Bill Could Mean More Money to Small Businesses, Residents with Solar Panels

Tom Johnson | August 11, 2015 | Energy & Environment
Christie signs law that increases cap on net metering, letting New Jersey residents earn more for electricity their solar panels produce

Gov. Chris Christie yesterday signed a bill important to the solar industry that should encourage continued investment in the technology for homes and small businesses.

The measure, S-2420, is strongly backed by clean-energy advocates and the solar industry, even though they readily acknowledge it’s only a temporary fix to a crucial component of the state’s solar sector.

Despite that, the changes, which are mostly technical, are necessary if the state is going to achieve its ambitious goals of increasing the use of cleaner ways of generating electricity. By 2020, New Jersey is hoping to have 22.5 percent of its power come from renewable energy, and solar is expected to play a big part in meeting that target, according to its proponents.

The changes deal with how owners of solar systems get paid for the electricity the panels on their homes and business produce. Called net metering, a system used in most other states, it is credited with helping promote the rapid growth of solar in New Jersey.

“This is an important bill that moves solar forward in New Jersey,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “This is a ray of sunshine for the solar industry and will create clean energy and more green jobs.’’

The legislation, sponsored by Sen. Bob Smith (D-Middlesex) lifts a cap that establishes when utilities can stop paying customers with net-metering systems for the power their panels produce. Under current law, the cap is defined as when the power generated by net-metering systems equals 2.5 percent of the state’s peak demand for electricity, a level already exceeded.

[related]The payments by the utilities create a lucrative incentive for people to put solar panels on homes and businesses, according to proponents of the plan. “It means investors will be more comfortable with solar,’’ said Lyle Rawlings, owner of Advanced Solar Products, a company based in Flemington.

The new law lifts the cap to 2.9 percent, a level that should afford the state three years to come up with a more permanent fix, advocates said. Some clean-energy advocates wanted a higher cap immediately, saying the state should do it all it can to promote solar.

“We should not be limiting solar energy,’’ said Doug O’Malley, director of Environment New Jersey. “We’re going to need to come back (to the Legislature) in three years,’’ he said.

Even a 2.9 percent cap should allow the state to install another 700 megawatts of solar systems over the next three years, according to industry officials.

The larger question about net metering, however, still has to be answered, according to Rawlings. “How do we get to a renewable energy future and still keep utilities healthy,’’ he asked.

The more customers rely on solar and other forms of renewable energy, the more utilities will see their traditional revenues erode, because they are delivering less electricity to homes and businesses with net-metering systems. At the same time, the utilities will have to make a lot of infrastructure changes in the grid to ensure reliability of the system, Rawlings noted.

Christie signed the bill without comment.