Does NJ Need New Ratepayer Subsidy to Encourage Solar Deployments?

More solar systems could help reduce congestion on grid, but Division of Rate Counsel argues the price is too high

If some legislators get their way, new financial incentives to install solar systems will be available, helping ease congestion on the electric grid, a problem that can spike power bills.

But are such incentives necessary? Not according to New Jersey Rate Counsel Director Stefanie Brand, who calls the proposed ratepayer subsidies “too rich,’’ and questions whether the state is already doing enough to hold down congestion costs related to the electric grid.

The bill (A-441) cleared the Assembly Telecommunications and Utilities Committee yesterday as proponents argued it would help bolster installation of solar in New Jersey while at the same time stabilizing electricity costs by reducing congestion on the grid.

In the past, problems with moving electricity on high-voltage power lines was a big problem in the state, adding up to $1 billion in costs that consumers end up paying. Brand, however, argued the state has done a pretty good job of dealing with congestion by approving new transmission lines to move electricity more efficiently and building new power plants near where demand is highest.

The result is congestion costs are now limited to only one zone in the state, an area served by Public Service Electric & Gas, where congestion adds about $40 million a year to utility bills, Brand said.

If the bill is approved and incentives are given to build in congested areas, it would end up costing ratepayers $43 million if 100 megawatts of new solar systems were installed, according to Brand’s projections.

“It’s just an inequity,’’ Brand told the committee. “The people who cannot afford to put solar on their homes will be the ones paying the subsidy.’’

Brand has long advocated reducing the subsidies utility customers pay on their bills to promote solar, especially given the sharp decline in the number of solar arrays. In addition, owners of solar systems receive payment for the electricity their panels produce, as well as federal tax incentives when they put in the arrays, which further drives down the cost.

Under the bill, the state Board of Public Utilities would be directed to designate five strategic zones in the state that would benefit from reduced congestion by installing solar systems. Owners of the systems would be reimbursed 15 percent of the cost of installing the panels under the bill.

“Families choosing to use solar panels are cutting energy costs, and most importantly, moving the state toward a greener, more environmentally responsible future,’’ said Assemblyman Tim Eustace (D-Bergen), the sponsor. “We should continue to encourage the use of solar power through incentive programs as this one.’’

The bill also drew opposition from the New Jersey Business & Industry Association, which did not testify. The New Jersey Sierra Club and Environment New Jersey backed the bill.

In approving the bill, the committee reduced the incentives that would be given to owners of solar systems, but Brand said it would amount to a 45 percent subsidy.