Lifting Cap on Net Metering Should Help Spur Solar Investments in Garden State

Tom Johnson | June 25, 2015 | Energy & Environment
Incentive lets residents and small businesses sell back solar-generated electricity they don’t use, defraying costs and making renewable energy a better buy

The Legislature is poised today to pass legislation aimed at boosting the solar sector in New Jersey, but even its proponents concede it is only a temporary fix.

If approved and signed into law by Gov. Chris Christie, the measure would encourage increased investment in solar energy systems, particularly for residential and small business projects.

The legislation (A-3838) is important because New Jersey has ambitious targets to increase the use of cleaner ways of producing electricity for utility customers, hoping to have 22.5 percent of its power come from renewable sources of energy by 2020. It is unlikely to meet those goals if solar is not a big component of that mix.

The measure, which is expected to be voted on in both the Assembly and the Senate, would revamp the rules governing when owners of solar systems get paid for the power they produce but do not use. The electricity they do not need goes into the traditional power grid.

The system, known as net metering, is used by 44 states and is credited with helping to promote the rapid growth in solar not only in New Jersey but also in other states. New Jersey has more than 36,000 solar systems installed, making it one of the nation’s leaders in the use of this technology.

“Net metering is one of the most cost-effective ways to help to help build more solar installations in New Jersey,’’ said Jeff Tittel, director of the New Jersey Sierra Club.

Under the current law, however, utilities do not have to offer net metering when generating capacity by net-metered customers equals 2.5 percent of the state’s peak demand for electricity, a level already exceeded.

[related]Without the financial incentives offered by net metering, the economics of smaller residential and business solar arrays do not work, according to clean-energy advocates.

The Senate bill would have lifted the cap on net metering to 4 percent, but it was amended in the Assembly, where the cap was lowered to 2.9 percent, a move that upset some environmentalists.

“We should be encouraging solar, not penalizing it,’’ said Doug O’Malley, director of Environment New Jersey. He also indicated that “4 percent should be a floor not a ceiling for expanding solar.” With a 2.9 percent cap, he said the state will need to fix it again in three years.

Tittel agreed. “We’re not leaving a lot of room for growth,’’ he said. Many other states, he noted, have higher caps of 10 percent, and Vermont just passed legislation allowing net metering up to 15 percent, according to Tittel.

Others said even a 2.9 percent gap will allow the solar sector to grow.

“It keeps us on track, which everyone wants,’’ said Fred DeSanti, a lobbyist for the New Jersey Solar Energy Coalition and Alliance for Solar Choice. The new cap, if approved, would allow the state to install another 700 megawatts of solar systems, according to DeSanti.

Utilities opposed the higher cap, in part, because the less electricity they deliver to customers, the less revenue they get for maintaining their distribution system and keeping it reliable.

On the eve of today’s vote, Environment New Jersey’s national organization issued a report touting the benefits customers receive from net metering, including reduced capital investment, lower expenditures on energy, and less spending on environmental compliance.

“Distributed solar power means we don’t have to build expensive new power plants. It means electricity is delivered more easily and efficiently, and it helps save the environment to boot,’’ O’Malley said.