Solar and Energy Storage Policies by State 2022

Solar energy continues to be a financially sound and environmentally sustainable investment for commercial enterprises in 2022 thanks in large part to money-saving incentives. On the federal level, the solar Investment Tax Credit will remain at 26% through the end of the year, helping system owners recoup a sizeable portion of installation costs in the form of a tax reduction. There are also federal tax incentives for renewable energy systems that are combined with battery energy storage. Looking more locally, a number of solar policy changes, as well as updated incentives for both solar-plus-storage and standalone storage systems, will potentially affect project economics in several key markets. Here’s a state-by-state breakdown:  

New York

The New York State Energy Research and Development Authority (NYSERDA) has announced plans to reinvigorate the NY-Sun program in pursuit of an updated goal of 10 gigawatts (GW) of distributed solar installed statewide by 2030. NYSERDA plans to provide additional funding to the Megawatt Block incentive program, which distributes incentives on a per-megawatt basis to solar projects of varying types across the Long Island and Upstate regions and the ConEdison utility territory.  

Of particular importance to businesses considering solar, new blocks will be allocated to commercial and industrial projects — and incentives for parking canopies as well as for systems installed on brownfields are expected to receive additional funding as well. The program will likely be finalized by spring or early summer 2022, so we advise C&Is to start planning their solar projects immediately so they can jump on these valuable incentives once they become available.  

New Jersey

In the Garden State, there’s a new program governing solar renewable energy certificates (SRECs). System owners earn one SREC for every 1 megawatt-hour (MWh) of solar electricity they generate, which they can sell to other parties who wish to claim use of renewable energy. While this is nothing new, the way SRECs are valuated in New Jersey has evolved. The Successor Solar Incentive (SuSi) program replaces the Transition Renewable Energy Credit (TREC) program that was put in place following the shuttering of the state’s previous Solar Renewable Energy Credit program. SuSi mints a new type of solar renewable energy credit, referred to as a SREC-II, whose value is determined by way of two different incentive models:

• The Administratively Determined Incentive (ADI) applies to net-metered solar systems up to 5 megawatts (MW) in size, which includes most commercial projects. SREC-II credits generated by these projects are set at a 15-year fixed price based on the specific project type (rooftop, ground-mount, community solar, etc.) and project size within the 5 MW limit. While the credit values for these types of projects are lower than what we’ve seen with previous SREC programs, solar owners can now pursue SREC income without fear of price volatility.
• The Competitive Solar Incentive (CSI) program is generally intended for grid-size projects greater than 5 MW. SREC-II values are set based on a competitive process that’s designed to create savings for ratepayers. The program is expected to begin accepting solicitations this summer.

Regardless of which incentive sub program a system falls under, SuSi will grant an additional $20 per SREC-II for public entities (like municipalities and public schools) and, temporarily, projects built on contaminated lands.  

California

The biggest solar policy shift in California this year is the proposed change to the Golden State’s net energy metering program that compensates solar system owners with utility bill credits for surplus energy they send back to the grid.  

With NEM 3.0, the California Public Utilities Commission will potentially devalue exported solar energy by as much as 80% and institute monthly fees. While this is obviously less than ideal, it’s still possible for new and existing solar customers to enjoy savings. Enterprises that submit their interconnection application for a new solar system before the new policy takes effect, most likely by this summer, will be grandfathered into the current, more attractive net metering rates.  

Businesses that have already installed solar could opt to implement a battery energy storage system that provides utility savings in the form of time-of-use arbitrage and peak shaving tactics. Fortunately, California’s Self-Generation Incentive Program (SGIP) can cover storage installation costs by up to 35%. Rebates are available across several different utility territories and budget categories. Funding for Large-Scale Storage, the project type most commercial storage projects fall under, is running out quickly, so we’re encouraging our clients to get their applications in now. You can read more about SGIP and how PowerFlex makes the application process seamless here.  

Connecticut

Last year was the tenth and final year of the LREC/ZREC program, facilitated by Eversource and The United Illuminating Company (UI). The Public Utilities Regulatory Authority (PURA) has launched its successor, the Non-Residential Solar Renewable Energy Solutions (NRES) Program, which is slated to run until 2028 with an annual program capacity of 60 MW. The state’s Virtual Net Metering (VNM) program will be folded into NRES as well. Participants must elect one of the following tariff structures:  

• In the Buy-All structure, the customer sends all energy they generate to the grid in exchange for either utility bill credits or a direct payment.  
• In the Netting Tariff structure, only surplus energy (energy leftover after meeting the onsite power load) is exported to the grid for bill credits.  

Projects 200 kW and under are accepted first-come, first-served — and are compensated about $200/MWh under a Buy-All tariff structure and $95/MWh under a Netting Tariff structure. Rates for projects larger than 200 kW will be determined through a competitive bidding process. All bids are due by March 14, 2022. In addition to these new solar incentives, PURA has also launched a storage incentive program to make headway on Connecticut’s goal of implementing 1,000 MW of storage across the state by the end of 2030. Through Energy Storage Solutions, C&Is could recoup as much as 50% of their storage installation costs as well as receive performance-based incentives that reward system owners for alleviating stress on the utility grid during peak demand.  

Illinois

An emerging and promising new market for solar, Illinois has opened an Adjustable Block Program (also known as Illinois Shines) with limited capacity for commercial solar projects. The program grants incentives to owners of onsite (“distributed generation”) solar systems in addition to utility customers who choose to subscribe to community solar (though applications for the latter incentive are currently waitlisted).  

For system owners, the incentive is paid out in revenue generated from selling the resulting renewable energy certificates (RECs) to utilities (or to other parties, though selling to a utility presents customers with the best financial outlook, according to the program brochure). The distributed generation arm of the Adjustable Block Program is currently in its fifth block and is now accepting new applications for Large Distributed Generation projects between 10 kW and 2 MW. As of this writing, there is approximately 72 MW of total capacity remaining in Block 5.  

Illinois also offers a rebate to all non-residential solar owners in the Ameren Illinois or ComEd service areas with systems that make use of smart inverters. It’s in the best interest of utility companies to incentivize the adoption of smart inverters because they can interface with the utility grid more effectively and contribute to better grid health. Appropriately, Illinois has increased the one-time smart inverter rebate from $250/kW to $300/kW.

For existing solar customers who are considering installing energy storage, Illinois utilities will grant a $300/kWh storage-capacity rebate for net-metering-eligible systems (the rebate drops to $250/kW for systems that are not eligible for net metering). Regulated by the Illinois Commerce Commission, the incentive will remain at these benefit levels until at least 2024, at which point the commission is mandated to either keep them the same or raise them.  

The solar and storage incentive landscapes are ever-changing, and when you choose PowerFlex as your renewable energy partner, you can count on us to stay on top of the latest developments in order to ensure your project achieves the most favorable economics. With decades of experience and a national client roster that stretches from Amazon in California to Bloomberg in New York, we’re uniquely suited to plan a system that will meet your financial and sustainability needs no matter which renewable energy-friendly state you call home. Ready to start? Use the button below to get in touch.