Last month, New York Governor Andrew Cuomo signed a series of bills jump starting a new program to bring more solar power to New York, called the NY-Sun Initiative. Managed by the New York State Energy Research & Development Agency (NYSERDA), the goal of this initiative is to double the amount of on-site electrical capacity produced in the state by solar PV in 2012 compared to 2011 and to quadruple that in 2013. $104 million has been set aside in incentives. Commercial facilities in NY have a unique, but temporary, opportunity to install solar PV at a relatively low cost and a good simple payback period, reducing their long-term electricity costs greatly.
The new NY laws include statewide tax credits for the lease of solar equipment and power purchase agreements (A.34-B/S.149-B), statewide sales tax exemptions for commercial solar equipment (A.5522-B/S.3203-B) and an extension of the real property tax abatement in New York City for solar installations (A.10620/S.7711).
One thing that has been holding businesses back from implementing installation of solar PV is the large upfront cost of such a system – depending on the size – from $30,000 to $60,000 or more. This is a huge upfront cost with a potential long return on investment (ROI or “payback”), even with the electricity cost savings and existing tax deductions, credits, and other incentives. Many solar PV companies offer customers options to either lease their systems or sign a Power Purchase Agreement, allowing lower or no upfront costs and the ability to buy sufficient electricity at a discounted rate compared to the normal utility. Often under these agreements, electricity is locked in to this low rate for 15 or 20 years. Cost certainty is certainly attractive to many businesses. But until this new bill, no tax credits or incentives were available for the leasing or PPA options in NY.
The new bill also exempts commercial sites from paying New York State and local sales taxes for purchasing a solar PV system, beginning Jan. 1, 2013.
Finally, for New York City buildings, the bill extends property tax abatements through 2014 for solar PV systems. Eligible expenditures include materials, labor costs of on-site preparation, engineering services, and assembly and original installation.
More information about the NYSERDA program can be found here.