Proposed Agency Budget Could Cast Shadow on Solar Industry

Office of Clean Energy proposal would leave just $3 million for solar programs

If New Jersey’s solar energy industry is going to maintain its remarkable run, it will have to do so without the huge infusion of cash from the state’s Office of Clean Energy it has enjoyed in recent years.

In the second year of belt tightening of its renewable energy budget, the state Office of Clean Energy has proposed a $22 million spending plan for technologies such as solar, wind and biopower, with the cuts the most dramatic in solar programs.

If the straw budget is adopted, it would leave just $3 million to support solar projects, by far the most popular renewable energy in New Jersey. Consider this: since the solar program kicked in about a decade ago, the state has backed more than 6,500 projects costing $331 million in rebates, which were financed by gas and electric customers statewide. It helped install about 189 megawatts of solar capacity.

Clean Energy Fills Budget Gap

That was then. This is now. With the Christie administration facing a mammoth budget deficit, it diverted more than $400 million in various clean energy funds to help balance last year’s and then this fiscal year’s budgets. More of the same is expected next year.

“What we’re seeing is the dismantling of probably the most successful home solar program in the country,’’ said Jeff Tittel, executive director of the New Jersey Sierra Club, and a frequent critic of the Republican governor.

Under the Office of Clean Energy’s straw proposal for its renewable energy program, $10 million of the $22 million total would be set aside for non-solar grid-connected projects. The other $12 million would be spent on wind and biopower rebates, including support for feasibility studies ($5 million); $800,000 on a renewable energy manufacturing incentive; $3.2 million on solar residential projects and $3.5 million on administrative costs.

Solar Advancement Act

The reductions occur at a particularly wrenching time for the solar industry, which in the past few years had enjoyed enormous backing from the prior administration and lawmakers. Just this past January, the legislature approved a bill called the Solar Advancement Act, which dramatically increased solar electricity goals. By 2026, it requires the state to have about 5,000 megawatts of solar capacity, roughly equivalent to five nuclear power plants. The state’s lucrative rebates and a program that earns solar panel owners more than $650 for the electricity their units generate has helped create a flourishing industry, one with more than 100 different solar firms and more than 1,500 employees.

It also has created a backlash among some in the business community who worry the aggressive solar and other renewable energy goals could drive up what they view as already steep electric and gas bills. The arguments appear to have been heard by the Christie administration, which is reviewing New Jersey’s energy master plan and the state’s aggressive renewable energy goals.

Part of the focus is on a surcharge on utility customers’ bills that helps pay for clean energy and energy efficiency programs, as well as an array of other government programs. Called the Societal Benefits Charge, it raised $740 million from ratepayers last year. There is some talk from policymakers about reducing the surcharge.

Reducing Rebates

It is no surprise the state is moving to reduce its rebate program. It vowed to do so a couple of years ago when it switched to more of a market-based program based on solar renewable energy certificates (SRECs), the money earned from the electricity generated by the systems. Still, some industry people worry the steep cuts could shrink the diversity of the sector, which includes big solar firms, such as SunEdison and SunPower, utility-driven programs and smaller businesses that serve the residential and small commercial market.

“We have some concern that the reduction in rebates needs to be carefully managed so as not to be precipitous,’’ said Terence Sobolewski, business development manager for SunPower, one of the biggest players in the New Jersey market. “More broadly, we’re anticipating the transition from a rebate program to one based on SRECs.’’

So, too, are many smaller firms, Sobolewski said. SunPower has relationships with nine dealers who help install smaller systems and some of them do not need rebates any more, he noted.

New Jersey Office of Clean Energy officials did not respond to calls or e-mail to comment for this article.