Compromise Bill Could Help Calm Fears of Collapse in Solar Sector

Legislature passes bill to boost amount of NJ's electricity coming from solar systems

The Legislature yesterday approved a fix to prop up the state’s solar market, with both the Assembly and the Senate easily passing a compromise bill that aims to speed up a mandate requiring how much of New Jersey’s electricity should come from solar systems.

The bill (A-2966), the subject of intense lobbying by the solar sector through this past weekend, ends a six-month effort by the industry to get legislation passed to avert what some fear could be a collapse in new investments in the technology in New Jersey. Gov. Chris Christie has said he will sign the bill.

While both the bill’s critics and proponents say its enactment will send a signal that should calm turmoil in the solar market, there is wide disagreement over whether it will provide the long-term stability the industry needs to continue steady growth of solar businesses in the state.

Count even one of the bill’s sponsors among them. “I have concerns over my own bill,” said Sen. Bob Smith (D-Middlesex). “I think we’ll revive the solar industry but I wonder how it plays out in the long run.”

Smith had tried to include a throttle mechanism in the bill, a proposal endorsed by some in the sector, as a way of halting too rapid growth in solar installations. The rapid build-out in New Jersey is largely blamed on triggering a steep decline in the price of solar credits, which owners of the arrays earn for the electricity they produce.

Jeff Tittel, director of the New Jersey Sierra Club, said the bill might buy the industry a year to a year-and-a-half, at most. “Everyone wants to do solar, but not in a measured way,” he said. The throttle mechanism was opposed by labor unions representing electrical workers and some segments of the solar industry.

Even as the price of solar credits dropped by more than two-thirds in the past year, there have been few signs of a slowdown in the pace of building. New Jersey, in fact, installed 174 megawatts of solar in the first three months of this year, more than any other state and one-third of the total nationwide.

Others were more optimistic the bill would achieve its goals.

“The legislation was critical for the sustainability and continued growth of New Jersey’s solar industry and the job creation that it brings,” said Jamie Hahn, co-founder and manager director of Manasquan-based Solis Partners, a provider of commercial solar systems in New Jersey. “Perhaps the most crucial part of the bill is the acceleration of the state’s Renewable Portfolio Standard (RPS),” said Hahn, which he claimed would absorb the oversupply of solar credits and create a modest demand for further solar development.

To deal with the oversupply situation, the bill would essentially double the amount of solar to be installed in New Jersey in the next few years, a prospect an industry trade group claims could spike electric bills by at least $300 million a year to as much as $400 million.

That increase would come about because utility customers ultimately bear the burden of paying off the solar credits, a cost that has come under increasing criticism from business interests.

“In the end, ratepayers pick up the tab,” said Sarah Blum, a lobbyist for the New Jersey Business & Industry Association.

But no mention of the expense of the solar program arose when either the Assembly or Senate took up the bill late yesterday afternoon, both of which passed without any debate in either house. The bill then went to the Senate, which amended the measure and sent it back to the lower house for final approval.

Solar advocates argue the bill will eventually save consumers up to $1 billion because the measure dramatically scales back payments made by power suppliers if they cannot buy solar credits needed to comply with the state’s solar mandates.

The payments, dubbed Solar Alternative Compliance Payments, act as a ceiling on how much power suppliers must pay to comply with solar mandates. By lowering the payments, advocates say it will lead to lower costs to consumers over the long run.

In the feverish lobbying over the measure, there were clear winners and losers. The bill includes incentives to build new solar systems on closed garbage dumps and brownfields, a goal established under the state’s Energy Master Plan. It also provides financial incentives to install solar projects at large manufacturers and pharmaceutical companies.

The bill also makes it more difficult to build large grid-supply projects on farmland, a measure that would hurt one developer, which has several large grid supply projects proposed on agricultural land.

Perhaps one of the most disappointed parties was the Retail Energy Supply Association. The bill provides an exemption for wholesale power suppliers from immediately complying with the ramped up solar requirements under the bill, but not to the association members, who supply electricity to customers who switch from incumbent utilities, a cost that will be quickly passed on to their customers.