PSE&G In Private Talks About Increasing Solar Capacity

The state's largest utility has approached the BPU about an $800 million program to build large solar arrays on landfills and brownfields

Credit: PSE&G
Some of the 11,484 solar panels that are being installed at PSE&G’s Linden Solar Farm. When complete, the solar farm will generate 3.2 megawatts of electricity, which is enough to power about 525 average size homes.
Public Service Electric & Gas (PSE&G) is talking with state officials about expanding its half-billion dollar solar system installation program, this time to build large solar arrays on landfills and brownfields around New Jersey.

The Newark utility has not yet made a filing with the state Board of Public Utilities (BPU) but has held a couple of private sessions talking with agency staff and the Division of Rate Counsel about the proposal, which several people with knowledge of the talks described as costing more than $800 million.

If so, the program would eclipse the company’s current Solar 4 All program, an initiative the utility undertook last year to build a series of solar farms on brownfields and landfills near its former power plants and to install solar systems on schools and atop thousands of telephone poles throughout its franchise territory. That $515 million program, expected to be mostly completed this year, installed about 80 megawatts of solar capacity.

The expected filing early next year poses tough questions for the state, which has established some of the most aggressive solar installation goals in the nation. If New Jersey is going to meet those targets, which would mean installing enough solar systems to roughly match the output of five nuclear power plants, most authorities say the state’s utilities will have to play a pivotal role.

If utilities do make those investments, however, they are entitled to earn a rate of return on the money they spend, which would mean higher electric and gas bills for their customers, a concern expressed by Division of Rate Counsel Stefanie Brand in preliminary talks about the proposal.

“It’s a lot of money and it would be paid for by ratepayers,” Brand said, when asked about the proposal. “It is generation and theoretically, they are out of the generation business. By all means, if they want to build it, let their generation arm do it.”

Michael Jennings, a spokesman for the company, declined to discuss the specifics of the proposal. “We’re working with the state to see how we can increase solar capacity in New Jersey,” he said.

Defraying Costs

In the past, PSE&G has noted the cost of the solar program is defrayed somewhat by the financial incentives inherent in renewable energy — federal tax investment credits, sale of the energy and capacity, as well as monetizing the Solar Renewable Energy Credits (SRECs) that are returned to ratepayers.

Jeff Tittel, executive director of the New Jersey Sierra Club, said his group favors putting solar systems on landfills and brownfields, no matter who is doing the installation.

“For us, building solar farms on landfills and brownfields, makes a lot of sense. You’re taking unproductive land and returning it to positive use. Many of these sites are too dirty to be used for schools and housing.”

Tittel also saw no problems with having a utility do renewable energy projects. “If we’re willing to subsidize building a natural gas power plant in a deregulated environment, then utilities might as well do solar,” he said, referring to a controversial bill moving through the legislature that would have ratepayers guarantee a revenue stream to a power plant developer to help build a new plant.

Paul Patterson, an energy analyst who follows the Public Service Enterprise Group (PSEG), the parent of the state’s largest gas and electric utility, also dismissed the concerns. “One way or the other, no matter who builds it, it is going to need a subsidy,” he said.

To Brand, that is part of the problem. Her office has projected that ratepayers may be on the hook for up to $5 billion in subsidies over the next two decades to meet New Jersey’s ambitious goals to increase its reliance on solar and wind energy.

Beyond the $800 million PSE&G is talking about investing in solar installations, the utility also is considering setting aside another $200 million to invest in energy-efficiency projects at New Jersey’s financially struggling hospitals.