PlaNYC: Foster the Market For Renewable Energy

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One interesting case study in the mayor’s plan is the real-time pricing of electricity. According to research done at Carnegie Mellon University, Americans would save nearly $23 billion a year if they shifted just 7% of their usage during peak hours to less expensive times – the equivalent of the whole nation getting a free month of power every year.

The peak hours for electricity consumption in New York City also happen to be at a time when we are basking in sunlight. Therefore it would be a smart policy to promote the use of solar energy, and that is exactly what the mayor’s plan is calling for:

Of all the renewable energy sources, solar currently has the greatest potential to generate electricity within the five boroughs. The technology is commercially available, our abundant roofs offer ample space for panels, and solar energy is most available when the city needs it most-during hot, sunny days. Estimates of solar potential by Columbia University, the City University of New York, and NYSERDA range from 6,000 MW to over 15,000 MW, with one study claiming solar can contribute 18% of peak load by 2022.

To ensure solar meets its long-term potential to contribute more significantly to our supply, we must employ a range of strategies to develop a more competitive market. In order to spur the market in the private sector and help achieve needed economies of scale to bring down prices, New York City will offer a property tax abatement for solar installations. The incentive will cover 35% of installation costs for the first three years of the program, with the incentive scaling back to 20% in years four and five. The graduated structure of this incentive will grant early adopters greater benefits, ensuring that a market is established.

In addition, the City will study the cost-effectiveness of solar electricity when evaluated under a Real Time Pricing scenario. The City will also support the construction of the city’s first carbon neutral building. This building, located along the East River, will be powered primarily by solar energy.

  • I don’t see the connection between real-time pricing and renewable energy.

    Yes, “The peak hours for electricity consumption in New York City also happen to be at a time when we are basking in sunlight.” But real-time pricing moves demand AWAY from the peak hours.

  • I think they are saying that when you factor in Real-Time Pricing, solar starts to look much cheaper.

  • Real-time electricity pricing will make solar-generated power far more valuable, by boosting the price of each kilowatt-hour that now doesn’t have to be bought from the power grid, because it’s solar-generated on-site. (Off-peak, night-time power will be cheaper, balancing out the rates so the average customer won’t pay more.)

  • Eric

    And yet, Whole Foods, which happily wraps itself in a (marketing) cloak of sustainability, continues to say that a solar (or green) roof for its proposed Brooklyn store is “not feasible.” And, oh yeah, they just have to have those 420 parking spaces.

  • I get it. With real-time pricing, the price is higher during peak hours, so it becomes more attractive for consumers to generate that peak electricity on-site using solar rather than buying it. Thank you, Mr. Komanoff.

    I see it is an incentive for energy consumers to build on-site solar panels, but I am not clear on whether it is an incentive for utilities to shift to solar. It seems the utilities would still want to use coal to generate that peak power and get a bigger profit.

  • Imagine if transportation worked the same way. You could pay less to take the subways off peak and mass transit would pay people to bike along highly congested mass transit lines at peak times…

  • Glenn – actually I believe that Mayor Bloomberg is essentially proposing “real-time pricing” for transportation. He doesn’t call it that, but congestion pricing for vehicles essentially means you pay more to get into the city during peak periods. It would produce the same incentive – you can choose to pay the higher tolls and drive into the city, or “go off the grid” and take the subway.

  • Well I still say they should pay people to bike…

  • Glenn,

    Funny you should say that. I just learned that the Mayor is in Mexico now visiting a Conditional Cash Transfer program. As I understand it, it is essentially a program to reward people monetarily for positive behavior. Perhaps such a program could eventually reward people for more sustainable and healthy activities, like biking.

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