Utility-Run Solar Energy Program Yields Disappointing Results

Higher prices on the spot market dissuade private solar suppliers from signing long-term contracts with large utilities

Unhappy with the results with a utility-run program to promote solar energy, the state is examining options to increase participation from the growing green-business community in New Jersey.

The Board of Public Utilities has directed its staff to begin exploring ways to encourage more solar businesses to bid on developing solar projects in franchise territories of Jersey Central Power & Electric, Atlantic City Electric and Rockland Electric.

The order follows up on the latest round of solicitations in utility-sponsored solar programs by the three utilities. For the fourth consecutive time, the program fell far short of expectations. Only 20 projects were approved to install a total of 5 megawatts from solar systems. The state had hoped to install up to 17 megawatts of new capacity.

As in the past, the shortfall was blamed on developers refraining from bidding on long-term contracts, since the price they could get for the electricity they generate would be much higher on the spot market, explained to Scott Hunter, program administrator for renewable energy for the agency.

Under the present system, owners of solar systems earn solar renewable energy certificates for electricity they generate. On the spot market, those certificates can sell for $685, far more than the $413 to $466 they would sell for under long-term contracts offered by the utility-run program.

The commissioners described the results as underwhelming, especially given the aggressive goals set by New Jersey lawmakers earlier this year who passed a bill aimed at encouraging much greater reliance on solar power to meet the state’s energy needs. By 2026, the state’s utilities are required to provide 5,316 gigawatts of electricity from solar systems, enough to power about 600,000 households.

Commissioner Joseph Fiordaliso recommended the staff begin a formal review of the program to determine how to improve its results. “There are changes that have to be made,” Fiordaliso said.

Commissioner Jeanne Fox agreed, saying she “was just as disappointed” as her fellow commissioner. Noting the program is a pilot, she questioned whether it was possible to streamline it to make it easier for the developers to navigate. “It’s a little bit bureaucratic,” Fox said. “Simpler is better.”

The issue arose at a time when funding for the state’s clean energy programs has been sharply curtailed, with the Christie administration diverting more than $400 million in funding to help plug a state budget deficit. With a huge budget deficit already projected next year, it is likely the state agency will reassess its clean energy goals, a process that is already under way with a revamping of the state energy master plan.