Developers Line Up to Take Part in Solar Program for Low- and Moderate-Income Communities

Given their previous qualms about the economics of such a program and uncertain future of New Jersey’s approach to renewable energy technology, the level of interest is surprising
Credit: Twenty20
Interest has surged in community-solar pilot program

A pilot program to expand the availability of solar energy to low- and moderate-income households is proving to be immensely attractive to developers who have swamped a state agency with hundreds of applications seeking to put in 650 megawatts of capacity.

The surge of interest in a community-solar pilot program is somewhat surprising given the uncertainty about how New Jersey intends to promote the renewable energy technology in the future as well as concerns previously cited by solar developers about the economics of such a program.

The New Jersey Board of Public Utilities said it has received 252 applications to participate in the first year of a three-year pilot. In the initial year, the agency had planned to limit it to just 75 MW of capacity. Of the applications, 232 involve projects where at least 51 percent of capacity would benefit low- and moderate-income residents.

The community solar pilot has been touted by the Murphy administration as a way to bring cleaner power to households largely left out of the solar boom in New Jersey, even though they have been subsidizing installation in more affluent areas for years by a surcharge on their gas and electric bills.

“I am extremely pleased at the overwhelming response in the first year of the program,’’ said Gov. Phil Murphy in a statement. “The community solar pilot will not only provide clean energy to our state’s residents, but it will also expand renewable energy for low- and moderate-income communities who have been previously unable to enjoy the benefits of solar energy.’’

In the past, extending solar to less affluent communities has been hindered by a range of factors, including the cost, poor roofing and other structural problems, and bad location in terms of exposure to the sun.

Uncertainty still about future state incentives

There also is widespread uncertainty about what incentives the state plans to offer solar developers in the future when it shuts down its existing method of financing solar. Lawmakers and the governor agreed to end the current system because it just became too expensive, costing ratepayers in excess of $500 million a year. The closure is expected to occur next year, even though a transition to a new system and more permanent financing mechanism have yet to be agreed upon.

Some developers privately speculated the rush to participate in the pilot program was a way to keep their options open, waiting to see if the new solar program provides enough incentives to do community solar.

“I knew it would be overrun,’’ said Tom Leyden, senior director of distributed systems for EDF Renewables, a developer that submitted an application for a 5 MW project. “The irony is we still don’t know the financing. The economics are a guess, at this point.’’

Others said community solar has been successful in other states, and it is no surprise it would be embraced in New Jersey.

“The numbers are eye-popping,’’ said Doug O’Malley, director of Environment New Jersey. “It’s clearly a marker that shows community solar has tremendous pent-up demand. It’s the next big thing. No one wants to be left out.’’

The BPU has begun the process of reviewing applications, eventually scoring and ranking proposals based on evaluation criteria already adopted. The most points will be given to low- and moderate-income and environmental justice communities; followed by siting locations, such as landfills, brownfields, rooftops and parking decks; and those projects offering guaranteed savings of more than 10 percent.

The agency anticipates awarding at least 75 MW during the second and third years of the program. In total, the pilot is estimated to cover the electricity usage of approximately 45,000 residential homes. The pilot is expected to provide market information and data to inform a more permanent program in the future.