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Developers of Solar Grid-Supply Systems Band Together

Tom Johnson | April 4, 2013

New trade group takes aim at policies they assert are stalling beneficial projects.

Developers of solar grid-supply systems – which supply electricity directly to the regional power grid -- have formed a new trade group aimed at convincing legislators and a state agency of the benefits of their projects, most of which are locked in bureaucratic limbo.

The formation of the New Jersey Solar Grid-Supply Association comes at critical juncture for the state’s once flourishing solar sector, which has seen investment dry up because of a steep fall in prices owners of solar arrays earn for the electricity their systems produce.

Last summer, Gov. Chris Christie signed a bipartisan bill aimed at helping to stabilize the market, but some of its provisions and policies in the state’s Energy Master Plan discourage development of certain grid-supply projects, primarily those on agricultural land and open space.

The administration’s push to avoid large grid-supply projects on farmland has won approval from many conservation groups, which support efforts to instead utilize garbage dumps and brownfields.

But few dispute the argument that grid-supply projects produce solar electricity at the lowest cost, which reduces the impact on ratepayers who ultimately bear most of the cost of developing solar energy.

Where those projects should be located, however, is a huge source of debate.

The 16 developers who organized the new trade group have 34 grid-supply projects on farmland pending before the New Jersey Board of Public Utilities, according to Mark Bellin, a renewable-energy attorney. None can move forward unless approved by the BPU, he said, adding the agency has failed to approve a single one in the seven months since Christie signed the solar bill.

“The formation of this association is long overdue,’’ said James Spano, a veteran solar developer at Spano Partners, who helped put together the group.

“Grid supply is an important part of the solar industry whose value has been largely disregarded over the last two years,’’ said a press release issued by the group.

The group’s creation underscores how diversified New Jersey’s solar and renewable- energy sectors have become in recent years as the state has ramped up efforts to promote cleaner ways of producing electricity. It also reflects the huge commitment the state has made in promoting renewable energy, with a big portion of the cost falling on the backs of electric and gas customers who pay for it on their utility bills.

Among the players in New Jersey are the Mid-Atlantic Solar Energy Industries Association, the New Jersey Solar Energy Coalition, and the New Jersey Renewable Energy Coalition—all representing various segments of the renewable-energy industry and often at odds with one another over what policies the state should adopt to foster cleaner ways of producing electricity.

The newly formed association blames the BPU for effectively halting construction of grid-supply solar generation, which the group says has blocked significant investment in the state and creation of new jobs in New Jersey.

The issue is one of the most challenging facing the BPU. The Christie administration has made it very clear it wants to steer large grid-supply projects, which supply electricity directly to the regional power grid, away from farmland and open space.

But the legislation signed by Christie last July allows certain grid-supply projects to be “grandfathered ’’—a step that would allow them to earn solar credits for the electricity their systems produce.

That provision worries other solar developers who build smaller systems that provide power directly to homeowners and businesses. They fear if they win approval from the BPU, it could swamp the market with too many solar credits, further driving down prices in the market and making it more difficult to install solar-energy systems.

“It’s a huge issue, which is very complex and nuanced,’’ said Lyle Rawlings, president of Advanced Solar Products, a Flemington solar developer, which builds systems for residents and businesses behind the meter -- industry jargon meaning the owners use most of the electricity their systems produce, rather than directly supplying the power grid.

“There’s no question that any new added capacity is adding to an oversupply situation,’’ Rawlings said. Because so much new solar capacity has been developed in New Jersey in the past few years, the price of the solar credits has dropped from more than $600 to less than $100.

But Belllin said his organization is compiling a study which will show the new capacity of grid-supply projects is not as nearly as great as what has been suggested by the BPU, which last fall said it could top 500 megawatts—a total equal to about half of all the solar capacity built in New Jersey over the past decade.

In addition, not all of the projects will roll out at the same time, which Bellin contends will prevent swamping of the sector with new solar credits.

“It’s very clear that it is going to be a multiyear roll-out,’’ he noted.

The projects range in size from 3 megawatts to about 17 megawatts, Bellin said. He guessed the ultimate backlog of grid-supply projects is probably 350 megawatts, which is much lower than BPU projections.

In addition, many of the projects seeking to be grandfathered have been in the pipeline for a long time and already have won approval from the PJM Interconnection, the operator of the regional power grid.

Many of the companies are enduring extreme financial hardship, much of it caused directly by federal and state policies, Bellin said. For example, to hold on to federal tax credits, the companies were required to buy and carry millions of dollars of solar panels to preserve them, he said.

With only 20 percent of its membership responding, Bellin said they have incurred up to $50 million in costs already, from buying panels, land payments and engineering costs, among other expenses.

Rawlings, despite his misgivings about the large grid-supply projects, conceded the state most carve out a role for them in developing a new energy mix for New Jersey.

“To have a real renewable energy transformation in the state, there must be a place for large-scale solar projects,’’ said Rawlings. But the state needs to control their pace of development, he added.

Nevertheless, the grid-supply developers face a tough challenge winning approval from the BPU. In October, BPU President Bob Hanna said at the agency’s monthly meeting that anyone who wants to be grandfathered in is entitled to file a notice of intent with the agency.

“That doesn’t mean all of those projects will be grandfathered,’’ he said at the time.

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