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This report is available at no cost from the National Renewable Energy

Laboratory (NREL) at www.nrel.gov/publications.

Contract No. DE-AC36-08GO28308

Technical Report

NREL/TP-6A20-72186

February 2019

Expanding Community Shared Solar in 

New York City: Analysis of Barriers and 

Policy Pathways

Eric O’Shaughnessy

National Renewable Energy Laboratory
NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

This report is available at no cost from the National Renewable Energy

Laboratory (NREL) at www.nrel.gov/publications.

Contract No. DE-AC36-08GO28308

National Renewable Energy Laboratory

15013 Denver West Parkway

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303-275-3000 • www.nrel.gov

Technical Report

NREL/TP-6A20-72186

February 2019

Expanding Community Shared Solar in 

New York City: Analysis of Barriers and 

Policy Pathways

Eric O’Shaughnessy

National Renewable Energy Laboratory

Suggested Citation 

O’Shaughnessy, Eric. 2019. Expanding Community Shared Solar in New York City: 

Analysis of Barriers and Policy Pathways. Golden, CO: National Renewable Energy 

Laboratory. NREL/TP-6A20-72186. https://www.nrel.gov/docs/fy19osti/72186.pdf.
NOTICE

This work was authored by the National Renewable Energy Laboratory, operated by Alliance for Sustainable 

Energy, LLC, for the U.S. Department of Energy (DOE) under Contract No. DE-AC36-08GO28308. Funding 

provided by U.S. Department of Energy Office of Energy Efficiency and Renewable Energy Solar Energy 

Technologies Office. The views expressed herein do not necessarily represent the views of the DOE or the U.S. 

Government.

This report is available at no cost from the National Renewable 

Energy Laboratory (NREL) at www.nrel.gov/publications.

U.S. Department of Energy (DOE) reports produced after 1991 

and a growing number of pre-1991 documents are available 

free via www.OSTI.gov.

Cover Photos by Dennis Schroeder: (clockwise, left to right) NREL 51934, NREL 45897, NREL 42160, NREL 45891, NREL 48097, 

NREL 46526.

NREL prints on paper that contains recycled content.
iii

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Foreword

The New York City Mayor’s Office of Sustainability seeks to identify policy pathways to 

support a local and scalable community shared solar market. This memo summarizes the key 

challenges to the New York City community shared solar and the existing policy landscape. 

Several tax incentive and other policy pathways are analyzed. The results suggest that supportive 

New York City policies could yield community shared solar deployment on the order of 

megawatts per year, resulting in tens of thousands of megawatt-hours of community shared solar 

output and generating millions of dollars in local economic activity.
iv

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Preface

This work was authored by the National Renewable Energy Laboratory (NREL), operated by 

Alliance for Sustainable Energy, LLC, for the U.S. Department of Energy (DOE) under Contract 

No. DE-AC36-08GO28308. Funding provided by the DOE Office of Energy Efficiency and 

Renewable Energy Solar Energy Technologies Office.

The Solar Technical Assistance Team (STAT) Network is a project of the DOE and is 

implemented by NREL. The STAT Network provides credible and timely information to 

policymakers and regulators for the purpose of solar technology and policy-related decision 

support.

The New York City Mayor’s Office of Sustainability requested assistance in developing costbenefit considerations and analysis to be used in evaluating the budgetary case for expanding 

incentives to support community shared solar installations in New York City. The New York 

City Mayor’s Office of Sustainability is specifically interested in rooftop acquisition and 

optimizing scarce surface area for distributed solar deployment. 

This analysis was conducted to meet an immediate need and was based on the best information 

the analysts had available within time constraints. This memo is intended to be a starting point 

for additional research and analysis into solar options for the New York City Mayor’s Office of 

Sustainability and does not constitute a comprehensive roadmap for solar deployment. 

The views expressed in this report do not necessarily represent the views of the DOE or the U.S. 

Government. This document was prepared as an account of work sponsored by an agency of the 

United States government. Neither the United States government nor any agency thereof, nor any 

of their employees, makes any warranty, express or implied, or assumes any legal liability or 

responsibility for the accuracy, completeness, or usefulness of any information, apparatus, 

product, or process disclosed, or represents that its use would not infringe privately owned rights. 

Reference herein to any specific commercial product, process, or service by trade name, 

trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, 

recommendation, or favoring by the United States government or any agency thereof. The views 

and opinions of authors expressed herein do not necessarily state or reflect those of the United 

States government or any agency thereof.
v

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Acknowledgments

For their collaboration on this project, we would like to thank the following individuals from the 

New York City Mayor’s Office of Sustainability: Thomas Hutton, Eleanor Kahn, Benjamin 

Mandel, and Susanne DesRoches. For their thoughtful review of this work, we would like to 

thank Shamara Collins (DOE), Kyle Fricker (DOE), Nate Hausman (Clean Energy States 

Alliance), and Alison Holm (NREL).
vi

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List of Acronyms

CSS community shared solar

DOE Department of Energy

DOF Department of Finance

EDC Economic Development Corporation

kW kilowatt

MW megawatt

NREL National Renewable Energy Laboratory

NPV net present value

NYC New York City

PTA property tax abatement

STAT Solar Technical Assistance Team
vii

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Table of Contents

1 Introduction and Context..................................................................................................................... 1

2 CSS Development Barriers in NYC..................................................................................................... 2

2.1 Building Owner Long-Term Commitment Risks.......................................................................... 2

2.2 Mixed Status Building Ownership ................................................................................................ 2

2.3 Issues with Existing Policy Framework ........................................................................................ 2

3 Policy Analysis: Tax Incentives to Support NYC CSS Market......................................................... 4

3.1 Baseline: PTA Expiration.............................................................................................................. 4

3.2 Scenario 1: PTA Extension ........................................................................................................... 4

3.3 Scenario 2: Reformed PTA Extension .......................................................................................... 5

3.4 Scenario 3: Increasing PTA Schedule ........................................................................................... 6

3.5 Scenario 4: Commercial Expansion Program Incentives.............................................................. 7

3.6 Summary ....................................................................................................................................... 8

4 Non-Tax Policy Pathways .................................................................................................................... 9

4.1 NYC Lease Guarantees................................................................................................................. 9

4.2 NYC Prospective Host Platform ................................................................................................... 9

4.3 City-Owned Building Hosting ...................................................................................................... 9

4.4 Policy Language Clarification..................................................................................................... 10

4.5 Ad Hoc Industrial Development Incentives................................................................................ 10

5 Conclusion .......................................................................................................................................... 11

References................................................................................................................................................. 13

Appendix A: Methods ............................................................................................................................... 14

NPV of Foregone Revenue................................................................................................................... 14

Scenario 1: PTA Extension ......................................................................................................... 14

Scenario 2: Reformed PTA Extension ........................................................................................ 14

Scenario 3: Increasing PTA Schedule ......................................................................................... 15

Scenario 4: Commercial Expansion Program ............................................................................. 15

Economic Activity................................................................................................................................ 16
viii

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List of Figures

Figure 1. Summary of tax incentive policy impacts (left pane) and costs (right pane)................................. 8

List of Tables

Table 1. Scenario 1 Results: PTA Extension ................................................................................................ 5

Table 2. Scenario 2 Results: Reformed PTA Extension ............................................................................... 5

Table 3. Scenario 3 Results: Increasing PTA Schedule................................................................................ 6

Table 4. Scenario 4 Results: Commercial Expansion Program .................................................................... 7

Table 5. Summary of Tax Incentive Policy Cost and Impacts.................................................................... 11
1

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1 Introduction and Context

Community shared solar (CSS)1 could be an effective way to improve customer participation in 

the New York City (NYC) solar market, the most densely populated urban environment in the 

United States (US Census 2012). Most residents of New York City are renters—about 63% of 

the housing stock are rental units—and many homeowners lack access to rooftop space in multifamily buildings (U.S. Census 2015; NYC 2018). These conditions make NYC an ideal 

subscriber2 base for CSS. However, potential hosts and solar developers face unique challenges 

in siting CSS projects in NYC. Due to competing interests for valuable real estate and re-zoning 

trends, CSS has failed to gain traction in NYC. The NYC Mayor’s Office of Sustainability seeks 

to identify policy pathways that could overcome these challenges and grow the NYC CSS 

market.

New York State policy allows for CSS projects that are less than 5 megawatts (MW) in size and 

which have at least 10 subscribers (NY PSC 2015).

3 The 10-subscriber minimum is waived for 

projects on multi-family buildings. The CSS policy allows for commercial and industrial 

customers to subscribe to up to 40% of project capacity, limiting all other subscribers to less than 

25 kilowatts (kW) per subscription. As of April 2018, about 4 MW of capacity across 13 CSS 

projects had been installed in New York State.4 Over 700 MW in 317 projects are in the pipeline

in New York State. CSS has gained less traction in NYC, with 25 projects in the pipeline, 

representing about 8.5 MW of capacity. At the time of writing, five CSS projects were in some 

state of construction or completion, representing about 3 MW of NYC CSS project capacity.5

 

 

1 The term “community shared solar” is used throughout to refer to projects where output from a central solar 

photovoltaic system is credited to multiple accounts. This term is commonly used in New York City, though 

community shared solar is often referred to as community distributed generation in New York State. 2 The term “subscriber” is commonly used to describe retail electricity customers that “subscribe” to a specified

capacity or output from a CSS array.

3 As part of New York’s Reforming the Energy Vision (REV), CSS projects are now eligible for value of distributed 

energy net metering.

4 All references to New York solar data are based on New York State Energy Research and Development 

Authority’s Open NY Database. See: https://data.ny.gov/browse?DatasetInformation_Agency=Energy+Research+and+Development+Authority 5 Based on conversations with project developers.
2

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2 CSS Development Barriers in NYC

The NYC Mayor’s Office of Sustainability and other stakeholders have identified site host 

acquisition as a key challenge for NYC CSS development. CSS models require a building or 

landowner to “host” a CSS array. Hosts are typically compensated through site lease payments. 

New York State’s community distributed generation program rules require CSS subscribers be 

located in the same utility service territory and NY-ISO load zone as the project. This effectively 

precludes New York City residents from subscribing to CSS projects upstate. NYC’s urban 

environment provides limited opportunities for ground mount-capable sites, such that CSS 

project capacities are generally limited by available rooftop space. In NYC, potential hosts 

include owners of large commercial and industrial buildings with rooftops large enough to 

support systems of 200 kW or more of capacity. These rooftop spaces are often not utilized or 

under-utilized, such that potential rooftop lease revenue should be attractive to building owners. 

However, interviews with the NYC Mayor’s Office of Sustainability and other stakeholders 

revealed several challenges in inducing building owners to host solar systems: building owner 

long-term commitment risks, mixed status building ownership, and issues with the existing CSS 

policy framework.

6

 

2.1 Building Owner Long-Term Commitment Risks

Potential building hosts are generally averse to long-term lease contracts for rooftop space. This 

aversion stems from NYC’s dynamic real estate environment. The potential for future re-zoning 

and urban development means that many commercial and industrial sites could be converted into 

more lucrative residential uses in the near future. Prospective hosts bear the risk of delaying or 

foregoing lucrative site re-purposing by tying up rooftop space in 10- to 20-year solar leases. As 

a result, prospective hosts may demand higher lease rates to shift some of the risk burden onto 

developers and system owners. Alternatively, prospective hosts may demand shorter-term 

contracts that undermine project economics. In both cases, building owner aversion to long-term 

rooftop commitments reduce interest in CSS hosting and impede NYC CSS deployment. 

2.2 Mixed Status Building Ownership

Several stakeholders stated that the mixed abilities of building owners to leverage available tax 

incentives increases site acquisition costs. As discussed further in the following section, NYC’s 

primary solar incentive uses a tax abatement that is unavailable to tax-exempt building owners 

(e.g., non-profits). Other building owners may have insufficient tax liability to fully monetize 

available tax incentives. Developers generally do not know the tax status of building owners. 

Hence, developers inefficiently invest resources in exploring potential sites that are ultimately 

not viable due to tax status.

2.3 Issues with Existing Policy Framework

In addition to federal and state incentives for solar, NYC has enacted policies to support solar 

development within the city (NYSERDA 2018). For example, building owners with a property 

 

6 Interviews have been conducted with CleanChoice Energy, Daroga Power (developer), Gotham Community Solar, 

the New York City Economic Development Corporation, On-Force Solar, SolarOne, and a building manager at an 

NYC CSS site. Feedback has also been gathered from experts at the City University of New York and documents 

obtained from the NYC Department of Finance. Further interviews have been planned for this project.
3

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tax liability that place a solar photovoltaic (PV) system “in service in connection with an eligible 

building” are eligible for the NYC property tax abatement (PTA).7 The PTA is worth 5% of the 

installed system costs per year for four years, capped at $62,500/year or $250,000 in total. The 

PTA is applied after all other New York State rebates have been deducted from the installed cost.

NYC stopped accepting applications for the existing PTA on December 31, 2018, as scheduled. 

Stakeholders reported that a PTA extension has been discussed at the state and city levels, but 

the PTA is inactive at the time of publication.

The NYC Mayor’s Office of Sustainability and other stakeholders have identified at least two 

issues with the existing PTA framework. First, the PTA cap at $62,500/year may render the 

incentive value too marginal to attract large industrial building hosts. Second, the language is 

vague enough to create possible confusion around PTA eligibility for CSS projects. The PTA 

accrues to the building owner rather than the solar PV system owner and appears to allow nonsystem owner hosts to accrue the PTA. However, the restriction that the system be “in 

connection with an eligible building” may be difficult to satisfy for CSS projects where 

subscribers are not necessarily building occupants.

Stakeholder feedback indicates that further policy ambiguity may exist concerning system 

ownership, sales of system output, and regulation. New York State exempts solar PV system 

owners from utility regulation.8 This language protects PV system owners from utility regulation 

in cases where system output is “distributed solely from one or more of such [systems] to users 

located at or near a project site.” Ambiguity in what constitutes distribution “near” the project 

site could complicate CSS project development, given that CSS subscribers may not reside near 

the project site. Indeed, NYC regulators rejected one proposed CSS project on the grounds that 

the project qualified as a “utility use.”9 Further, rooftop solar systems have been treated as 

separate property lots for taxation purposes in some cases, disqualifying the building owner from 

PTA eligibility.

 

7 New York Consolidated Laws, Real Property Tax Law, Article 4, Title 4-C. Eligible building refers to property tax 

class one, class two, or class four building in cities larger than one million people. See 

http://public.leginfo.state.ny.us/lawssrch.cgi?NVLWO:.

8 New York Consolidated Laws, Public Service Law – PBS §2.13. http://codes.findlaw.com/ny/public-servicelaw/pbs-sect-2.html. 9 Based on conversation with the project developer Daroga Power.
4

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3 Policy Analysis: Tax Incentives to Support NYC CSS 

Market

Four tax policy pathways to expand NYC CSS are analyzed. Each policy is assessed against a 

hypothetical baseline scenario where the PTA expires, and no additional policies are 

implemented. Policy impacts are presented in terms of additional installed CSS capacity 

(MW/year), additional CSS output (MWh/year),10 foregone tax revenue ($M/year), and 

additional economic activity ($M/year). Ranges are presented to avoid over-stating confidence in 

point estimates. The ranges should roughly approximate low-and high-end estimates of policy 

impacts. See "Appendix A: Methods" for more detailed information about the approaches to the 

policy analysis.

3.1 Baseline: PTA Expiration

Five projects representing about 3 MW of capacity were due to come online in NYC in the first 

half of 2018 under the existing PTA. One developer had an additional 4 MW in some stage of 

construction as of early 2018, suggesting that total installed capacity in 2018 could be as high or 

higher than 7 MW.11 Based on these data, it is assumed that 3 MW/year (5 projects) represents a 

low-end estimate of annual installation rates and that 7 MW/year (12 projects) represents a highend estimate of installation rates under a PTA extension. 

The baseline assumes that the PTA expires at the end of 2018, as scheduled. One developer 

estimated that about half of the project pipeline would be economically infeasible without the 

PTA, while another developer stated that the entire project pipeline depends on the PTA. 

Conservatively, if about half of CSS projects would remain economically viable with a PTA 

expiration, it is assumed that a range of 1.5 MW/year (2.5 projects) to 3.5 MW/year (6 projects)

would be installed if the PTA expires. This deployment range serves as the baseline scenario.

3.2 Scenario 1: PTA Extension

Scenario 1 assumes the PTA is extended as is. Building on the discussion in the baseline, a PTA 

extension could support an additional 1.5 MW/year (2.5 projects) to 3.5 MW/year (6 projects) of 

NYC CSS deployment. Table 1 presents results of the policy analysis. It is estimated that the 

PTA extension would cost about $1M-$3M/year in foregone tax revenue and generate $1M-

$3M/year in economic activity.

 

10 Capacity is converted to output based on a capacity factor of 13%, the same capacity factor applied in the 

NYSERDA Open NY Database for NYC CSS projects.

11 These estimates are based on data collected during the period of analysis in 2018.
5

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Table 1. Scenario 1 Results: PTA Extension

Additional Installed 

Capacity (MW/year)

Additional Output 

(MWh/year)

Foregone Tax 

Revenue ($M/year)

Economic Activity 

($M/year)

1.5 – 3.5 1,700 – 4,000 1 – 3 1 – 3

3.3 Scenario 2: Reformed PTA Extension

Scenario 2 assumes the PTA is extended, with an increased duration from 4 to 10 years, and the 

PTA cap is removed. Based on stakeholder feedback, these PTA reforms would have significant 

impacts on the NYC CSS market. Extending the PTA duration would increase the lifetime value 

of the PTA to building owners and could allay re-zoning risk. Removing the PTA cap could 

improve project economics on large rooftops where project costs exceed the existing cap. Hence 

a reformed PTA extension could increase the number of viable projects and increase average 

project size.

To generate a low-end estimate, a no-impact case assumes that the reformed PTA extension 

would have no incremental impact on NYC CSS capacity relative to the simple PTA extension 

(Scenario 1). To generate a high-end estimate, a high-impact case assumes that the reformed 

PTA extension increases deployment by a factor of 2.3, the estimated difference in value to a 

building owner between the reformed PTA and the existing PTA for a hypothetical 500 kW 

system (see Appendix A: Methods).

Table 2 summarizes the analytical results for Scenario 2 based on these two cases. The no-impact 

case represents a worst-case scenario where the PTA reforms have no effect on deployment but 

result in increased foregone revenue to the city. The high-impact case represents a situation 

where the PTA reforms increase deployment while incurring the cost of increased foregone tax 

revenue. In both cases, foregone tax revenues are higher than under a simple PTA extension, 

given that the PTA accrues over a longer timeframe and that the PTA cap has been removed. In 

the high-impact case, these additional costs may be justified by a significant increase in CSS 

output: we estimate that CSS output would increase by about 260% in the high-impact case for 

the reformed PTA extension relative to a simple PTA extension. The reformed PTA also 

increases incremental economic activity by about a factor of 4. However, foregone tax revenues 

exceed benefits from increased economic activity.

Table 2. Scenario 2 Results: Reformed PTA Extension

Policy Impact

Additional 

Installed Capacity 

(MW/year)

Additional 

Output 

(MWh/year)

Foregone Tax 

Revenue 

($M/year)

Economic Activity 

($M/year)

None 1.5 – 3.5 1,700 – 4,000 3 – 6 1 – 3

High 5.5 – 12.5 6,300 – 14,200 6 – 14 4 – 9
6

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3.4 Scenario 3: Increasing PTA Schedule

Scenario 3 assumes that the PTA is extended, the PTA duration is extended from 4 to 10 years, 

the PTA cap is removed, and that the PTA rate is adjusted to the following schedule:

Year 1 2 3 4 5 6 7 8 9 10

PTA 1% 2% 3% 4% 5% 5% 5% 5% 5% 5%

The increasing schedule developed here is provided for illustrative purposes. Policymakers and 

stakeholders could work together to design an optimal schedule. The increasing schedule would 

have several benefits. First, the increasing schedule would reduce the host’s risk, given that the 

penalty of breaking the lease early is lower when PTA receipts are lower in the early years of the 

term.12 Second, the increasing schedule protects NYC’s investment by distributing fewer 

abatements in the early years of the lease in the event that the host breaks the lease and defaults 

on the penalty. Tax abatements in the early years would generally be less than the abatement cap 

($62,500/year) under the existing PTA. Third, the increasing schedule incentivizes hosts to keep 

the property in its current use for the full PTA term to realize the higher abatement at the end of 

the term. Finally, the increasing schedule could result in some beneficial self-selection, given 

that building owners that are less likely to break the lease would be more likely to select into a 

program with an increasing incentive schedule.

To generate a low-end estimate, a no-impact case assumes that the increasing PTA schedule 

would have no incremental impact on NYC CSS capacity relative to the simple PTA extension 

(Scenario 1). To generate a high-end estimate, a high-impact case assumes that the increasing 

PTA schedule increases deployment by a factor of 1.8, the estimated difference in value to a 

building owner between the increasing PTA and the existing PTA for a hypothetical 500 kW 

system (see Appendix A: Methods).

Table 3 presents the analytical results for the increasing PTA. Policy impacts in terms of 

additional capacity, output, and economic activity are the same in the increasing PTA as in the 

reformed PTA (Scenario 2). However foregone tax revenues are lower in the increasing PTA, 

given that PTA outlays are lower in the early years of the PTA term.

Table 3. Scenario 3 Results: Increasing PTA Schedule

Policy Impact

Additional 

Installed Capacity 

(MW/year)

Additional 

Output 

(MWh/year)

Foregone Tax 

Revenue 

($M/year)

Economic Activity 

($M/year)

Low 1.5 – 3.5 1,700 – 4,000 2 – 5 1 – 3

High 3.5 – 9.5 4,000 – 10,800 4 – 9 3 – 7

 

12 NYC may implement a break clause dictating that hosts must re-pay some portion of the PTA if the host breaks 

the lease and decommissions the system during the PTA term.
7

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3.5 Scenario 4: Commercial Expansion Program Incentives

Scenario 4 assumes that the PTA is replaced by a program allowing rooftop PV lessees to 

capitalize on Commercial Expansion Program incentives. The Commercial Expansion Program

offers property tax abatements to building owners that induce tenants to lease and use 

commercial and industrial spaces in certain areas of NYC. The Commercial Expansion Program

abatement is equal to $2.5 per square foot of leased space for 10 years. There is no precedent to 

allow rooftop lessors to claim the Commercial Expansion Program, and the only application to 

our knowledge has been rejected by NYC.13 NYC could amend policy language to explicitly 

extend the Commercial Expansion Program to rooftop lessors. The rationale is that the site host 

(building owner) induces the development of unutilized rooftop space by allowing a lessee 

(developer) to lease and use the space for CSS development. CSS project development also 

stimulates direct and indirect economic activity through the installation of alternative energy 

systems that produce bill savings for subscribers.

To generate a low-end estimate, a no-impact case assumes that the Commercial Expansion 

Program would have no incremental impact on NYC CSS capacity relative to the simple PTA

extension (Scenario 1). To generate a high-end estimate, a high-impact case assumes that the 

Commercial Expansion Program increases deployment by a factor of 3.6, the estimated 

difference in value to a building owner between the Commercial Expansion Program and the 

existing PTA for a hypothetical 500 kW system (see Appendix A: Methods).

Table 4 summarizes the analytical results for Scenario 4 based on these two cases. The lowimpact case represents a worst-case scenario where the Commercial Expansion Program has no 

effect on deployment but results in increased foregone revenue to the city. The high-impact case 

represents a situation where the Commercial Expansion Program increases deployment while 

incurring the cost of increased foregone tax revenue. In both cases, foregone tax revenues are 

higher than a simple PTA extension (Scenario 1) and the reformed PTA extensions (Scenarios 2 

and 3). The high costs of the Commercial Expansion Program reflect the value of the incentives 

to the building owners. These high costs may be justified by increased CSS deployment: we 

estimate that CSS output would increase by about a factor of 7 in the high-impact Commercial 

Expansion Program case relative to a simple PTA extension, and that CSS output would increase 

by about 90% in the high-impact Commercial Expansion Program case relative to the highimpact case for the reformed PTA extensions. The Commercial Expansion Program also 

increases economic activity relative to all other scenarios. 

Table 4. Scenario 4 Results: Commercial Expansion Program

Policy Impact

Additional 

Installed Capacity 

(MW/year)

Additional 

Output 

(MWh/year)

Foregone Tax 

Revenue 

($M/year)

Economic Activity 

($M/year)

Low 1.5 – 3.5 1,700 – 4,000 4 – 10 1 – 3

High 9.5 – 21.5 10,800 – 24,500 15 – 35 7 – 15

 

13 Based on conversations with and documents provided by project developer Daroga Power.
8

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3.6 Summary

Figure 1 summarizes the results of the policy analysis for the four tax incentive policies. The 

figure illustrates the ranges of incremental impacts relative to a baseline where the PTA expires 

at the end of 2018. 

Figure 1. Summary of tax incentive policy impacts (left pane) and costs (right pane)

Scenario 1 represents the lowest-cost, lowest-impact policy pathway. A simple PTA extension 

would support ongoing CSS deployment consistent with current trends. Scenarios 2 and 3 maintain 

the existing PTA structure with reforms that both increase policy impact (in terms of CSS 

deployment) and increase costs. By providing lower abatements in the initial years of the PTA 

duration, the increasing PTA reduces the net present cost to NYC but also reduces the NPV to the 

building owner. As a result, Scenario 3 is a lower-cost, lower-impact PTA reform than Scenario 2.

Scenario 4 replaces the existing PTA structure with a PV Commercial Expansion Program. The 

Commercial Expansion Program is a more valuable incentive to building owners than the existing 

PTA or the reformed PTA structures in Scenarios 2 and 3. As a result, Scenario 4 has the greatest 

estimated impact on CSS deployment. However high values to building owners entail higher costs 

to NYC, making Scenario 4 the highest-cost, highest-impact tax incentive policy pathway.

The costs of the Commercial Expansion Program approach could be reduced by adjusting the 

incentive level, that is, by reducing the incentive level per square foot. However, the Commercial 

Expansion Program approach varies from the PTA approach in a way that would affect impacts 

and costs at any incentive level. Unlike the Commercial Expansion Program, the PTA amount 

correlates with system costs. As a result, the PTA level per watt installed declines as prices fall. 

Likewise, PTA levels are lower per watt installed for larger systems that reduce costs through 

economies of scale. In contrast, the Commercial Expansion Program level is set by rooftop space, 

so that foregone revenues do not fall if prices fall or if larger projects achieve economies of scale. 

Therefore, the costs and impacts of the Commercial Expansion Program approach should generally 

increase over time relative to the PTA.
9

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4 Non-Tax Policy Pathways

This section summarizes several non-tax policy pathways to support NYC CSS deployment. The 

policy pathways are discussed qualitatively and future work could attempt to quantify the 

impacts and costs of these non-tax policy pathways.

4.1 NYC Lease Guarantees

As an alternative approach to address long-term commitment risks, NYC or a financing 

institution such as the NY Green Bank or NYCEEC14 could act as guarantors for CSS projects. 

In this pathway, the guarantor would compensate the developer in the event that the host breaks 

the lease. The amount of the guarantee could decrease over time, such that compensation would 

be higher for leases broken earlier in the term. This structure could allow developers to pursue 

sites with higher lease rates, given the reduced risk of losses from a broken lease. 

One possible structure would be to cover all developer losses in the event of re-zoning. In this 

structure, the developer could offer the building owner a lease with no damage clause in the 

event of re-zoning. This structure would eliminate the building owner’s re-zoning risk and 

directly address re-zoning concerns as an implementation barrier. One developer estimated that 

such a guarantee would be worth about $25,000 for each year of a broken lease for a 100-kW 

system. Thus, in the event of a lease break in year 10, for example, program costs would be on 

the order of hundreds of thousands of dollars for relatively small systems, and on the order of 

millions of dollars for large systems. To reduce program costs, the guarantee could be offered as 

an insurance product. The guarantor would sell the guarantee to the developer for some up-front 

premium.

4.2 NYC Prospective Host Platform

Several stakeholders stated that finding suitable hosts was the primary barrier to NYC CSS 

deployment. Tax incentives partly address this challenge by increasing building owner incentives 

to become site hosts. However, project developers still struggle to contact suitable hosts even 

with the existing PTA. Several stakeholders argued that NYC could more directly address this 

challenge by serving as an information broker. NYC could publish information about building 

host suitability in an open online platform. The platform could include information about rooftop 

size and condition, building owner tax status, and building owner lease demands (e.g., short- or 

long-term lease). Such an online platform could reduce project developer site acquisition costs 

and ultimately improve project economics.

4.3 City-Owned Building Hosting

NYC has committed to deploying 100 MW of PV on city-owned buildings by 2025. NYC could 

carve out some part of that goal for CSS deployment on city-owned buildings. This approach 

could yield several CSS projects while circumventing several of the challenges associated with 

privately-owned building site acquisitions. The approach could also generate economic benefits 

for NYC. NYC estimates that city-owned PV deployment could generate $8 million in annual 

energy cost savings (City of New York 2017). However, these savings are limited by the fact that 

 

14 NYCEEC is a local financier specializing in projects that reduce building energy use or greenhouse gas emissions.
10

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

city-owned buildings pay relatively low volumetric electricity rates ($/kWh). Rather than 

generating savings through consuming PV output, NYC could potentially generate more revenue 

by leasing city-owned rooftop space to CSS developers. A city-owned building hosting policy 

could be implemented in tandem with tax incentive policies to partially offset the costs of 

foregone tax revenues.

4.4 Policy Language Clarification

Several stakeholders suggested that policy ambiguity impedes NYC CSS deployment. NYC 

authorities may not be familiar with regulations that exempt CSS projects from “utility use” 

classifications. Further, CSS systems may be treated as separate tax lots, undermining the ability 

of building owners to use tax incentives. Existing or reformed tax incentive language could 

clarify that CSS project owners are to be regulated as project sponsors exempted from utility use 

classifications (NY PSC 2015). Existing or reformed tax incentives could also specify that 

rooftop space and CSS projects are to be treated under the same tax lot as the host building.

4.5 Ad Hoc Industrial Development Incentives

The New York Economic Development Corporation (EDC) administers various programs to 

incentivize commercial and industrial development. EDC has broad authority to provide tax 

incentives for development projects with approval from the New York Department of Finance 

(DOF). EDC can also provide incentives on an ad hoc basis without DOF approval. 

Conversations with EDC suggest that ad hoc incentives could be extended to rooftop solar 

systems in certain cases. 
11

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

5 Conclusion

NYC’s large prospective subscriber base could support a scalable and local CSS market. 

However, project developers struggle to identify suitable host sites and to induce building 

owners to lease rooftop space for CSS deployment. Site acquisition challenges are driven in part 

by a scarcity of viable host sites, but also by NYC’s dynamic real estate environment where rezoning trends add risks to CSS hosting. Lease revenues and tax incentives may allay these risks, 

though existing tax incentives have only yielded a small CSS market to date.

This memo examines tax incentive and other policy pathways to support the NYC CSS market. 

Table 5 summarizes the analytical results of the tax incentive pathways. Intuitively, policy 

impact correlates with policy costs: tax incentive policies increase CSS deployment at the cost of 

foregone tax revenue. NYC may develop hybrid policies that increase the cost-effectiveness of 

tax policies. For instance, an increasing Commercial Expansion Program schedule may yield 

some of the higher impacts of the Commercial Expansion Program incentive while also reducing 

foregone tax revenues through an increasing abatement schedule. NYC could also play the role 

of information broker by providing information to developers about suitable host sites. Other 

policy pathways include lease guarantees, city-owned building hosting, and ad hoc industrial 

development incentives.

Table 5. Summary of Tax Incentive Policy Cost and Impacts

Policy Cost Impact

PTA extension Low: PTA is capped and 

duration is limited to 4 years

Low: The low value of the PTA 

and the PTA cap limit 

applicability for large projects

Reformed PTA extension Moderate-high: PTA cap 

removal and extension to 10 

years increases costs relative to 

simple PTA extension

Moderate-high: Higher value of 

un-capped, 10-year PTA 

supports more and larger CSS 

projects

Increasing PTA schedule Moderate: PTA cap removal 

and extension to 10 years 

increases costs, but increasing 

PTA schedule reduces the NPV 

of foregone tax revenue

Moderate: Higher value of the 

increasing PTA schedule 

supports more and larger CSS 

projects, but building owners 

realize less value early in the 

PTA term

Commercial expansion program 

extension to CSS

High: Foregone tax revenue is 

higher due to the structure of 

the Commercial Expansion 

Program, tying the abatement 

amount to rooftop size

High: Higher value of the 

Commercial Expansion Program

supports more and larger CSS 

projects relative to all other 

scenarios.
12

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

The results presented here represent a high-level analysis to inform policymaking. Ranges are 

presented to avoid over-stating confidence in the results. All results are sensitive to the 

underlying assumptions (see Appendix A: Methods). In general, the results indicate that NYC 

could facilitate local CSS deployment through tax incentives on the order of tens of millions of 

dollars annually. NYC incentives could support CSS capacity additions at the MW scale, 

resulting in incremental output on the order of tens of thousands of MWh per year. These 

incentives would also generate local economic activity on the order of millions of dollars per 

year.
13

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

References

The City of New York. 2014. "One City Built to Last." 

https://www1.nyc.gov/site/builttolast/index.page.

Fu, R., et al. 2017. “U.S. Solar Photovoltaic System Cost Benchmark: Q1 2017.” NREL/TP6A20-68925. Golden, CO: National Renewable Energy Laboratory.

https://www.nrel.gov/docs/fy17osti/68925.pdf

NYC. 2018. Selected Initial Findings of the 2017 New York City Housing and Vacancy Survey.

NY PSC. 2015. Case 15-E-0082: Order Establishing a Community Distributed Generation 

Program and Making Other Findings.

NYSERDA (New York State Energy Research and Development Authority). 2018. "NY-Sun 

Program." https://www.nyserda.ny.gov/All-Programs/Programs/NY-Sun. Accessed 1/19/2018.

U.S. Census. 2012. "Patterns of Metropolitan and Micropolitan Population Change: 2000 to 

2010." https://www.census.gov/library/publications/2012/dec/c2010sr-01.html. 

U.S. Census. 2015. "2013 American Housing Survey." https://www.census.gov/programssurveys/ahs/data.2013.html.
14

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Appendix A: Methods

This appendix summaries assumptions and methods used in the policy analysis.

NPV of Foregone Revenue

Net present values (NPV) are calculated using an assumed discount rate of 3.5%. 

Scenario 1: PTA Extension

Based on stakeholder feedback, we assume a CSS deployment range of 3 MW/year (5 projects)

to 7 MW/year (12 projects) under a PTA extension. We assume that half of this deployment 

would have occurred in a baseline scenario. We conservatively assume that all of the projects 

would receive the full $62,500/year abatement. The full NPV of foregone tax revenue is 

estimated by:

FFFF = # of projects ×

$62,500

pppppppppppppp

× �

1 − (1.035)4

0.035 � (1)

Scenario 2: Reformed PTA Extension

To estimate the effects of a reformed PTA extension, we estimate the effects of the reformed 

PTA extension on the NPV of tax incentives accruing to building owners. For illustrative 

purposes, consider a 500-kW system with a total installed cost of $2.6/W.15 We assumed that the 

system receives $0.5/W in state rebates,16 so that the PTA-eligible system cost is $2.1/W. The 

NPV of this abatement is equal to:

NNNNVVSSSS1 = 500kkkk ×

$2,100

kkkk × 5% × �

1 − (1.035)4

0.035 � = $192,800 (2)

Under the reformed PTA extension, the cap is removed and the duration is extended from four to 

10 years. The NPV of the PTA for the same 500 kW system is now:

NNNNVVSSSS2 = 500 kkkk ×

$2,100

kkkk × 5% × �

1 − (1.035)10

0.035 � = $436,600 (3)

Equations (2) and (3) show that the NPV of the reformed PTA is about 2.3 times higher than the 

existing PTA for a hypothetical 500 kW system. This value differential is used to assume that the 

reformed PTA would increase CSS deployment by a factor of 2.3 in a high-impact policy 

scenario.

 

15 Based on the average system cost for pipeline NYC CSS projects reported in the NYSERDA Solar Electric 

Programs data.

16 Based on estimate from NYC Mayor’s Office of Sustainability.
15

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

The NPV of foregone revenue from the reformed PTA extension is calculated:

FF SSSS2 = kkkk dd dd dd dd ×

$2,100

kkkk × 5% × �

1 − (1.035)10

0.035 � (4)

Scenario 3: Increasing PTA Schedule

The value of the increasing PTA schedule for a hypothetical 500 kW system with a total installed 

cost of $1.05 million (based on $2.1/W cost) under the increasing PTA schedule is calculated:

NNNNVVSSSS3 = 1%($1.05MM)

1.035 +

2%($1.05MM)

1.0352 +

3%($1.05MM)

1.0353 +

4%($1.05MM)

1.0354 + �5%($1.05MM)1.035tt

10

tt=5

= $338,500 (5)

Comparing Equations (5) and (2) suggests that the value of the increasing PTA to the building 

owner is about 1.8 times higher than the value of the existing PTA. This value differential is used 

to estimate the effects of the increasing PTA on CSS deployment in a high-impact scenario.

The NPV of foregone revenue for Scenario 3 is estimated:

FF SSSS3 = 1%TTTT

1.035 +

2%TTTT

1.0352 +

3%TTTT

1.0353 +

4%TTTT

1.0354 + �5%TTTT1.035tt

10

tt=5

(6)

Where TC equals total costs, based on assumed PTA-eligible costs of $2.1/W.

Scenario 4: Commercial Expansion Program

We assume that 15 W of PV capacity are installed per square foot of rooftop space. Based on this 

assumption, the value of the Commercial Expansion Program for a hypothetical 500 kW system 

is given:

NNNNVVSSSS4 = 500 kkkk × ssssss

0.015kkkk ×

$2.5

ssssss × �

1 − (1.035)10

0.035 � = $693,100 (7)

Comparing Equations (7) and (2) suggests that the value of the Commercial Expansion Program

to the building owner is about 3.6 times higher than the value of the existing PTA. This value 

differential is used to estimate the effects of the increasing PTA on CSS deployment in a highimpact scenario.

The NPV of foregone revenue for Scenario 4 is estimated:

FF SSSS4 = kkkk dd dd dd dd × ssssss

0.015kkkk ×

$2.5

ssssss × �

1 − (1.035)10

0.035 � (8)
16

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Economic Activity

Estimates for local economic activity are based on NREL benchmarked costs for commercialscale (10 kW–2 MW) projects (Fu et. al. 2017). NREL estimates un-burdened (before benefits) 

installation labor costs of $0.136/W for commercial-scale projects in New York State. According 

to data from the U.S. Bureau of Labor Statistics, weekly wages for electricians are about 42% 

higher in NYC than in the rest of New York State. Given that some of this difference may reflect 

burden, we conservatively assume that contractor wages are 20% higher in NYC than in the rest 

of the state and adjust the assumed installation labor cost to $0.16/W. NREL estimates EPC 

overhead at $0.17/W and developer costs at $0.38/W for commercial-scale projects in New York 

State. To the extent that EPC and developer firms are NYC-based, economic activity should also 

reflect profit margins. We conservatively exclude profit margins given that some engineering, 

procurement, and construction (EPC) and developer services may be undertaken by firms based 

outside of NYC. Total local EPC and developer costs are therefore assumed to be $0.55/W. Full 

local economic activity is assumed to be $0.71/W. We believe this is a conservative assumption, 

excluding indirect local economic activity such as roof replacement that may be associated with 

NYC CSS projects. Note that economic activity estimates are based on the incremental capacity 

induced by policy changes, excluding economic activity that would have occurred in the 

baseline.