Laws, Regulations and Incentives – Power Solar Energy’s Growth

July 24, 2014

Reprinted with permission from New York Law Journal.


Debates about energy typically focus on concerns about global warming from the use of fossil fuels or the safety (or not) of nuclear power and fracking. While all this discussion is happening, New York is moving, to a not inconsiderable extent, in a different direction. With state laws, regulations and incentives leading the way, the future of solar power here has never looked brighter. This column discusses some of the more significant steps that the state has been taking recently to promote the use of solar energy.

Solar Energy Today

            With improved technology, solar energy today is more than just solar panels (or, more formally, “solar photovoltaic” or “PV” cells connected together) on rooftops that convert sunlight directly into electricity for individual homes or small buildings. Now, PV arrays, which sometimes are referred to as “solar farms,” generate commercial electric power. Solar hot water technology uses a collector, storage tank, piping and valves and pumps to heat water. Passive solar energy heats and lights buildings directly from sunlight, using windows, walls and floors to collect, store and distribute solar heat in cold seasons and using other elements, such as awnings and overhangs, to shade buildings during warm weather.[1]

New PV panels are more efficient and less expensive than ever before. Combined with regulatory developments, the new technology is leading to an incredible growth of solar energy in the state. For example, according to the New York Department of Environmental Conservation (“DEC”), over the past two years, a total of 316 megawatts (“MW”) of solar PV has been installed or is under contract, more than was installed in the entire prior decade.[2]

The Sun Initiative

Two years ago, Gov. Andrew M. Cuomo launched a public-private partnership known as the “The NY-Sun Initiative” to encourage growth of the solar industry. Under this initiative, a solar PV program offers incentives to reduce the installation costs of solar PV for both residential and commercial customers.

For example, under the NY-Sun “Competitive PV Program,” PV installers are able to submit proposals for funding based on commitments from companies interested in having PV installed at their sites and the proposed incentive for each PV project. This past May, the program awarded $18 million for 22 projects that are proposed to add 22 MW of solar capacity in the Hudson Valley and New York City. The approved projects include three sites in Brooklyn, two in Queens, one in Staten Island, four each in Orange and Rockland counties, three in Westchester, two each in Putnam and Ulster counties, and one in Sullivan County. According to the governor’s office, this funding will leverage private investment that will result in a total of $55 million in new PV power infrastructure projects.[3]

Tax Incentives

New York State offers several tax incentives to encourage solar energy. Incentives for residential installations include:

  • An income tax credit for 25 percent of the cost of the system ($5,000 maximum) for grid connected and net metered residential (including multi-family) solar electric and solar thermal systems.
  • An exemption from state sales tax for passive solar space heat, solar water heat, solar space heat and photovoltaics installed in residential and multi-family residential buildings.
  • Subject to local option, a 15-year real property tax exemption for the cost of solar (and certain other renewable) energy systems constructed in New York State, to ensure that property taxes do not rise because owners install solar energy equipment.[4]

The 15-year real property tax exemption is contained in New York Real Property Tax § 487 and provides an exemption for taxation for, among other things, certain solar energy systems.

Focusing on solar power, Section 487 first defines solar energy equipment to mean collectors, controls, energy storage devices, heat pumps and pumps, heat exchangers and other materials, hardware or equipment necessary to the process by which solar radiation is (i) collected, (ii) converted into another form of energy, (iii) stored, (iv) protected from unnecessary dissipation and (v) distributed. The definition specifically excludes pipes, controls, insulation or other equipment that are part of the normal heating, cooling or insulation system of a building, although it specifically includes insulated glazing or insulation to the extent that such materials exceed the energy efficiency standards required by law.

Section 487 provides that real property that includes an approved solar energy system “shall be exempt from taxation to the extent of any increase in the value thereof” by reason of the inclusion of such solar energy system for a period of 15 years. Moreover, when a solar energy system or its components also serve as part of the building structure, the increase in value that is exempt from taxation is equal to the assessed value attributable to such system or components multiplied by the ratio of the incremental cost of such system or components to the total cost of such system or components.

It should be emphasized that solar energy systems must be constructed before January 1, 2015 to be eligible for this exemption. Moreover, local governments may opt-out of this exemption, and a number have done so.[5]


A number of other state policies promote solar energy and other renewable energy sources.

For example, the “Renewable Portfolio Standard” has a goal of at least 30 percent of renewable electricity by 2015 (sometimes referred to as “30 x 15”).[6] In addition, Executive Order 111 sets forth an energy purchasing goal to meet 20 percent of the annual electricity requirement of buildings occupied by state agencies through renewable technologies.[7] From a practical point of view, however, one of the most important of these policies relates to the permitting process.

New York has created a standardized residential/small business solar permit in an effort to cut costs by creating a uniform permitting process in municipalities across the state. Known as the New York State Unified Solar Permit, it was based on the Long Island Unified Solar Permit Initiative (“LIUSPI”) as well as the Solar America Board for Codes and Standards’ national best practices and was developed by the New York State Energy Research and Development Authority (“NYSERDA”), the New York Power Authority, municipalities across the state, and The City University of New York. Any local government on Long Island that adopts the LIUSPI, and municipalities elsewhere in New York that adopt the New York State Unified Solar Permit, are eligible for between $2,500 and $5,000, depending on population, through the New York State Cleaner, Greener Communities program to implement the new procedures.[8]

Under this initiative, a combined building and electrical permit for a grid‐tied PV system will be issued pending proper completion of forms, submission of approved plans and approval by the municipality. The forms are relatively straightforward. Applicants must submit a site plan showing the location of the major components of the solar system and other equipment on the roof or a legal accessory structure. This plan should represent relative location of components at the site including, but not limited to, the location of the array, the existing electrical service location, the utility meter, the inverter, the system orientation and the tilt angle. This plan also should show access and pathways that are compliant with New York State Fire Code, if applicable.

Applicants also must submit the electrical diagram required by NYSERDA for an incentive application or utility for an interconnection agreement; specification sheets for all manufactured components; the project address, section, block and lot number of the property; the owner’s name, address and phone number; the name, address and phone number of the person preparing the plans; and system capacity. In addition, applicants must submit a permit fee.

Permit determinations are to be issued within 14 days upon receipt of a complete application; the local government is required to provide feedback within seven days of receiving an incomplete or inaccurate application. Finally, if an inspection is required, a single inspection should be sufficient and should be conducted within seven days of the request for an inspection.


Solar power is just one form of renewable energy that is being promoted – and that is growing – in New York now. With government support for solar, and for wind, water power, geothermal and biomass, alternative energy sources already provide nearly 11 percent of the energy that New Yorkers use for transportation, space heating, industrial processes and electric power, according to NYSERDA and the federal Department of Energy.[9] Whether renewables will meet 40 percent of New York’s energy needs by 2030, as some predict, remains to be seen, but the efforts being made to promote solar energy suggest that the outlook is, for lack of a better word, sunny.


[1] See, Solar Energy in New York, available at http://www.dec.ny.gov/energy/43231.html (hereinafter, “DEC Solar Energy”).

[2] See, The New York-Sun Initiative, available at http://ny-sun.ny.gov/.

[3] See, Governor Cuomo Announces $60 Million in NY-Sun Funding Available, available at http://www.governor.ny.gov/press/51314-ny-sun.

[4] DEC Solar Energy, supra n. 1.

[5] See, RPTL Section 487. Solar or Wind Energy Systems Exemption, available at http://www.tax.ny.gov/research/property/legal/localop/487opt.htm.

[6] See, New York Renewable Portfolio Standard, available at https://www.nyserda.ny.gov/BusinessAreas/Energy-Data-and-Prices-Planning-and-Policy/Program-Planning/Renewable-Portfolio-Standard.aspx.

[7] See, Executive Order No. 111 – “Green and Clean” State Buildings and Vehicles Reports, available at https://www.nyserda.ny.gov/Publications/Program-Planning-Status-and-Evaluation-Reports/Executive-Order-Green-and-Clean-State-Building-and-Vehicles.aspx.

[8] See, New York State Solar Permits, available at http://www.cuny.edu/about/resources/sustainability/nyssolar/NYSolarSmartPermitWorkshops.html.


[9] See, Renewable Energy, available at http://www.dec.ny.gov/energy/40899.html.


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