Opinion: Gov. Chris Christie and the Myth of Solar Subsidies

R. William Potter | June 10, 2011 | Opinion
According to the Energy Master Plan, solar power is financed on the backs of overburdened consumers

The Christie Administration’s June 7 release of its much-delayed draft Energy Master Plan (EMP) has caused quite an uproar among solar energy advocates.

Understandably so.

The EMP spends too much time talking about what it calls the need to “ease the undue economic burden” on consumers, the ones who pay for solar incentive programs — pejoratively labeled “subsidies” — each time they pay their power bills.

The trouble is, if you pay close attention to the draft’s own numbers, that “economic burden” vanishes after just a few minutes with a calculator.

Indeed, the plan warns of the “financial albatross” caused by the success of the state’s renewable energy push, which has been among the few bright spots in otherwise dismal economic times. Little New Jersey is now second only to mighty California in the number and capacity of solar electric projects.

According to data in the draft plan, some 9,000 solar installations are now in place across the Garden State, silently and renewably producing 330.5 megawatts of non-polluting electricity. That’s the equivalent of a mid-sized utility-scale power plant — but without any of the emissions.

Is too much solar really a problem? If so, it brings to mind a quip attributed to President John F. Kennedy, that “all our problems are caused by all our solutions.”

In other words, if only the state’s renewable power policies — which originated a decade ago during the tenure of Gov. Christie Whitman — hadn’t been so successful, then ratepayers wouldn’t be reeling under the heavy weight of paying for all those solar panels on other peoples’ roofs.

That, in short, is what the draft plan implies: time to cut back on all that success, or at least on the “subsidies” that have made it possible, claiming the solar industry no longer needs them.

But exactly how much of a burden is this solar success story? A better question is whether there is any burden at all, given the many benefits of solar.

Consider that solar produces electricity at “peak periods” — on hot summer days — which reduces the high cost of purchasing power while eliminating the pollution that goes with running so-called peaker units full bore.

This solar substitution reduces everyone’s rates, whether they have a solar collector on the roof or not. And best of all, the total cost to ratepayers is all but invisible.

Far from being a “financial albatross” or even slightly worrisome to policy makers, solar subsidies come as close to getting something for nothing as can be imagined. But don’t take my word for it; here’s the draft plan’s own data on the “burdensome” cost of all this sun-fed power.

Figure 26 on page 49 of the plan breaks out the cost factors in the annual energy auction (called the BGS for “Basic Generation Service”), the energy marketplace where the state’s utilities buy their electric power from diverse generators for eventual delivery to retail customers. Overall, the BGS adds up to about two-thirds of the total cost of delivered power.

The chart shows that the solar component of BGS comes to a whopping 0.09 cents per kilowatt hour, out of a total BGS cost of 11.259 cents per kilowatt hour. That’s nine-hundredth of one cent due to solar.

I’m not too good at math but my calculator says this means “solar subsidies” amount to 79 hundredths of 1 percent of the total bill for purchased BGS power. And this figure breaks down further to about 52 hundredths of one percent of the total power bill when all other costs are added up and rolled into one package.

Still not convinced that paying for solar’s success is the best bargain for ratepayers? Turn to Table 4 on the next page of the plan. It breaks out the elements of an average monthly residential bill for BGS, which the planners estimate at $78.81. And what part of that bill is solar? The EMP says it comes to 63 cents per month.

In other words, for less than the price of buying one Star Ledger a month, New Jersey has become the most solarized state in the nation on a per-acre basis. Which brings us then to the next logical question:

Since “solar subsidies” are little or no burden on consumers, and since the benefits are heavily on the plus side, why did the Christie administration choose to single out solar and its allegedly “undue economic burden” on ratepayers. There’s plenty more to complain about, but the cost of solar is demonstrably not among them.

Let’s hope that the Board of Public Utilities (BPU), which will hold three public hearings on the draft plan, looks closely at the evidence and recognizes the facts for what they are.

(Disclosure: In his law practice, the author represents and advises various solar developers, including the MidAtlantic Solar Energy Industries Association, a trade group that promotes the interest of solar companies in the Mid-Atlantic region, including New Jersey.)