State Starts to Wind Down Program Used to Encourage Solar Installations

Steep costs to utility customers who subsidize this renewable energy leads Board of Public Utilities to move away from solar credits, but new system has yet to be determined

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The state is beginning to phase out the way it has promoted solar energy in New Jersey, a program that has come under intense scrutiny because of its high costs to utility customers who bear the brunt of its expense.

The process, mandated by a sweeping overhaul of the state’s renewable-energy laws signed by Gov. Phil Murphy last month, will close out a program that has led to more than 90,000 solar installations here.

That program was enough to foster a robust solar sector — the fifth largest in the nation by one estimate — but even advocates say it’s time to transition to a less expensive system to foster continued growth.

The big uncertainty is what will replace the current system, one that cost ratepayers in excess of $500 million last year. There is some urgency to the task, given that solar developers are not sure precisely when the state will stop accepting applications for new projects.

Deadline: 2021 — or sooner

Under the bill signed by the governor, the Board of Public Utilities is directed to end the current system of incentivizing new projects no later than June 1, 2021. Currently, owners of solar arrays obtain credits they can cash in for the electricity produced by their systems.

But the law also provides that once New Jersey attains a level at which 5.1 percent of electric sales are provided by solar installations, the state must stop providing solar credits to new projects. That level could be reached in just seven months, according to some solar advocates.

“The industry is concerned that the market remains stable,’’ said Lyle Rawlings, founder of Advanced Solar Products in Flemington. “We believe closure will happen soon enough that putting a (new) program in place will be very challenging.’’

Based on retail electric sales, reaching the 5.1 percent solar trigger would mean installing roughly 3,060 megawatts of solar, according to Thomas Lynch, executive vice president of KDC Solar LLC in Bedminster. The state currently has about 2,500 megawatts installed, he said. There are about another 550 megawatts of solar projects in the pipeline, although not all those will get built.

Setting the trigger point

The BPU has yet to indicate the way it will define when and how the 5.1 percent trigger to close of the current program will be achieved. The agency plans to initiate a proceeding this summer among various stakeholders to gather comments. It also plans to conduct a study on how to modify or replace the current program.

If no new program is in place, the state’s solar market could collapse, shedding thousands of jobs among those employed by the sector. State officials do not expect that to happen.

“New Jersey has a thriving solar program and we fully expect that to continue,’’ said BPU President Joseph Fiordaliso, who added the state is moving on several front to ensure solar and offshore wind are vital parts of its energy system.

The issue is a top priority of environmentalists, who pushed for new mandates to require at least half of the state’s electricity come from renewable energy by 2030.

“It’s a big issue,’’ acknowledged Tom Gilbert, campaign director of Rethink Energy, referring to the overhaul of the solar program. “It is important to get it rolling and to get it done right.’’