BPU Says Special Solar Incentives Unlikely to Attract Big Manufacturers to NJ

Citing abundance of solar certificates, large solar installations, agency takes a pass on clean energy program

The state has decided not to award special incentives to big manufacturers so they can install large solar projects as a way of lowering their energy costs, a move some lawmakers believe could help retain or attract new businesses to New Jersey.

In a decision by the Board of Public Utilities last week, the four commissioners found there was no evidence that an additional incentive would “achieve the stated goal of improving their economic competitiveness.’’

In adopting a wide-ranging bill aimed at reviving a sluggish solar market last summer, legislators included a number of provisions designed to jump start investment in the sector, including a proposal to give financial incentives to commercial and industrial customers installing solar projects of 3 megawatts or larger.

The incentive would award additional solar credits for the electricity the systems produced, above and beyond what consumers and owners of smaller projects are entitled to. The proposal generated opposition from much of the solar industry and the New Jersey Division of Rate Counsel, which argued it would exacerbate a market already oversupplied with solar credits, or Solar Renewable Energy Certificates (SRECs).

The abundance of solar credits has driven down the price owners of systems earn for the electricity their arrays produce, dropping from a high in the mid-$600 range to as low as $80. That drop is drying up investment in the sector, spurring the bill passed by lawmakers last July and signed into law by Gov. Chris Christie.

In deciding not to give special incentives to commercial and industrial customers, the board noted that many solar projects larger than 3 megawatts have already been installed in New Jersey or are under construction.

As of the end of this past October, more than 55 megawatts of solar systems had been deployed at 10 facilities, and another 61 megawatts are being built at 11 other facilities, the board noted.

In its order, the board noted that the Office of Clean Energy “believes that this clearly demonstrates the economics are sufficient to motivate a significant market response for these larger projects without the need for an additional incentive.’’

KDC Solar LLC, a firm that has developed a successful business model encouraging big customers to install solar systems, argued that such projects are unique and deliver multiple benefits to the state, not the least of which is retaining big companies that employ many workers.

The company, based in Bedminster, argued that besides lowering energy costs, the incentive could be used as a recruitment tool to attract companies to New Jersey.

The staff of the OCE did not buy the premise. It contended that in an oversupplied SREC market, any incremental benefit provided by an increased number of credits would be highly unlikely to provide a benefit significant enough to influence a company’s decision to locate in New Jersey.

KDC is focused on supplying 100 percent of the electric needs of large commercial and industrial customers, typically building systems of 2 megawatts or more. It finances the entire project while offering significant energy savings to customers who opt in for power-purchaser agreements ranging up to 20 years.

Others warned that awarding additional benefits could further depress the price of solar credits. The agency noted that the solar market for credits is likely to be oversupplied for the next two years.

The board also faces a similar question as to what type of incentives to give to developers who want to build solar systems on brownfields and abandoned garbage dumps in New Jersey. The legislation mirrors a goal in the state’s Energy Master Plan, which aims to turn idle land to more productive use.