Glimmer of Light Breaks Through Clouds Over NJ Solar Sector

Tom Johnson | February 13, 2013 | Energy & Environment
Prices paid for electricity climb to nearly twice as much as low point reached late last year

It took a lot longer than some people expected, but it appears that New Jersey’s solar-energy sector is starting to show some signs of stabilizing.

The prices owners of solar-energy systems receive for the electricity their arrays produce is slowly creeping upwards, bumping up above the $100 level in recent days, and even reaching the $120 range, before dropping back to $110 this week. That marks a significant climb from the low $60 range at the end of last year.

The resurgence in prices may be a reflection that a legislative effort passed last summer to revive the solar-energy sector, once one of the fastest-growing parts of New Jersey’s economy, is beginning to achieve its goal.

New Jersey has been very aggressive in promoting solar energy, so much so that it once ranked second behind only California in the number of solar-power systems installed in the state. At the end of December, there were more than 19,000 solar installations in the state, according to the Office of Clean Energy.

At one time in the summer of 2011, the price of solar renewable energy certificates climbed to the mid $600-range, which helped fuel a rush to develop projects. But too many new projects were built, creating an oversupply of the so-called solar credits, leading to a crash in prices paid to owners of the systems.

The result dried up investment in the solar-energy sector, which had created thousands of jobs in the state even in the midst of a deep economic downturn. Still, the state’s efforts to promote solar continue to be controversial, since much of the burden of that effort falls on electric and gas customers who pay for the solar-power incentives on their utility bills.

The legislation passed last summer aimed to correct that problem by ramping up how much electricity power suppliers must purchase from solar-energy systems, a move lawmakers and the Christie administration hoped would soak up the oversupply of solar credits.

The prices inched upward earlier this month in the wake of an annual auction held by the New Jersey Board of Public Utilities, a process in which the state’s four electric utilities buy the electricity they need to supply to customers. The law mandated that more of that power should come from solar-energy systems.

The requirement may have accounted for the jump in prices during the past week, according to Michael Flett, president of the Flett Exchange in Jersey City, which buys and sells solar credits.

“We got a nice move up,’’ Flett said, referring to the jump in prices after auction.

Beyond the auction, the big drop in prices for the solar credits prior to that event has remarkably slowed the pace of solar installations in New Jersey, which at its peak was running more than 40 megawatts a month. In December, the pace slowed to just 9 megawatts, and only increased to 16 megawatts as of January 25, according to Flett.

“It does seem development is ratcheting back to some degree,’’ Flett said.

Fred DeSanti, a lobbyist who represents solar developers, agreed. “It’s so far off the pace it was going at that you are starting to see the marketplace stabilize,’’ he said. “The market is starting to reflect some of that optimism.’’

Other solar-energy developers were not so certain.

“Unfortunately, the solar community has shown if you make it possible for one solar project to move forward, then everyone will do these projects,’’ warned Lyle Rawlings, president of Advance Solar Products, Inc.

But the rise in solar credits cheered other advocates of the technology.

“It’s not where we need to be, but at least it is heading in the right direction,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “A year ago, we were not sure if the solar industry would still be viable in New Jersey.’’