The Christie administration yesterday adopted an Energy Master Plan with changes aimed at stabilizing New Jersey’s once flourishing solar energy market, which some fear is threatened by a collapse.
For the most part, the final version of the plan sticks to the broad outlines of a draft unveiled this past June, ignoring many criticisms raised by clean energy advocates during public hearings on the proposal. Much of the disapproval focused on a scaling back of renewable energy targets and promoting an increased reliance on natural gas.
Yet in recommending some changes to how New Jersey’s solar market operates, the new plan drew praise from industry executives who say it could fix a problem that has dried up investment in the sector — an oversupply of solar renewable energy certificates (SRECs), the primary means of financing solar installations.
“The things that we need are there,” said Lyle Rawlings, vice president of the Mid-Atlantic Solar Energy Industries, an industry trade group, citing in particular a recommendation to accelerate by three years how much of the state’s electricity must come from solar energy. Many believe such a move would soak up the oversupply of the certificates, for which prices have dropped dramatically.
Michael Flett, president of the Flett Exchange, which brokers certificates, agrees “Moving it forward three years is much different than it was just a year ago,” he said, describing it as an encouraging sign for the battered sector.
The plan also will support an extension of the long-term contracting programs offered by the electric utilities, a move that also could provide stability to the so-called SREC spot market, where prices have fallen from the mid-$600 range to less than $200. At that level, some industry executives say it is difficult to come up with a viable business plan for financing solar installations.
The volatility in New Jersey’s solar market — and the drop in prices — have been blamed on an oversupply of SRECs, a situation most attribute to the lucrative incentives offered both by New Jersey and by the federal government in the form of subsidies and tax credits, which have attracted many investors to the state looking for a quick return on their investment.
At the same time as recommending utilities buy more of their power from solar suppliers, the new plan also recommends a drop in a compliance payment power suppliers must pay if there are not enough SRECs to buy. With an oversupply of the certificates, that is no longer a concern and by dropping the price, it could lead to lower electricity bills for ratepayers, who ultimately bear both the cost of paying off SRECs and the compliance payments.
Indeed, lowering the cost of electric bills for residents and businesses remains an overarching theme of the master plan. It proposes to do so in various ways, including building more natural gas-fired power plants; expanding the natural gas pipeline infrastructure in New Jersey; and acknowledging the importance of developing Marcellus Shale natural gas deposits in Pennsylvania and New York.
That premise was echoed by Gov. Chris Christie in a press release announcing completion of the plan.
“The EMP offers concrete strategies to reduce some of the nation’s highest energy rates and make them comparable to costs in other regions and states, which is consistent with the recommendations of the State Strategic Plan for facilitating economic growth and lowering the cost of living for New Jersey residents,” the governor said.
To some, however, the plan’s focus on natural gas continues to be a major flaw.
“With all of the public outcry about fracking at the public hearings, it’s a disappointment to see it discuss the Marcellus Shale in such a positive way,” said Matt Elliott, clean energy advocate for Environment New Jersey. The process of extracting the natural gas through a technology called hydraulic fracturing, or fracking as some have dubbed it, is opposed by most environmental groups because they fear it will contaminate the Delaware River, the source of water for 15 million people.
“It is still more transmission lines, more natural gas plants, and nuclear,” said Jeff Tittel, director of the New Jersey Sierra Club. “I don’t think they listened to the public.”
The plan also came under fire from Assemblyman John McKeon (D-Essex), the chairman of the Assembly Environment and Solid Waste Committee. “The current plan is regressive, shortsighted, and will promulgate reliance on fossil fuels,” he said.
Nonetheless, the plan maintains that more than 70 percent of New Jersey’s electricity will come from what it calls clean energy, although the bulk of that (51 percent) will come from nuclear power, which does not emit any greenhouse gas emissions, but is hardly viewed as a clean energy source by many environmental groups. The plan maintains a statutory goal of having 22.5 percent of the state’s electricity come from renewable energy by 2020, a scaling back of a 30 percent target established in the last energy master plan prepared by the Corzine administration.