Solar Megawatts Continue to Climb, Amid Concerns About the Health of the Sector

Optimistic projections fail to take into account recent problems in NJ solar market

In meetings in Iselin and Trenton today, representatives of the executive and legislative branches will discuss how to correct much-debated problems in New Jersey’s solar sector.

But looking at projections by managers of the state’s renewable energy program raises a classic question: If it’s not broken, why fix it?

By the end of last year, the state will have likely installed more solar systems in one calendar year than in the prior decade, according to Michael Winka, director of the state Office of Clean Energy. As of the end of October, there had been 4,348 solar systems installed for 230 megawatts of capacity this year — nearly topping the 259 megawatts installed in 8,351 solar system projects over the prior 10 years.

By June, the state will have a projected solar capacity of 640 megawatts and as high as 702 megawatts, according to the projections of a board-hired consultant, an amount at least 133 percent higher than a legislatively mandated target to have solar produce electricity for the state’s residents and businesses.

Those projections easily exceed the so-called state renewable portfolio standard for solar — a requirement that steadily ramps up how much solar electricity must be provided to customers — and are expected to hold until the year 2014, according to the consultant’s analysis.

However, those projections were based on what has been happening in New Jersey over the past few years and fail to include new factors, which have led some in the solar sector to fear a crash in the market.

That includes a huge drop in the prices of solar renewable energy certificates, the primary means of financing installation of solar panels. The certificates earn owners of the systems money for the electricity they produce, but have dropped in value by more than half since this summer.

Other factors also could lead to a drop in investment in the sector in New Jersey, including the reversion of a federal credit from an upfront cash grant back to a credit this year, as well as the elimination of an accelerated federal depreciation for solar systems.

Worried about those issues, the state is exploring numerous options to remedy the drop in prices for the solar certificates. While not agreeing on the details, both legislators and the state Board of Public Utilities have embraced the idea of accelerating how much solar energy should be supplied to customers by power generators, although how long that should occur is still under discussion.

In addition, the state is looking at extending utility-sponsored solar loan programs that help residents and businesses put solar panels on their homes and facilities. These programs, relying on long-term contracts, tend to drive down the price of the solar certificates, a top priority of the Christie administration.

If the state decides to increase how much solar electricity should be provided to customers, the staff of the Office of Clean Energy is recommending it be set aside for the utility-sponsored program, a step it argues would drive down prices for the solar certificates.

Meanwhile, the number of solar installations in New Jersey, second only to California, continues to grow. As of the beginning of November, there were 490.5 megawatts of solar deployed throughout the state in 12,379 installations.