New York Is Trading Fracking for Solar Panel Kits

Source: NY Dept. of Conservation. Long Island Solar Farm, the largest solar plant in the Eastern United States.

New York State banned fracking earlier this month, pitting energy policy against public health like never before. With fracking officially off the table, New York is focusing its energy efforts elsewhere. A $1 billion solar initiative provides a not-so-subtle hint as to where. Here's what you need to know.

Farewell, frackingOn Dec. 17, New York Governor Cuomo officially declared his state free of fracking. The motion was both celebrated and vilified. The state made its decision based on public health threats outlined in a seminal 184-page Department of Health report, but it did so at the expense of around 141 trillion cubic feet of untapped natural gas -- equivalent to 128 times the state's current annual consumption.

New York has bid farewell to fracking, and its support for solar will shape its energy future for decades to come. Solar is taking off across the nation, but there are three reasons New York state offers energy users and investors a unique opportunity.

1. Sensible incentivesIn 2012, Governor Cuomo unveiled his NY-Sun initiative as part of his commitment to "protect the environment and lower energy costs for all New Yorkers by improving the efficiency and reliability of the electric grid." Two years and 316 solar MW later, Cuomo committed almost $1 billion more to NY-Sun to keep solar panel kits soaring.

Unlike other states that rely on a hodgepodge of municipal initiatives, federal production tax credits, and everything in between, Governor Cuomo consolidated power authorities' efforts to create a unified solar strategy. By 2023, New York estimates it will have installed 3,000 MW of solar panel kits, enough to power 400,000 homes.

Programs such as the MegaWatt Block allow for utilities like Consolidated Edison and Public Service Enterprise Group Long Island to offer incentives to their customers for installing either residential or commercial systems. Its clever design allows incentives to ease down as demand ramps up, creating a commonsense and easily adoptable program for the utilities.

2. Net metering

Net metering allows solar-generating customers to take only what they need from the grid and sell back excess electricity when they don't need all of the solar for themselves. Since electricity demand is highest during the day, net metering helps utilities like ConEd and PSEG keep expensive peak power production to a minimum, relying on steadier sources like nuclear instead of expensive natural gas.

Net metering is also an essential part of solar installers' sales strategy. SolarCity , America's largest solar power provider, relies on net metering to convince customers to make the solar leap. If they can drop their utility bill and sell back excess power, their solar panel kit becomes more than an environmental asset -- it becomes an economic asset as well.

While 43 states and Washington, D.C. currently have net metering policies, not all are created equal. The Solar Energy Industries Association gave New York an "A" grade on its A to F scale, which measures the effectiveness of net metering policies across each state. Investor-owned utilities like Consolidated Edison, and Public Service Enterprise Group are included in the policy, allowing solar-generating customers to receive credit on their next bill at retail rates. While companies like Pinnacle West's Arizona Public Service Utility have eaten up time and money fighting net metering, ConEd and PSEG are adapting their energy plans to accommodate net metering.

3. Bigger and cheaperNothing spells success like greater scale at less cost. In New York, the average price for commercial and solar installations fell 14% over the last year, almost twice as fast as America's 8% price decline. Last year, the state spent $334 million to boost its overall installed capacity to 338 MW, making it the ninth largest solar state in the country. It's also taking steps to bring the full supply chain closer to home. In September, SolarCity Corporation acquired New York-based solar manufacturer Silevo and promptly signed a deal to lease a one million square foot Buffalo facility from the State University of New York for $1 a year plus utilities for the next decade. That's the type of public-private partnership investors love to see.

From SolarCity's rooftop projects to the 32 MW utility-scale Long Island Solar Project, the largest solar farm in the easternU.S., New York is serious about solar expansion.

Foolish takeawayNot all states are succeeding with solar. With fracking officially off the table, New York is pushing solar policy forward, and corporations like Consolidated Edison, Public Service Enterprise Group, and SolarCity Corporation are more than happy to accompany the Empire State in its quest for solar success.

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Justin Loiseau has no position in any stocks mentioned. The Motley Fool recommends SolarCity. The Motley Fool owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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