Can Short-Term Fix to Solar Sector Help Stave off Potential Collapse?

Increasing reliance on the renewable technology could stabilize downward trend in market, but Division of Rate Counsel raises questions about costs

solar church
The state is looking to make a short-term fix to its solar market, boosting reliance on the technology over the next few years to provide power to homes and businesses while mapping out a long-term policy for New Jersey.

In a bill (S-2276) scheduled for a vote on Monday, the Assembly could give final legislative approval to a measure that would accelerate the deployment of solar systems in the state, a step aimed at averting a potential collapse of a sector employing thousands.

The legislation is similar to a previous law adopted by the Legislature four years ago that helped revive the solar industry when prices used to incent installation of solar arrays collapsed, drying up investment in the sector.

By most accounts, the earlier bill worked well, leading the current initiative to win broad support from the industry, clean-energy advocates, and environmentalists. But the state Division of Rate Counsel has questioned whether the fix could cost utility ratepayers as much as $276 million to help subsidize installations.

That is because owners of solar systems earn credits for the electricity their arrays generate. Those credits, dubbed SRECs (solar renewable energy credits), are paid for by a surcharge on all utility gas and electric bills.

In recent months, after rallying up to as high as $290, the price of those credits has fallen, selling as low as $180 to $200 on the short-term market, according to Michael Flett, who runs the Flett Exchange, which buys and sells solar credits. The market now appears to be in a downward trend, he said.

If the price continues to fall, solar advocates fear that investment will once again dry up, causing massive layoffs in an industry that clean-energy advocates claim employs nearly 10,000 people.

“It’s a real signal that we need to do something,’’ said Fred DeSanti, a lobbyist representing solar developers, referring to the drop in SREC prices. “If we don’t, the market is going to be a lot worse, and ultimately, a lot of jobs are going to be lost.’’

Even some of its proponents concede the pending measure is just a “stop-gap,” and one that may not even be supported by Gov. Chris Christie.

“We don’t know what the governor will do,’’ said Lyle Rawlings, president and founder of Advanced Solar Products in Flemington, one of the state’s solar companies.

He is pushing another bill that would require the state to get 80 percent of its electricity from renewable energy by 2050, with a specific carve-out for solar. Rawlings also said the state needs to lower the cost of solar by changing its SREC system.

Some of those issues would be addressed by a new commission set up under the pending bill, if signed by the governor. The commission would study what steps the state should take to continue to promote the solar industry, and perhaps more importantly, whether it should continue to have ratepayers subsidize its growth.

Rate Counsel Director Stefanie Brand cited the latter issue in a letter to lawmakers last month, noting the cost to build solar is now on par with other, more conventional sources of energy. “This means that over time fewer subsidies should be required to pay for solar on homes and businesses,’’ she said.

But some clean-energy advocates fear the issues will not be solved anytime soon. “Nothing will happen until we get a new governor,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “That is the problem.’’