The First Step in Fixing NJ’s Solar Sector: Decide If and Where It’s Broken

Solar advocates, developers, stakeholders, and lawmakers assess problems with the sector -- including if ratepayer subsidies are too high

The Legislature yesterday looked into fixing New Jersey’s solar industry, but precisely where and whether it needs mending seemed uncertain by the day’s end.

In an echo of a bill passed four years ago, the Senate Environment and Energy Committee adopted a measure (S-2276) aimed at averting a potential crash of the sector due to declining state mandates governing how much electricity must be generated by solar systems.

The bill passed unanimously with consensus support from solar developers and companies, but its approval was overshadowed to a large degree by a debate over whether utility customers are paying too much to subsidize installation of the renewable energy panels.

In response to those concerns, the Director of the Division of Rate Counsel Stefanie Brand sought an amendment that would establish a market monitor at a state agency to track the sector and to ensure ratepayers are getting a fair deal.

The issue is significant because consumers and businesses already have forked over as much as $5 billion in the past decade through surcharges on electric and gas bills to help New Jersey become a national leader in solar installations. The state has the fourth-highest number of arrays in the country.

If the new bill becomes law, it would ramp up the state’s reliance on solar power to deliver electricity, a tactic that worked in 2012 when the sector collapsed because the price of solar credits — which govern the amount that owners of solar panels receive for electricity produced by their systems — plummeted.

Solar advocates fear that scenario could occur again in 2018 when state requirements for solar power dramatically drop off. That could tank the market for solar credits, they say, drying up investment and costing thousands of jobs in New Jersey.

Right now, however, the solar industry is booming, with solar credits selling for more than $240 and lucrative federal tax incentives also sweetening the deal. The cost of the systems also has fallen, making the technology competitive with more conventional, but more polluting ways of generating power.

So much so that Sen. Bob Smith (D-Middlesex), the chairman of the committee and sponsor of the bill, said yesterday he’d like to end solar subsidies, dubbed solar renewable energy certificates (SRECs) in 2022.

“That’s it. That’s the end of the game,’’ Smith said at the start of the hearing. “There will be a point we will cut the umbilical cord.’’

The bill would not create any new SCRECs — merely accelerate the requirement that 4.1 percent of the state’s electricity come from solar by 2021, not 2028 as now envisioned, according to Smith.

But Brian Lipman, litigation manager for the Division of Rate Counsel, said the expedited reliance on solar would increase costs to ratepayers by up to $276 million. He also questioned whether the industry will “fall off a cliff’’ as some in the industry have predicted.

In pushing for a market monitor, rate counsel questioned why SRECs, a financing tool used in other states, cost so much more in New Jersey. In Delaware and Maryland, prices range from $50 to $80.

“We question the need for more subsidies. The industry is getting their subsidies,’’ Lipman said. “We’re concerned the ratepayer is overpaying.’’

But industry representatives argued vehemently against the market monitor proposal, saying it would add uncertainty to the market and deter investment in New Jersey.

“This would put a lot of bureaucratic red tape in the path of investors,’’ said Lyle Rawlings, owner of Advanced Solar Products of Flemington and a leading solar developer in New Jersey.

But when Smith asked whether Brand is right in arguing that New Jersey ratepayers are providing too much stimulus to developers in a sector that is already profitable, Rawlings replied, “I think she is right, actually. All you have to do is look at other states. You can’t deny it.’’

However, Rawlings blamed the high costs on the framework chosen by the state to promote solar via credits, a system he has long advocated be replaced by a more efficient model.

As in the past, business lobbyists expressed opposition to speeding up the solar mandates, fearing their impact on energy costs in a state where they’re typically among the most expensive in the nation.

Clean-energy advocates backed the bill, even though they said New Jersey probably needs more aggressive renewable energy targets to comply with new laws to reduce greenhouse-gas emissions and try to curb global climate change.

In the end, the committee released the bill without the market-monitor amendment, although Smith said he would consider adding it as the measure works its way through the Legislature.