Mission Accomplished: Solar Sector is Stable, BPU Report Concludes

Tom Johnson | July 25, 2014 | Energy & Environment
Legislation passed in 2012 has done its job, review says, guiding once-volatile sector to stability

Credit: Amanda Brown
Dianne Solomon, president of NJ BPU
With the solar-energy market apparently rebounding, a new report to the Legislature largely recommends the state shun adopting major new measures to deal with what has been a boom and bust cycle for the sector.

The report, required by a law passed two years ago to suggest steps to reduce volatility in the solar market, essentially says many of the measures in that act have brought stability to the sector, leading to new growth in solar installations.

So much so that New Jersey now gets 2 percent of its electricity from solar systems, with 80 megawatts of arrays installed during the first quarter of 2014, a modest increase from just a few of years ago.

“New Jersey’s solar market is sound,’’ said New Jersey Board of Public Utilities President Diane Solomon, She added that the 2012 law passed with bipartisan approval and signed by Gov. Chris Christie has brought needed stability to the solar market. The agency submitted the report to the Legislature Wednesday.

Investment in New Jersey’s solar sector has dried up dramatically, a result of too much capacity being built in the state. Lucrative federal incentives, a drop in the cost of solar equipment, and high prices paid to owners of solar arrays for the electricity they generate contributed to the glut of new systems.

The result was a steep drop in prices for solar credits — from more than $600 to below $100 — which led installers to abandon the sector. With the passage of the 2012 law, however, prices for solar credits have climbed to $180, enough to spur new investment.

The recommendations in the report basically reflect what many industry stakeholders said about dealing with the possibility of new volatility during discussions with the BPU and at a recent hearing before the Senate Environment and Energy Committee.

The suggestions closely mesh with what the state Division of Rate Counsel has argued, saying no changes are needed now, Eventually, however, the industry has to wean itself off subsidies provided by ratepayers that make solar a cheaper option for both businesses and residents, according to Stefanie Brand, director of the office.

“Our considered opinion is it is finally in balance for the past year,’’ said Fred DeSanti, a spokesman for the New Jersey Solar Energy Coalition. “Nothing should be done at this time. Leave it alone, it’s fine.”

BPU Commissioner Jeanne Fox concurred.

“The message of this report is that it is working,’’ she said. “Let the industry function and continue to grow in this state.’’

The report warned that there could be future volatility in the sector, partly the result of a drop in federal tax credits from 30 percent to 10 percent after 2016, as well as elimination of a residential tax credit, which expires the same year. That could lead to a rush to build new installations prior to that date, according to the report.

Jeff Tittel, director of the New Jersey Sierra Club, agreed with that assessment, saying the state may need to ramp up again its requirements for electricity produced from solar energy.

“It is vulnerable to another crash in a year-and-a-half,’’ he said. “Meanwhile the BPU buries its head in the sand. They don’t want to make any tough choices.’’

The report, however, recommends that the state take steps if there is significant volatility in the sector over three consecutive quarters. Those steps would include limiting sales of solar credits by electric distribution companies and restricting projects that could affect solar volatility.