Explainer: Gauging the Future of Solar Energy in New Jersey

Does the fall-off in solar installations and loss of jobs indicate a slowdown in the sector?

solar installer
What’s going on: Mostly business as usual: The unanswered question is whether that portends well for New Jersey’s solar sector, which has been prone to boom-and-bust cycles. The state’s solar industry is continuing to install new systems at a fairly good pace, although last month the number of deployments fell off dramatically from the rate of a year ago. In March, 889 residential systems were put in, roughly half the number installed 12 months earlier, according to the Office of Clean Energy. The number of nonresidential systems put also fell. That is only one month’s tally, but there are other signs the sector may be slowing. An industry survey of the sector nationwide released early this year found New Jersey lost 1,000 solar jobs in 2016 — at the same time the industry was growing at 25 percent nationwide.

What to worry about: For pessimists, it could be the beginning of a market collapse, which happened in 2012 when the price owners of renewable energy systems get for the electricity they produced fell precipitously. The result dried up investment in the industry and the loss of thousands of jobs as solar companies targeted other states for more lucrative business opportunities. The market revived after Gov. Chris Christie signed a legislative fix into law. As of now, the price owners get for their power — dubbed solar renewable energy certificates (SRECs) —remains fairly stable.

What lies ahead: In the short run, some industry experts expect prices to stay in the range of $200 or slightly more until the summer. In a newsletter, Michael Flett of the Flett Exchange is projecting an oversupply of SRECs will begin putting pressure on the solar credits, leading to a drastic dropoff in prices. Flett, and others, think that can be averted if the Legislature steps in once again and adopts a legislative fix. A bill (S-2276) already won approval in the Senate and is pending in the Assembly. The legislation would ramp up solar requirements, a step advocates argue will keep the market growing. Critics say that will happen at too high a cost, putting ratepayers, who subsidize the program, at jeopardy of paying up to $276 million.

What else is happening: There also is a push in the Legislature to revamp policies dealing with solar energy, including an expansion of net metering, which also could increase the reliance on solar. Net metering allows customers who do not use the power their solar systems generate to sell it back into the power grid. Also pending in the Legislature is a bill (S-1707) that would require 80 percent of all electricity to come from renewable energy sources by 2050, a mandate that would expand solar use in New Jersey.

What is likely to happen: Probably not a whole lot, other than legislative jockeying over who wins and who loses in the drafting of the various legislation. The maneuvering is prelude to getting bills signed into law, shortly after the next governor takes office in January 2019. That is when it will be seen if there is a real shift in the state’s energy policies.

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