Solar Sector Likely to Look for Stabilization by Regulation

Tom Johnson | January 11, 2012 | Energy & Environment
State agency may increase amount of electricity power suppliers must buy from solar systems

With hopes for a legislative fix dashed, the solar sector likely will press for a regulatory remedy to stabilize an industry that has seen prices for the credits owners of solar systems earn for the electricity they produce drop dramatically in the past six months.

When the lame duck legislature ended yesterday without lawmakers even posting a much-debated bill designed to prop up prices for the credits, the attention shifts to the Office of Clean Energy within the state Board of Public Utilities, which has been considering a similar but less aggressive proposal.

The issue arose during a meeting of the agency staff with industry lobbyists and utility officials in Iselin, with Michael Winka, director of the office, noting that the new Energy Master Plan recommends ramping up the requirement that power suppliers get more of their electricity from solar systems.

An acceleration of the so-called Renewable Portfolio Standard (RPS) aims to soak up an oversupply of solar credits created by a boom cycle in the sector driven by lucrative state and federal incentives. That has led the price of so-called solar renewable energy certificates (SRECs) to drop from more than $600 this past summer to the $200 range.

Without some action by lawmakers or the state, the price is likely to drop below $150 within a week or so, according to Michael Flett, president of the Flett Exchange, which brokers the solar credits. Industry executives say investment in the sector, one of the few growth areas in the state economy, could dry up unless the price of credits stays within the range of $200 to $400.

Winka indicated yesterday the staff will recommend to the five commissioners at the BPU whether and how much to accelerate the RPS for solar, but it must also include some type of cost savings for ratepayers, who end up paying for the solar credits on their gas and electric bills.

At the same time, the staff is also trying to determine whether to continue to expand utility-sponsored loan programs that help residents and businesses install solar system through long-term contracts. The staff is expected to convene again tomorrow with stakeholders to review a study by Rutgers University, which looked at the financial implications of the utility-sponsored programs.

“That will shape our discussions going forward,’’ Winka said.

Even with all the uncertainty hovering over the sector, New Jersey continues to see solar systems installed at a healthy rate. In December, between 35 and 36 megawatts of solar systems were installed, bringing the statewide total to 564 to 566 megawatts of solar capacity. Another 616 megawatts of solar systems are in the pipeline, according to projections by a consultant to the board.

Despite the expiration of a lucrative federal cash grant program at the end of last year, Lyle Rawlings, a vice president of the Mid-Atlantic Solar Energy Industries Association, said it should not have a big impact on the number of solar projects moving forward.

“I don’t think it’s going off a cliff at all,’’ when asked about the potential for a drop-off. “It’s going to be primarily driven by the acceleration of the RPS, or the lack thereof.’’