For Energy Sector, 2013 Brings Another Chance to Grapple With Unresolved Issues

Tom Johnson | January 2, 2013 | Energy & Environment
State must move ahead on offshore wind, solar, and cleaner vehicles if it's going to realize aggressive alternative energy goals

Will the state push its much-touted offshore wind projects forward? Can New Jersey’s once flourishing solar sector avert a crash? Is there a coherent policy to promote vehicles fueled by alternatives to gasoline?

Those questions likely will dominate the debate among state policymakers in the new year, a time when the state’s aggressive goals to promote renewable energy will come under increasing scrutiny.

Whatever is decided will determine whether the targets established by the state’s Energy Master Plan are achieved, an objective that aims to have New Jersey usher in a cleaner way of producing the electricity to power homes and businesses while reducing pollution that contributes to global climate change.

Few question the goals, but many question the cost. The state’s efforts to promote clean energy has saddled businesses and consumers with hundreds of millions of dollars in added fees on their electric and gas bills, a cost that is expected to rise in the future.

The New Jersey Division of Rate Counsel has projected the cost of subsidizing solar and wind projects by consumers over the next 20 years is likely to exceed $5 billion, an expense that has raised concern among businesses who bear the majority of the burden of financing clean energy projects.

The state’s Energy Master Plan calls for the development of 1,100 megawatts of offshore wind power along the Jersey coast by 2020, a goal embraced by the Christie administration and Democratic-controlled Legislature.

But permitting delays at both the state and the federal levels have prevented any of the offshore wind projects from moving forward. The state also has failed to develop regulations that would provide a funding mechanism that would provide credits paid by ratepayers for the electricity the wind turbines produce.

Even given the lack of action at the state and federal levels, the development of offshore wind farms faces other huge hurdles, including historically low natural
gas prices, which make the technology less competitive with more conventional fossil-fuel plants.

So far, the first offshore wind project to come before the New Jersey Board of Public Utilities has run into opposition from a consultant retained by the regulatory agency. In a report released last month, the consultant expressed concern that the Fishermen’s Energy Atlantic City Wind farm would require a “significant level of subsidy that would be paid by ratepayers’’ for a project that poses considerable technical risk.

Fishermen’s is hoping to build a 25-megawatt wind farm about three miles off of Atlantic City.

The state’s once robust solar sector also faces a great deal of uncertainty in the coming year, primarily because the price of credits owners of solar systems earn for the electricity their arrays produce has dropped precipitously in the past 18 months.

With the price of the credits declining steeply, the pace of new solar installations has slowed dramatically, so much so that the Christie administration and Legislature enacted a new law aimed at reviving the sector. The law, passed last summer, ramps up significantly how much electricity power suppliers must buy from solar systems, but many industry experts say it is still too early to tell whether it will be successful in stabilizing the sector.

Statewide, New Jersey has installed over 950 megawatts of solar capacity, accounting for more than 1 percent of the electricity used by its residents and businesses. The market has slowed because lucrative state and federal incentives led to an oversupply of solar credits, which has caused a meltdown in the price owners of solar arrays earn for the electricity their systems produce.

A big test of whether the state can stabilize the solar sector hinges on a decision by the BPU as to how many of the more than 60 projects seeking to build grid-supply solar projects on farmland are able to move forward. The projects are seeking to be grandfathered in under the new solar law and could result in more than 500 megawatts of new capacity in the state, if all were approved.

Meanwhile, the Legislature is working on a package of bills aimed at helping develop a new infrastructure to power alternative-fueled vehicles, including plug-in electric cars and vehicles powered by natural gas. At this point, lawmakers have yet to decide what types of incentives are needed and where to encourage consumers to buy vehicles not fueled by gasoline.