After a few years of volatility in which prices fluctuated wildly, New Jersey’s solar market appears to have settled down, but the lingering question is — for how long?
That issue was debated by solar developers, consumer advocates, and others at a hearing last Thursday before the Senate Environment and Energy Committee, with no clear consensus emerging, once again reflecting the divergent views often expressed by those in the sector.
For the most part, many of those who spoke at the hearing argued that a bill signed into law in 2012 by Gov. Chris Christie stabilized prices for solar credits. These are what owners of systems earn for the electricity their arrays produce and are the main source of financing for solar projects.
At the end of June, the prices for those credits — called solar renewable energy certificates (SRECs) — were selling at the $180 level, but one analyst said prices could drop to $120 or lower by the fall or winter.
Even so, that price is far lower than the $600 the credits were earning just a few years ago before the market crashed. So many solar installations were built in New Jersey — once second behind only California in the number of systems nationwide — that prices for the credits fell dramatically, dropping to as low as $70 at one point.
As a result, of those plummeting prices, the number of solar systems being installed in the state also dropped steeply. In part, that also was due to the expiration of a generous federal tax incentive that helped drive down installation costs for developers.
While the prices for credits have climbed back up to the point at which they support renewed solar development, some argue the state still is prone to a boom-and-bust cycle, a conclusion also reached by a consultant in a draft report this spring] for the Rutgers Center for Energy, Economic and Environmental Policy (CEEEP).
Nevertheless, many solar developers told the committee to hold off making any changes to the current system.
“We believe you have to let the market season,’’ said Alan Epstein, president and chief operating officer of KDC Solar, which has built 45 megawatts of solar projects in New Jersey. “It would be irresponsible to tinker with it.’’
Pam Frank, a vice president at Gabel Associates, a Highlands Park energy consulting firm, agreed. “Things look pretty good, pretty balanced,’’ she said, referring to the current state of the solar sector.
Others were not so confident.
Lyle Rawlings, president of the Mid-Atlantic Solar Energy Industries Association, said efforts to build grid-supply solar projects, long-term contracts to build solar by the state’s utilities, and to encourage development on brownfields and landfills, will accelerate the amount of solar installed in the state.
“We see high growth,’’ Rawlings, the owner of a solar firm in Flemington, said. “We have conditions for a market crash.’’
Rawlings is advocating that the state greatly ramp up requirements to have as much as 80 percent of the electricity in New Jersey come from renewable energy technologies, such as solar. The proposal, not yet incorporated into legislation, has been the subject of discussions by working groups set up by Sen. Bob Smith (D-Middlesex), the chairman of the Senate panel. But it is unlikely to come up until next year at the earliest.
Fred DeSanti, a lobbyist representing the New Jersey Solar Energy Association, shared Rawling’s concerns. “You’ve got to do something in the next 24 months’’ he told the committee.
Among other things worrying those concerned with the stability of the solar market is the price of a federal tax credit that will drop from 30 percent to 10 percent in 2016, a factor that may create a new rush to install the technology.
Director of the Division of Rate Counsel Stefanie Brand disputed the assertion that the market needs changes.
“We fall into the category of don’t do anything now,’’ she said. “The market is working and things are settling down.’’
At some point, the industry needs to wean itself off requiring solar credits, which are financed by utility customers, to be self-sufficient, according to Brand. “If we change it every two years, we’re creating the volatility,’’ she said.