On His Way out, Will Christie Sign Bill Propping up Solar Sector?

If the governor puts his name to measure, it could cost utility customers nearly $1 billion over next 15 years to subsidize state’s solar industry

Solar eclipse
In his final days in office, Gov. Chris Christie will decide the fate of a bill that could direct hundreds of millions of dollars in ratepayer subsidies to back an important part of the energy sector that employs up to 6,000 people in New Jersey.

The legislation, approved without debate on the final day of the lame-duck session on Monday, is not aimed at propping up three nuclear plants in South Jersey, but instead designed to avert a collapse of the state’s solar industry.

Amidst all the hoopla about legislation to subsidize the state’s nuclear plants, hardly any attention was focused on another bill (S-2276) that could commit utility customers to paying nearly $1 billion more over the next 15 years to keep the state’s solar sector afloat, according to the New Jersey Division of Rate Counsel.

That is in the same ballpark as what critics said a bailout of Public Service Enterprise Group’s nuclear plants could end up costing over a decade if that bill also had won final approval this week. The nuclear bill, however, never made it to a vote.

Waiting in the wings

The solar legislation has been kicking around in Trenton for more than a half year, touted as a short-term fix for an industry that has gone through boom-and-bust cycles. By some estimates, the sector could be headed for hard times again, unless the state ramps up mandates to increase solar to power homes and businesses, clean-energy advocates say.

But the question of handing out new subsidies to boost solar raises concerns about just how much ratepayers can absorb in trying to promote clean energy, or carbon-free electricity from nuclear power — and where those finite resources ought to be focused.

New Jersey’s solar market is at risk of coming to halt in mid-2018 after the state meets its renewable portfolio standard (RPS), which it is on track to do by this May, a full decade ahead of schedule, according to the Solar Energy Industries Association, an industry trade group.

‘Short-term fix’

“This legislation approved this week provides a crucial short-term fix that will enable the state’s solar industry to keep growing and adding jobs, while the state works on an even more ambitious long term plan,’’ said Sean Gallagher, vice president of state affairs for the association.

“It means everything to the solar industry,’’ added Lyle Rawlings, president of Advanced Solar Products in Flemington. “It’s basically to keep the industry working during a transition to protect billons of dollars of investments from going underwater.’’

New Jersey’s solar sector certainly has its share of success. It is currently the fifth-largest in the nation with 2,234 megawatts of cumulative solar capacity installed, powered, in part, by lucrative state subsidies and federal incentives.

The potential crisis hinges on the price of solar credits — dubbed solar renewable energy credits (SRECs) — given to owners of solar systems for the electricity they produce. The price of the credits, ultimately financed by ratepayers, could collapse without a new mandate to build additional solar systems. That happened five years ago, drying up investment in the sector, leading to large layoffs of solar installers.

Rate counsel opposes

Rate Counsel Stefanie Brand opposed the new mandate, saying the costs of the bill will be very high in a letter to lawmakers. “Rate Counsel’s consultants have calculated that the changes to the RPS will bring ratepayers’ exposure for the SREC program to $6.764 billion between 2018 and 2033, an increase of $938 million over the law as it stands now,’’ Brand wrote.

Rawlings and others conceded the state needs long-term changes in the solar program to make it more cost-effective and sustainable. “The new governor is going to have a whole new approach on renewables,’’ he predicted.

The bill does propose to phase out SRECs and replace them with a new or modified way of encouraging increased reliance on solar, which has begun, in some places, to reach grid parity with other conventional ways of producing electricity. To Brand, that should mean over time fewer subsidies should be required for solar developers and their customers.

To some extent, clean-energy advocates agree. “We need to figure out a strategy that isn’t going to bankrupt the state. We need a long-term revamp of solar to make it more affordable and to meet our goals,’’ said Doug O’Malley, director of Environment New Jersey.

Brand questions if the state continues to spend more than it needs to on solar, it might mean it will have fewer funds available for other worthy programs, such as energy efficiency, wind, and infrastructure replacement and resiliency.

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