New York state recently hit 2GW of solar power installed, and has five years to install the next 4GW. The state is also aiming to install 1.5 GW of energy storage capacity by 2025 and 3 GW by 2030 while trying to figure out how to deal with a potential winter time solar duck curve and one of the most unique cities on the planet – Manhattan.

As part of the its broader discussion on the value of distributed energy resources (DER), New York’s Public Utility Commission (PUC) has published a whitepaper on rate design for a mass market Net Metering (NEM) successor tariff for solar power projects smaller than 750kWac. The recommendations by the PUC suggest that onsite NEM customers be required to choose from among set billing structures that include demand charge and time-of-use variables.

As part of the presentation, the PUC staff suggested extending net metering for all projects below 750kWac for an additional year, — and the PUC did approve this extension.

The group studied four billing structures based on various applications of time-of-use and demand charges, and three sensitivities. The unique structures were:

Joint Utilities time-of-use with demand charge

Joint Utilities with two demand charges

Clean Energy Parties TOU

Alternative TOU without demand charges

Sensitivity: Alternative TOU with reduced customer charge

Sensitivity: Joint Utilities with reduced demand charges

Sensitivity: Clean Energy Parties’ TOU with reduced customer charge

Energy storage will be used in the state to mitigate these effects — with big incentives and projects moving in already.

The above chart shows an analysis performed by the DER working group which showed the costs shifts from NEM customers to non-NEM customers. The values range from $3.16 to $7.28/kWdc per month. Some of these cost shifts included fees that all electricity users paid as taxes into clean energy programs that NEM customers benefit from. One suggestion is to create a “Customer Benefit Contribution” charge of between $0.69/kW to $1.09/kW depending on utility and customer class to balance out these clean energy taxes.

The report did try to account for changes on a project’s return on investment. For instance, the above Customer Benefit Contribution would have a “relatively subtle effect on the economics of solar, with expected increases to simple payback ranging from 0.2 years in Con Edison to 1.4 years in NYSEG, and averaging 0.7 years across all service territories.”

The report assumed that 50% of residential solar was consumed onsite immediately — at 50% net metered, while 70% of a small commercial installation was consumed immediately.

The document breaks down the four programs and three sensitivities affecting electricity bills. The above image shows a residential electricity bill with costs broken out based upon the various billing techniques. The total avoided costs as well avoided supply costs are broken out with the solid and dotted lines above.

The below chart looks at the same information, but in a different format and focuses on the small commercial service class. A smart developer would focus the highest rate customers, balanced by the cost to install in that region, in order to maximize customer return on investment.