The New York Public Service Commission has refined their pricing mechanism for services provided by distributed energy providers. In its most recent order in a long line of decisions on modernizing the state’s electric market, the commission updated methods to compensate distributed energy resources based on the actual value provided by those resources. The modifications to the so-called “Value Stack” and related compensation rules include how Demand Reduction Value and Capacity Value are calculated.
According to the commission, the improvements to the commission’s renewable energy policy known as the Value of Distributed Energy Resources (VDER) will create the potential for more than 1,000 megawatts (MW) of additional community distributed generation (CDG) projects beyond the 500 MW of projects already in the pipeline. It stated that “by accurately compensating distributed energy to maximize grid benefit and reduce costs for distributed energy providers and consumers, this policy will advance the State’s renewable energy industry, including the bourgeoning CDG market.”
The commission emphasized that unlike the established net metering method of pricing for distributed energy resources, VDER compensates owners of solar and other distributed and renewable energy projects for the values they provide to society and the grid, including carbon-free power, thereby reducing cost shifting while still providing good returns to solar and other renewable projects. It explained that VDER is a successor policy to net metering and was first implemented because net metering was a blunt compensation method that did not encourage projects to maximize grid benefits and over time will cause unfair impacts on ratepayers. Re Value of Distributed Energy Resources, Case 15-E-0751, Apr. 18, 2019 (N.Y.P.S.C.).