New Law Keeps Farmland Free of Oversized Solar Projects

Tom Johnson | October 5, 2012 | Energy & Environment
Developers hope to sidestep legislation by being 'grandfathered in'

The Christie administration has made it clear that it wants to steer large grid-supply solar projects away from farmland, but developers haven’t gotten the message.

The New Jersey Board of Public Utilities has received at least 65 applications seeking approval to be “grandfathered in’’ as qualifying for solar credits for the electricity their systems would produce on agricultural land, a designation crucial to making those projects economically viable.

Only 50 applications have been deemed by the state to qualify for consideration under a solar law enacted this past summer. But the total capacity of those projects, if all were built, would top 500 megawatts. That amounts to more than 40 percent of the capacity built in New Jersey over the past decade.

The issue is important because New Jersey is struggling to reinvigorate its solar sector, the second-biggest in the country behind only California. With the price of the solar credits dropping precipitously, lawmakers passed and Gov. Chris Christie signed a bill (A-2966) aimed at stabilizing the price of the credits, more formally known as Solar Renewable Energy Certificates (SRECs).

Unless some steps are taken to stabilize the sector, many industry executives and lawmakers fear investment in New Jersey could dry up.

The law has many provisions designed to bring more stability to the industry, including a requirement to more than double the amount of solar electricity that power suppliers must buy, a step advocates say will help balance the supply of solar credits and demand for them. By doing so, it could help prop up the prices of the credits, which have fallen from more than $600 in the summer of 2011 to less than $100 now.

Also, both the law and the Energy Master Plan discourage putting solar-energy systems on farmland or open space. The bill even requires the BPU to look at what financial incentives ought to be put in place, if any, to promote installation of solar arrays on brownfields and landfills, a proposal Christie first floated during his successful gubernatorial run.

It also renews a debate over best location to put solar-energy systems: on the ground vs. rooftop installations; on farmland versus brownfields and other underutilized urban areas; and on homes and businesses compared with larger industrial properties.

In fairness, many of the projects seeking to be grandfathered in have long been in the pipeline, and have already been processed through the second phase of review by PJM Interconnection, the regional operator of the nation’s largest power grid. PJM’s inclusion in the bill was key to it winning final legislative approval in June; its absence doomed the bill in the lame-duck session in January.

This does not mean that the projects pending before the BPU, which range in size from 1.95 megawatts to 22.35 megawatts, will move forward. If they do not, however, some industry observers say large-scale rejection of the projects could lead to a wave of lawsuits from developers, many of whom have invested substantial money in making them happen.

Anybody who believes they are qualified to be grandfathered in is entitled to file a notice of intent to seek that status, according to BPU President Robert Hanna. “That doesn’t mean all of those projects will be grandfathered,’’ he said.

“We are attempting to direct large-scale grid projects away from farmland and open space to brownfields and landfills,’’ Hanna said during the board’s monthly meeting.

However, he conceded the grandfathering provision is “a very difficult issue.’’

Other BPU commissioners echoed Hanna’s comments. “There are a lot of landfills capable of providing electricity,’’ said BPU Commissioner Jeanne Fox. “It makes a lot of sense to do this.’’

Noting that New Jersey’s success in the solar sector is the envy of many other states, BPU Commissioner Joseph Fiordaliso vowed “to do everything in our power to ensure the industry remains vibrant and continues to grow.’’

At the meeting, the BPU also began a series of proceedings to implement the solar law passed this past summer. Among other things, it will have to come up with recommendations for stabilizing the solar sector and determining if financial incentives are needed to spur development of bigger solar projects.