Solar Projects Racing a Federal Deadline Get Their Own Line at PSEG Long Island

From October 1, the Long Island Power Authority wants PSEG Long Island to run two lines for connecting solar panels and batteries to the grid. Projects trying to qualify for a federal tax credit would be scheduled first, on dates the utility sets and holds them to. Everything else would be connected under the usual procedures, but only where that does not slow a tax credit project down.

The change is a LIPA staff proposal to amend the Small Generator Interconnection Procedures, the part of the authority's electric tariff that governs how a generator or battery under 10 megawatts is hooked up on Long Island. That is the category a business rooftop array, a parking lot canopy or a battery in a utility room falls into. The public comment period closed September 5, after two comment sessions on August 31, one in Hauppauge and one in Uniondale. The proposal carries an effective date of October 1, 2026.

Why a utility queue now has tax rules

The federal budget law signed on July 4, 2025 put deadlines on clean electricity tax credits, and the Internal Revenue Service issued guidance on August 15, 2025 about which projects remain eligible. The first projects LIPA's rules address are those that began construction by July 1, 2026 and must be in service by December 31, 2027 to qualify. For a building owner, the date a system goes live often depends less on the installer than on the utility's own work on lines, transformers and substations.

The state Public Service Commission dealt with the same problem for New York's regulated utilities in an order issued January 23, 2026, and those utilities put the rules into their tariffs in February. LIPA is not bound by the statewide requirements and writes its own. Its trustees approved a first round of timeline changes for tax credit projects in June. This proposal adds the queue rules themselves, modeled on the statewide version.

Two groups, and a deposit date that decides everything

Group A is for projects that need no major shared grid upgrade. The developer tells PSEG Long Island when construction started and when it wants the system running. Within 15 days the utility responds with a schedule, a target in-service date and a release date, the day by which 30 percent of the estimated cost of the utility's interconnection work must be paid. A project that has not paid by its release date is removed from the group. A developer who sees the date slipping can request a new schedule in writing at least 15 business days ahead, and a project that misses the second release date is removed as well.

Group B is for projects that depend on a qualifying upgrade: grid work, such as expanding a substation, that creates room for several projects and whose cost they share. Projects that already held an assigned share and had started construction form Group B.1, and their upgrade payments are due by October 1, 2026. PSEG Long Island then has 30 days to publish work plans and must update them monthly. Every other project needing an upgrade lands in Group B.2 and pays either when it joins an existing work plan or by a deadline the utility posts once enough money has been committed.

Two terms deserve a careful read. Upgrade payments are not refunded once the funding threshold for that upgrade is met, unless the work becomes impossible to finish in time or its cost climbs 50 percent or more above the estimate, and even then a project that withdraws pays its share of what has already been spent. And PSEG Long Island may spend deposit money as needed to keep to the schedules.

Where that leaves everyone else

The proposal is direct about it. Projects that do not qualify for the credit, or that are not scheduled under the new rules, are connected under the standard procedures so long as no Group A or Group B project is delayed as a result. LIPA's filing lists no financial impact on the authority. The impact is on the order of the line.

What it means for members

If you have solar, a battery or both planned for your building and the numbers depend on the federal credit, ask your installer this week whether the project has been placed in Group A or Group B, and get the release date or upgrade payment date in writing. That date, more than the day the panels go up, now decides whether you keep the credit.

Put the deposit into your cash plan before it is invoiced. Thirty percent of the utility's estimated interconnection cost can be a meaningful figure on a commercial system, and one missed date takes the project off the priority schedule.

Read your installation contract for who pays the utility deposit and any upgrade share, and what happens if PSEG Long Island moves your date. Committed upgrade money is largely non-refundable, so that conversation belongs before October 1, not after.

If your project does not depend on the credit, assume a longer wait for the utility side of the work through the end of 2027, and keep that out of any lease or operating decision that counts on the system running by a particular date.