State Agency Still Undecided on Solar Incentives for Dumps, Brownfields

Tom Johnson | April 15, 2013 | Energy & Environment
BPU wary of further depressing price of solar credits, discouraging investment in what once was hot segment in NJ economy

The state’s Energy Master Plan wants to convert garbage dumps and brownfields into large solar energy farms, but making that happen is proving more difficult than anticipated.

An order issued by the New Jersey Board of Public Utilities earlier this year set in motion an effort to certify what projects may move forward, but there is still far from a consensus on what type of incentives should be given to solar developers.

Many in the industry worry that any incentives could further swamp a marketplace where the price that solar systems earn for the electricity they produce has fallen dramatically. The collapse of so-called SRECs (solar renewable energy certificates) has dried up investment in a sector once viewed as one of the strongest in New Jersey’s economy.

The incentive issue for brownfields and landfills is so contentious that the agency has put off making a decision, even though a bill promoting that goal last July gave it six months to decide how to spur solar developments on those facilities. While it is yet to decide what type of incentive to award, the BPU did conclude that some sort of inducement is appropriate.

In part, the debate reflects an ongoing dispute over where to locate solar projects: on farmland vs. abandoned property, such as contaminated brownfields, or on rooftops vs. the ground. There’s also no agreement on what type of solar systems to promote: larger grid-supply projects or those on homes and small businesses.

Underlying all those questions is a larger one: What will the state’s aggressive efforts to promote solar cost ratepayers?

Many businesses and the New Jersey Division of Rate Counsel, while still supporting the technology, have raised repeated concerns about the economic burden to consumers, who ultimately foot the bill for SRECs.

For example the Division of Rate Counsel opposed the creation of an SREC carve-out for facilities located on landfills, arguing in stakeholder hearings on the issue that a carve-out could lead to indirect subsidization of cleaning up former dumps.

Quantum Solar argued that because of the economies of scale, grid supply projects, even if located on landfills, need very little SREC support to make them economically viable.

Others disagreed.

Public Service Electric & Gas — the state utility that has been most aggressive in developing solar farms on brownfields — said that these projects often have higher interconnection costs to link with the regional power grid, arguing that those costs should be reflected in any financial incentives developed.

One solar developer agreed, suggesting that building solar on landfills historically has been 25 percent to 35 percent more expensive on greenfield sites, adding that this expense that makes it reasonable to award incentives to projects on these locations.

In adopting a certification process for what projects on brownfields, landfills, and historic fill can move forward, the BPU elected to implement a two-tiered approach, primarily due to concerns raised by the New Jersey Department of Environmental Protection.

Developers can win conditional certification for projects where further work needs to be done to clean up pollution on the site, according to the DEP. But only projects receiving full certification from the DEP — bureaucratic jargon meaning the landfill or brownfield has been properly cleaned up — will be eligible to receive SRECs. Without those solar credits, many of the projects would not be economically feasible, according to some developers.