Solar

Five Lessons That Define LIPA’s New CSI Solar Program

The Long Island Power Authority (LIPA) is planning another round of solar energy support with its Clean Solar Initiative-II (CSI-II) program, building off lessons learned from the first such program. The CSI-II seeks to bring on another 100-MW of solar energy generated on Long Island, with a couple of unique criteria. LIPA expects to begin accepting applications for CSI-II from the end of September through the end of January.

The CSI-I, which was laid out in three tranches, “has accomplished what we wanted to,” explained Michael Deering, LIPA’s VP for environmental affairs. The first tranche for >500-kW systems has been fully subscribed, and the middle tranche (~150-500 kW) is about 90 percent subscribed. There’s about 40 percent availability in the third tranche for smaller systems (50-150 kW). Deering predicts that at least two and possibly all three tranches from CSI-I will be fully developed as LIPA kicks into its CSI-II program.

But with CSI-II, LIPA is applying a few lessons learned from its CSI-I experience, along with some new angles to suit its emerging needs.

A 2-MW project cap. In CSI-I there was no cap on the size of a project, and LIPA was inundated with projects bigger than 2 MW, which is the level where its standard interconnection processes are streamlined, Deering said. As a result of more large projects coming in, it’s taken longer to do interconnection studies and understand the infrastructure needs to move them forward. With CSI-II, LIPA is capping project sizes at 2 MW to be consistent with its small generator interconnection procedures, which will help expedite them toward approval more quickly.

Better-defined site control. Another change from CSI-I to CSI-II is that LIPA is requiring term sheets, or PPAs, between the solar developer and landowners. “What we saw in the first round was that we got letters from owners saying ‘yes I’ll work with this person to put a solar array on my property,’ but what we found was that they hadn’t really negotiated any terms,” which caused more delays before LIPA could move on to the interconnection, Deering said. Requiring term sheets or a PPA “will help us move these projects forward more quickly.” LIPA aims to have CSI-II projects developed in the 2015-2016 timeframe.

More time to apply. Another key difference in CSI-II is in the bidding process. CSI-I was a first-come-first-serve program, and within 10 minutes of its opening LIPA was overrun with applications, particularly for the larger tranche, Deering said. This time LIPA will keep the application process open for four months to allow plenty of time for customers and developers to have a more complete dialogue and get their ducks in a row. More complete applications and procurement pathways means a more streamlined process.

Let the market set the price. Those applications also will ultimately determine the price point for LIPA. While CSI-I pricing was set by LIPA at $0.22/kWh, CSI-II LIPA will take into account the price identified within each application that customers feel is economic for them, Deering said. Over the course of the four-month application period LIPA will review them all, do a complete economic analysis and then set the clearing price that will apply to all projects. “It’s a little bit different than a reverse auction,” he explained.

Address load-constrained areas. There’s also an extra nugget in CSI-II for customers in a specific area of Long Island: LIPA is offering a premium of $0.07/kWh for 40-MW of solar that gets developed on the east end of the South Fork (think the Hamptons, Montauk, etc.). That area is seeing an increased load on the system; so LIPA is willing to pay a little extra for new solar energy in that area, instead of investing in a lot more T&D and additional generation, potentially $85-$125 million by 2020, according to Deering. “That’s a cost-effective investment for us to avoid and defer that significant capital infrastructure costs, and address the increasing load in that area in a very environmentally sensitive manner,” he said. And if that price premium convinces enough customers to bring on more solar, LIPA sees it as an effective example to apply to other areas in its service territory that are straining with demand.

LIPA has long been committed to solar energy development, but lately it’s been in the spotlight for other reasons and currently is being privatized under Public Service Electric & Gas (PSEG) by gubernatorial order, reportedly including a rate freeze for the next two years. That shouldn’t impact the CSI programs though, Deering said. Any such LIPA programs that are approved and authorized or in place, PSE&G will be picking them up and administering them, he noted. For others still in the planning process like CSI-II and the two other renewable energy proposals mentioned above, “PSE&G is aware of these programs, and will be in a position to engage in these programs going forward,” he noted.

CSI-II is in addition to two other clean energy initiatives that LIPA is pursuing: a separate FiT for a 20-MW block of other renewable energy sources (e.g., wind, fuel cells), and an upcoming request-for-proposal (RFP) due by year’s end for up to 280-MW of renewable energy, which could also include energy storage. Meanwhile, LIPA, the New York Power Authority and ConEd are in a partnership to explore various renewable energy options, including up to 350 MW of offshore wind project potential, Deering noted.

Lead image: Overhead view of Long Island, via Shutterstock