The Slightly Higher Cost of Meeting NJ’s Aggressive Solar Goals

A total of $122 million buys a banner year, with a record 132 megawatts tied into the grid

For ratepayers, the cost of increasing the state’s reliance on solar power rose slightly in the past 12 months to $122 million, according to an annual report by the state’s Office of Clean Energy.

For that money, New Jersey posted some pretty impressive records, including installing more capacity last year from solar systems (132 megawatts) than in all the years combined since the program was established in 2001. In December 2010 alone, 24 megawatts of solar was connected to the power grid.

The state has now installed more than 300 megawatts of solar generating capacity, second behind only California in how much power it gets from the sun.

Rallying for the Sun

Nonetheless, clean energy advocates, fearful the Christie administration may scale back the state’s ambitious solar targets, rallied on the steps of the Statehouse yesterday, urging policymakers to retain the goals and stop diverting clean energy funds to help balance the state budget.

The state will begin holding hearings on its revised Energy Master Plan next month, but has yet to release the document, under review by the administration for several months. With few details about the plan emerging, proponents of green energy programs worry those who argue the technology is too costly will carry the day when it comes to deciding how big a role solar and other renewable technologies will play in the state’s future energy mix.

The current energy master plan, developed by the Corzine administration, calls for 30 percent renewable by 2020. A Renewable Portfolio Standard adopted by state agencies suggests 22.5 percent.

The big question among solar advocates is what standard will emerge from the revised Energy Master Plan.

“Unless we have a strong standard that matches the goal in the Energy Master Plan, then there will be projects that never will be built,” said Jeff Tittel, executive director of the New Jersey Sierra Club.

The $122 million cost of the solar program was based on money spent retiring solar renewable energy credits (SRECs) and the cost of alternative compliance payments by utilities and other suppliers that could not acquire the SRECS to meet Renewable Energy Portfolio Standards.

Solar Benefits

To solar advocates, the expense is well worth the effort.

“Today, we’ve got hundreds of businesses that have been created in just the last eight years,” said Lyle Rawlings, president of Advanced Solar Products, Inc. in Flemington. In addition, Rawlings said some law firms and architectural firms in New Jersey have developed specialized practices dealing strictly with the solar sector.

Dennis Wilson, the president of the Mid-Atlantic Solar Energy Industries Association, noted the nuclear disaster in Japan and said, “It is time to up the ante. The solar industry is just getting started,” he said.

Wilson argued the problem with high costs associated with solar power in New Jersey is tied to its current structure, which “leads to a rapid return on investment and high cost to consumers.” What we really need is more long-term contracts that lead to lower risk and cheaper capital.”

In a positive sign for the sector, the state has long debated how to push more people into long-term contracts, which typically earn far less than what they can earn selling the electricity they generate on the spot market. Most industry experts say if the state is successful in doing so, it could drive down the price of SRECs, which systems earn for each megawatt of electricity they produce.

BPU President Lee Solomon has repeatedly made reducing the cost of solar electricity a top priority of the agency, which has seen funding for its clean energy programs slashed due to budgetary constraints. If the state can lower the cost of the certificates, it can make solar energy more competitive with traditional ways of producing power.

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