LIPA Announces “Feed-in-Tariff II” Solar Program

At long last, The Long Island Power Authority (LIPA) has revealed the details behind its proposed Feed-in-Tariff (FIT) II Solar Program. Although the proposal is still subject to public review and final approval by LIPA’s Board, we are encouraged by the proposed revisions to the new FIT program, and think it represents a highly attractive financial opportunity for Long Island-based businesses and commercial real estate owners.For starters, the total FIT program size is to be 100MW, double the 2012 FIT program of 50MW. In addition, the eligible solar system size will be reduced to 2MW, which will limit the number of large “white elephant projects” that are proving to be the Achilles' heel of last year’s FIT program, while ensuring a broader base of participating projects.The other key revision is the adoption of an auction-based clearing price for the 20-year FIT arrangement. Unlike the pre-determined 20-year FIT price of $0.22 per kWh that was used in the 2012 program, under FIT II, applicants will submit competitive bid prices along with their applications, and winning applicants will receive the “Clearing Price” on a fixed-price basis over the 20-year period. Another change is the elimination of system size tiers, along with an increase in the minimum system size from last year’s 50kW to 100kW.The tentative timing for LIPA’s Solar FIT II calls for a late September 2013 launch date with a five month open application period (i.e. through January 31, 2014 if the FIT program launches on September 30, 2013). Unlike the 2012 FIT program, the available FIT capacity will not be doled out on a “first-come, first-served” basis, but will rather allow all applications to be submitted during the application window, with winning bidders to be determined based upon competitive bid levels.We think LIPA’s FIT II will be a terrific opportunity for Long-Island businesses and commercial real-estate owners, whether you are interested in owning the solar system directly (and fully extracting the available federal solar incentives while enjoying an attractive annuity-like payment from LIPA for 20-years) or simply leasing your unused roof or ground to a solar developer like PowerFlex (thereby gaining a new revenue source with no associated capital investment).