The state yesterday was slapped with a half-billion-dollar lawsuit from large solar developers who claim they have lost millions of dollars invested in projects that the New Jersey Board of Public Utilities has prevented from being built.
The litigation is not much of a surprise; the state agency has approved only three grid-supply projects out of 57 pending before it as of this past May. Grid-supply solar systems feed electricity directly into the regional power grid, but generally produce electricity more cheaply than smaller arrays.
The dispute underscores the difficulties the state is having in trying to revive a once flourishing solar sector. At one time it encouraged grid-supply projects, but officials now fear that an influx of those systems could cripple efforts to stabilize the solar industry.
Most of the projects would be built on farmland, something Christie administration officials now hope to avoid. Instead, the administration is pushing to build large grid-supply projects on old garbage dumps and fallow brownfields, former industrial sites with contaminated properties. The cost, however, will be much steeper than building on agricultural land, a prospect some conservation groups oppose.
In its lawsuit, the New Jersey Solar Grid Supply Association argued that the state, beginning in 2008 and continuing through 2011, promoted polices to encourage the development of grid-supply projects. In response, the group argued, its members invested millions of dollars and significant time, usually two to three years, developing the projects, many of which would be located in less densely populated South Jersey.
“The BPU unjustifiably stopped solar grid-supply projects, resulting in the loss of millions of dollars in economic investment by businesses that the state essentially recruited to pursue these types of renewable energy projects,’’ said Jim Spano, president of the association. “As an additional consequence, the state has also denied New Jersey taxpayers cleaner more affordable energy and thousands of jobs,’’ he said.
Email messages to the BPU were not answered. The lawsuit was filed in Superior Court in Burlington County.
What is driving the legal dispute is the fact that the state’s solar sector is in trouble, with the price of solar credits paid for the electricity systems produce dropping dramatically and drying up investment. Most industry observes believe the problem has been created by overbuilding solar systems, and fear new grid supply projects will only make matter worse.
Lawrence Neuman, a member of the association and a developer of grid-supply projects, argued otherwise, saying the grid-supply projects his association is pushing have a three-to-four-year timeline. He blamed the BPU with changing its rules and regulations, saying they did not exist when the developers made their initial investments. “These are not projects making a huge amount of money,’’ he said.
“Every time we tried to meet the requirements, they moved the goal posts,’’ he said. Neuman argued that when the Legislature passed a new law in 2012 designed to revive the solar sector, the lawmaker's intent was to grandfather in big solar grid-supply projects advocated by his association.
That legislation allows the agency to approve 80 megawatts of grid-supply projects each year over the next three years.
Spano agreed. “The BPU’s unjustified actions to allow some solar projects to proceed, but not others is a gross injustice to the businesses who invested millions of dollars and years of work at the state’s behest,’’ he said.
Perhaps more importantly, the litigation reflects the fractured nature of the solar sector, where smaller firms installing relatively modest solar projects are competing against companies developing much larger arrays. With the solar sector shrinking, those divisions are becoming more contentious.