customers a Customer Benefit Contribution (CBC) charge, as directed by the PSC. Both of these policy changes were implemented to address cost-shifting.
Like the community solar credit, the current Net Metering program has been instrumental in the spread of solar throughout NYC; yet this new charge disincentivizes the investment in solar. When it comes to cost shifting, the truth is that solar owners account for only about 1% of total electric customers in the state. Thus, any cost shifting that occurs cannot be very significant.
Making the switch to clean solar energy is a significant financial investment that benefits the entire grid; however, it will now result in an extra charge from Con Edison. This charge will unfairly target solar customers and therefore stunt the growth of residential solar in NYC.
Governor Hochul & the State still have time to act
With ambitious climate goals and a population that supports the Climate Act, New York’s solar industry should be thriving. Yet, there is a clear disconnect between the State’s clean energy goals and its current solar policies. But there’s still time to intervene.
BSW joins NYSEIA in calling on Governor Hochul and the PSC to take action before the end of the year. The Governor and the PSC should work to replenish the community solar credit. They should also postpone fees on residential and commercial solar installations until the impact of imposing a solar tax within the context of New York’s climate goals is fully analyzed by an independent party.
We appreciate all that Governor Hochul is doing for clean energy in our state. But we encourage her to continue taking the lead to ensure New York can fully realize its solar goals by preventing the enactment of policies that undermine progress.
If you want to see New York stick to its word on clean energy goals, we encourage you to make your voice heard.
Contact the New York State Governor’s office HERE.
Find your New York State Assembly member’s contact information HERE.
Find your New York State Senator’s contact information HERE.
Starting next year, Con Edison will be charging new solar customers a Customer Benefit Contribution (CBC) charge. This new charge is effectively a solar tax in New York City. While it will not significantly affect the investment in solar, we want to make sure our customers are aware of the upcoming changes.
Read on for what you need to know about the New York “solar tax.”
What is the CBC charge?
Starting January 1, 2022, Con Edison will be applying a Customer Benefit Contribution (CBC) charge to the electric bills of solar owners whose systems were interconnected on or after this date.
Note: If your system was installed prior to this date, you will not be charged for the CBC. You’ll continue to receive the full retail value of the energy produced by your system for the next 20 years.
The CBC charge is based on the DC nameplate rating, service class, and location of the solar system. We expect this “solar tax” to cost NYC solar owners $7-$10 per month.
Where did this solar tax come from?
Last year, Con Edison announced it would be making changes to its current Net Metering program. Some states have begun to do the same in order to address cost shifting. Utility companies claim that they need to charge their non-solar customers more money in order to make up for the revenue they lose from the Net Metering of clean energy.
To address cost shifting at the state level, NYSERDA announced last July that Phase One Net Metering (the program as it is now) will only be available for projects interconnected before January 1, 2022.
Making the switch to clean, solar energy is a significant financial investment that benefits the entire grid. However, it will now result in an extra charge from Con Edison. This charge is effectively a tax on solar in New York.
Is the CBC charge final?
This charge will unfairly target solar customers and therefore stunt the growth of solar in NYC, which undermines the city and state’s sustainability goals. For this reason, members of the solar industry are doing what they can to fight back. Brooklyn SolarWorks, NYSEIA, and a number of other solar companies and organizations in New York have filed comments with the state on the charge.
The current Net Metering program has been instrumental in the spread of solar throughout NYC; yet this new charge disincentivizes the investment in solar. When it comes to cost shifting, the truth is that solar owners account for only about 1% of total electric customers in the state. Thus, any cost shifting that occurs cannot be very significant. Further, making the switch to solar is an investment that has considerable economic and environmental benefits for both Con Edison and the city as a whole.
The CBC is just another barrier to residential solar in our city. We believe solar should be becoming more accessible to New Yorkers, not the other way around.
Will the CBC charge affect my investment in solar?
While the potential savings from the current Net Metering program will decrease, it is important to know that the return on your investment in solar will not change significantly.
Though payback periods may vary when factoring in these new changes, the investment in solar is still worthwhile, for yourself, for your community, and for the planet.
With that said, energy policy in New York is always evolving. If you’re considering solar, we urge you to move forward as soon as possible to avoid any potential uncertainty.
Take charge of your electric bill and help spread solar! Talk with us about making the switch to solar today.