How COVID-19 is impacting New York’s ambitious distributed solar goals

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Under the Climate Leadership and Community Protection Act (CLCPA) passed in 2019, New York State set an ambitious goal to deploy 6 gigawatts of distributed solar power by 2025. Going into 2020, the State had roughly 2 GW of distributed solar installed and a workforce nearly 11,000 strong, with growth projected to increase 25 percent per year to meet these goals.

But this year, given COVID-19 and the resultant shutdown of solar projects at the start of the construction season, the industry has weathered devastating and lasting financial impacts. Due to the halt on non-essential construction activities as directed by the New York on PAUSE Order through April and May, the New York solar sector is in danger of losing significant potential progress in the very first year of the CLCPA mandate. With individual distributed solar projects capped at 5 megawatts in size, the State needs all six construction seasons between now and 2025 to deliver more than 200 projects per year.

New York Solar Energy Industries Association (NYSEIA) surveyed the New York State solar industry from April 24–May 8 regarding the economic impact of COVID-19. Seventy-eight organizations completed the survey, including NYSEIA members and non-members. Here were the results:

Jobs and pay

  • Between March and May, 63% of the workforce was laid off or furloughed, equating to approximately 6,800 lost solar jobs.
  • For retained employees, 75% had their pay or hours reduced by at least 20%, with 23% of retained employees seeing reductions of 80% or more.
  • Of those who avoided layoffs or furloughs, 58% of those in closed regions may have to take those actions, with 33% expecting the numbers will impact more than 30% of their workforce.

“We have developed plans that take the pandemic into consideration and are able to gauge the customer’s level of comfort. Our industry has such a positive effect on the economy, on the environment, and has well-paying jobs for the blue-collar industry.” —Western NY developer/installer

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Revenue

Half of the solar firms surveyed expect 2020 revenue losses of 50% or greater stemming from the impacts of COVID-19, and key residential and small commercial markets (New York City, Long Island, Mid-Hudson) continue to be closed, dampening prospects for firms in these regions.

“When the shelter in place lifts, our business from a sales pipeline standpoint could be months or years behind a recovery. Homeowners making a $30,000 purchase after being unemployed for 2–3 months will likely push solar to the back burner. Businesses that were looking at solar will also likely have more important financial hardships to deal with and will likely also shelve solar. The road to sales and pipeline building for 2020 and 2021 is going to be a protracted and difficult one.” —NYC/Long Island/Hudson Valley Residential/C&I/CDG Developer

Business Survival

Most New York State distributed solar firms are small-to-medium businesses.

  • 54% indicated their firms do not have sufficient liquidity to operate beyond 6 months.
  • 84% have applied for fiscal relief and half of those who applied for Paycheck Protection Program funding received it.
  • About half of the firms think workforce retention/rehiring credits or low-interest business loans would provide effective support.
  • Half of firms active in residential installations indicated low-interest customer loans would help.

“We have no way of getting income until we can install our solar projects again. Our business calendar runs from March through December, and the shutdown came at a very bad time of season for us. We have lost projects and interest from homeowners. Homeowners are very worried and are not looking to invest in solar as much as they were.” —Central NY residential/commercial installer

Timeline for recovery

74% estimate it will take a year or longer to recover, with project completion timelines extended by an additional 6–12 months. Firms based in New York City and Long Island could take even longer to recover. The residential market is set to lose the spring and summer periods for initiation, crucial to the sales cycle.

“The largest thing that will affect residential solar is economic uncertainty. I see a near collapse of this market as homeowners will not be making any large-ticket purchases, loans, and leases this year. The state will need to offer some extraordinary steps for residential solar to survive. We may have to eliminate our residential sales and move entirely to commercial if this does not happen. I would also include a residential solar-plus-storage incentive—this has caused people to want to feel secure in their homes.” —NYC installer

Increased costs

More than 40% of firms report an increased cost of doing business, due to higher financing costs (longer timelines to project completion), procurement costs (equipment/material shortages caused by supply chain disruptions), and fixed costs (lower installation volumes).

Longer permitting timelines, plus the new requirements for COVID-19 safety compliance (extra personal protective equipment resources and time factors for reduced crew size and extended schedules) also add to costs.

“At the state level, the most important thing would be providing the tools and resources for towns and Industrial Development Agencies to be able to conduct their business virtually and requiring that they do it so that progress of development projects is not an arbitrary activity determined by town supervisors, planning boards.” —National CDG developer

— Solar Builder magazine

[source: https://solarbuildermag.com/news/how-covid-19-is-impacting-new-yorks-ambitious-distributed-solar-goals/]

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