Some Players See Solar Future Brightening

Tom Johnson | May 28, 2010
Politics and business conditions bring sustainable, market-based models into clearer focus

SunPower’s Tom Leyden wasn’t too happy earlier this year when he heard the state’s clean energy fund was being used to help plug a hole in the state budget. But Leyden has been around the solar industry long enough to know it wasn’t going to alter his company’s strategy.

“Taking the money wasn’t good,” said Leyden, referring to the Christie administration’s decision to divert $158 million out of the fund. “But the fact remains it was always the intent of the state Board of Public Utilities to move away from rebates to something sustainable and market-based. In my view, this accelerates that process.”

For SunPower, the nation’s largest solar energy company and likely the one with the largest share of the fast-growing New Jersey market, that probably is good news. The San-Jose, Calif.-based company has pivoted nicely, adjusting to the new market-based program, which relies on solar renewable energy certificates (SRECs) and federal tax incentives to build a profitable business model.

Credit: SunPower
SunPower solar installation at Landis Sewerage Authority.
Smaller firms, on the other hand, may not be able to adjust as easily. And their reaction to what they see as a shutdown of the rebate program reflects the diversity and differences in New Jersey’s renewable energy field. A sector that holds much promise for job creation and leadership in the emerging green economy is struggling at times to speak with a united voice. And as the industry rapidly evolves, some fear the small businesses that helped grow the sector may be left behind.

Business Conditions Hint at Rapid Growth

SunPower has had a hand in developing nearly 50 solar projects around New Jersey, ranging from installations for Johnson & Johnson to the Army National Guard to Kearny High School. The projects, about 40 percent involving commercial installations, provide more than 53,000 kilowatts of solar-powered electricity. The company claims its photovoltaic panels produce up to 50 percent more power than those of its competitors.

For Leyden, the 55-year-old managing director of the company’s Trenton office, the future for solar probably couldn’t be much more promising. A bill passed earlier this year in the lame-duck Legislature has solar advocates believing the business conditions are right for solar power to grow even more rapidly.

New Jersey already is second behind only California in the number of solar installations, with 5,815. It has more than 100 solar businesses in the state, employing more than 2,000 people. Each month about 10 megawatts of new solar powered systems are installed around the state.

“Solar has clearly proven to be the easiest clean energy technology to deploy and the biggest job creator,” said Leyden, who has worked in the industry for 25 years.

The legislation passed earlier this year, dubbed the Solar Advancement and Fair Competition Act, aims to promote even quicker growth. One provision calls for dramatic increases in the threshold of how much electricity in New Jersey must come from solar systems. The new threshold, 5,316 gigawatt hours by the year 2026, is roughly equivalent to the capacity of five nuclear power plants.

Other key provisions aim to provide more certainty to investors that the SRECs will retain enough value over the long run by establishing multi-year schedules requiring minimum purchase of solar certificates, or failing that, compliance payments for utilities that fail to obtain the necessary amount of certificates.

“I can go to a bank with certainty about getting a 10-year contract with a customer and know it will get financed,” Leyden said. At this juncture, only 5 percent of all solar projects involve long-term contracts, but that situation will quickly change, he said.

Clean Energy Advocates Seek More

The legislation also removed a cap that set a limit on the eligibility of larger solar installation projects to receive the certificates. The provision is important because solar advocates are pushing for new legislation that would allow community-based solar power systems—single systems built by a group of neighbors and into which others could tap for cleaner and cheaper power. But that provision worries smaller firms that handle mostly residential projects; they fear mega-projects could use up all available solar certificates in any given year.

While Leyden is bullish about solar’s future, one environmental advocate wishes the company would be a more forceful player in lobbying for alternative energy.

“It’s good they have such a presence in New Jersey because they are one of the largest solar businesses, but I think they really need to increase their political presence to push renewable energy overall,” said Jeff Tittel, a lobbyist for the New Jersey Sierra Club. “As a major business and employer, they carry a lot of weight to carry this progress forward.”