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A Plan to Fix New Jersey’s Solar Sector … Before it Breaks (Again)

Increasing the amount of solar energy used to deliver electricity to consumers could help prevent the industry as it did just a few years ago

solar

There is a new fix in the works for the state’s solar market, which is booming right now but could face serious retrenchment in just a few years.

A legislative remedy, introduced late Monday, aims to avert problems in the sector by accelerating the state’s reliance on solar power to deliver electricity to consumers, a strategy already used once in this decade to much success.

The latest bill aims to help the state achieve aggressive solar energy goals sooner rather than later, while retaining thousands of jobs in a reviving green industry. Its proponents say it does so without increasing the financial burden on utility customers, who have subsidized the growth of the sector for years.

The proposal, developed over the past few months by a broad coalition of solar developers, clean-energy advocates, and labor, would borrow a model used in 2012 to revive the solar industry when the market crashed with both jobs and investment in the sector fleeing the state.

At that time, legislation signed into law ramped up state requirements for how much solar should be installed in New Jersey. The step stabilized the market after the price of solar credits -- a key element in financing solar systems -- collapsed. The credits, ultimately paid for by utility customers, are payments to owners of systems for the electricity they produce.

Some fear that scenario could repeat itself in June 2018 when mandates for solar power drop off dramatically, reducing the financial incentives to developers of the systems.

The timing to ensure the growth of solar is right, according to Fred DeSanti, a lobbyist who represents the New Jersey Solar Energy Coalition. Last year, Congress approved an extension of federal benefits to retain a 30 percent investment tax-credit and depreciation incentive that make putting money into the renewable energy more lucrative.

“We are just trying to maximize the benefits the federal government has offered,’’ DeSanti said. “The only way to do that is to align New Jersey policy with that of the federal government.’’

The bill (S-2276) would do that by pushing forward requirements for increased solar to 2021, when those federal incentives are scheduled to disappear. Essentially, it would move up a requirement that more than 4 percent of the state’s electricity comes from solar systems in 2021, instead of 2028 as is expected according to existing law.

Under the current scenario, solar developers fear the drop in mandates to install solar in the state will tank the market for solar credits, drying up investment once again and leading to mass layoffs of industry employees here.

“It’s an opportunity to get all those federal benefits as well as preserving those jobs, which would fall off the cliff,’’ said Lyle Rawlings, a solar developer based in Flemington, referring to the new bill.

The problem with pulling forward demand sooner is that it again will drop off after 2021, an event that some say will only lead solar developers to come forward once again and seek another legislative fix.

The bill tries to deal with that prospect by establishing a new commission to come up with a solar strategy for New Jersey. “We need a long-term policy,” argued DeSanti. “What should solar be? Maybe 6 percent? (of electricity used by consumers) Maybe 7 percent?’’

But Division of Rate Counsel Stefanie Brand is already worried about the costs to consumers -- without increasing mandates again. “They still will make money,’’ she said, referring to solar developers.

Indeed, Brand, noted the high prices of solar credits -- running above $250 in March. “Given New Jersey’s robust SREC (solar renewable energy certificates) market and continued support for solar development, it is difficult to understand what market dynamics could be influencing these ever-increasing SREC prices, particularly when prices should be flat or even decreasing,’’ she said in a filing with the state Board of Public Utilities.

In the filing made earlier this month in another proceeding Brand urged the agency to install a market monitor or establish a monitoring mechanism for the board to ensure the fair and competitive operation of the solar market.

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