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Complexities Vex Community Solar Project Bill

Bill sponsors and solar advocates acknowledge the difficulty of creating practical approach to what seems like a slam-dunk solution.

Imagine being able to tap into a community solar energy system and getting a discount on your electric bill by doing so.

The vision may one day become a reality for New Jersey residents, but transforming it into legislation is proving more difficult than its advocates originally envisioned. As a result, the Assembly deferred action on a bill (A-915) allowing people in a community to band together to share solar power systems.

Acknowledging the complexity of developing a practical approach to creating community solar power systems, the two sponsors said they need to iron out several key issues that have raised concerns among solar industry experts, utility officials and clean energy advocates.

These range from the unintended effect of potentially creating an unfair playing field among various entities in the solar industry, to concerns over having other ratepayers subsidize the community solar systems, to bureaucratic hurdles created through the involvement in the process of the independent operator of the regional power grid.

“It’s a real complex bill," conceded Assemblyman Upendra Chivukula (D- Middlesex), who is a sponsor of the measure and steered it through the Assembly Telecommunications and Utilities Committee, which he chairs.

Sen. Robert Smith (D-Middlesex), a co-sponsor, said just about everyone backs the concept of the bill, but he agrees that amendments are needed. “We’re just not sure what they should be," he said, prior to entering the Senate chamber for yesterday’s session.

Simple Concept, Frustrating Details

The concept is fairly simple. It would allow a community, a church or a collection of neighbors to form a local renewable energy collaborative (LREC) and serve as a host for a central renewable energy system, such as a community solar system in a field or a warehouse roof. The idea is to offer people an opportunity to join the solar revolution who would otherwise not be able to because of shade or building constraints.

But both advocates and foes say the devil is in the details.

The collaborative would sell the energy generated by the system into the PJM electric power pool, or the regional power grid. PJM would then assign payments for that energy to the local electric utility, which would be responsible for reading meters of the system and billing customers at the same rate paid by residential customers who are not on the system.

The utility, however, would also have to pass to the LREC a payment amount equal to 110 percent of that fixed residential rate, which would then be allocated among LREC members. In the Senate bill, LREC customers in all-electric homes would divide rebates equal to 120 percent of the prevailing fixed residential price. (There are about 200,000 all-electric homes in New Jersey.)

The convoluted process, particularly the involvement of PJM, has turned even some solar proponents against the bill. Other environmentalists, such as Jeff Tittel, executive director of the New Jersey Sierra Club, object to provisions that allow utilities to collect for the solar electricity delivered over its power lines.

“It’s double-dipping," he said. “Ratepayers have already paid for those lines. And most of the solar energy will be used locally even before it hits the grid."

Questions on Credits

Utilities have concerns about the impact of the discounts given to LREC members and worry it will increase electric bills for other ratepayers. “The question New Jersey has to decide is how much solar does the state want and how much does it want to pay for it," said Karen Alexander, president and CEO of the New Jersey Utilities Association.

Even Chivukula is wary of that issue, noting that solar energy renewable credits (SRECs), which pay solar owners for the electricity their systems generate, are now selling for more than $600, which translates to about 65 cents per kilowatt hour. Traditional electricity costs between 6 cents and 11 cents to generate, depending upon the fuel and location.

“At what point do we say, ‘Enough is enough’?" Chivukula said. “The key is determining the right compensation for the LRECs that will encourage community-wide solar projects."

But some in the solar industry fear the bill would end up in huge, mega-solar projects, which would crowd out smaller players in the field, particularly those who primarily install solar systems on residences or small commercial buildings.

“These are the companies that built the solar industry in New Jersey," said Lyle Rawlings, president of the Mid-Atlantic Solar Energy Industries Association and Advanced Solar Products Inc., of Flemington. “These are Jersey companies providing jobs that cannot be outsourced."

A mega-solar project could swallow up most of the SRECs in any given year, which would make it difficult for smaller solar firms to survive, Rawlings said. His group advocates establishing a cap that would prevent such a possibility.

Despite the disagreements, Smith said he still hoped to work out a compromise that could pass both houses by June 30, the deadline for approval of a new state budget.

“We are going to have a cosmic meeting -- the PJM, the Board of Public Utilities and everyone else -- and hammer it out," he said.

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