BPU to Hire Consultant to Help Overhaul Solar Energy Program: Cost Is Key

Tom Johnson | November 8, 2018 | Energy & Environment
Existing program has cost utility ratepayers more than $2.8 billion over a decade. Board of Public Utilities is under pressure to cut costs for utility customers

solar installer
The state Board of Public Utilities this week said it is planning to hire a firm to help it redesign its solar-energy program, a policy it is under pressure to overhaul and make less costly to utility customers.

The consultant, yet to be approved by the New Jersey Department of Treasury, will help determine how the state will end its current system of incenting solar development by June 2021.

Under the current system, New Jersey has vaulted into one of the nation’s leading solar states with nearly 100,000 arrays installed. It is the fastest growing segment of the clean-energy sector in the state.

But the system’s cost to ratepayers has spurred legislation to revamp the program. New Jersey’s solar program is currently financed through solar renewable energy certificates (SRECs). A tradeable commodity, the certificates are sold by owners of the solar systems to electricity suppliers, based on the power they produce. Costs are then passed on to the suppliers’ ratepayers.

Looking for a cheaper option

Over the past decade, those costs have exceeded $2.8 billion, leading policy makers and legislators to seek a less costly option. While many developers in the solar sector agree the system needs to be overhauled, they fear the market could collapse if a smooth transition to a new framework is not designed.

Industry leaders have argued recently that such a collapse could cause massive layoffs in a sector that now employs more than 7,000 in New Jersey. It also could leave many solar projects — including those undertaken by school systems, municipalities, hospitals and others — without sufficient revenues to repay the bonds used to finance them.

At a hearing last month in Newark, several solar executives seemed to agree the transition away from the current system needs to be relatively simple and incorporate elements of the SREC system. So far, BPU staffers have not given any indication of what system will emerge from the transition.

“We are committed to redesigning the solar program diligently and effectively,’’ said BPU president Joseph Fiordaliso. “Developing a new solar program is critical to achieving the Governor’s clean energy plan.’’

Gov. Phil Murphy wants the state to achieve a 100-percent clean energy goal by 2050, and solar power is projected to be a key component of that plan.

Once approved by Treasury, the consultant will assess market development potential, evaluate alternative market development policies and make recommendations.