The Solar Energy Industries Association wants to set the record straight on the New Jersey Board of Public Utilities’ proposed solar transition incentive plan (TRECs) and recent comments made by Division of Rate Counsel director Stefanie Brand in the article “Rate Counsel Faults New Solar Subsidies for Not Reducing Costs to Utility Customers” on Oct. 21, 2019.
In comments and at various stakeholder meetings, SEIA — and the New Jersey solar industry more broadly — have consistently said that incentive values in the TREC program can and should be lower than the current Solar Renewable Energy Credit (SREC) program. But the TREC values cannot be so low that solar projects under development now would cease construction.
While the Rate Counsel division has a mandate to protect ratepayers, the governor and his staff have a broader mandate that not only includes protecting the ratepayer but also developing clean-energy sources, creating green jobs, and supporting a growing industry that has significant direct and indirect economic impact in New Jersey.
It’s crucial to understand the limited nature of this discussion.
Challenges in making the transition
The Clean Energy Act was signed in 2018 and requires that the BPU shut down the old SREC program when solar energy meets 5.1% of the state’s electric demand and create a new long-term incentive program to replace it.
Regulators are faced with three challenges:
- No one knows exactly when New Jersey will hit the 5.1% milestone;
- Some portion of the projects that have applied to the SREC program and signed contracts with customers will not be complete when the 5.1% milestone is reached;
- The long-term successor incentive program for solar will not be ready until later next year.
The BPU isn’t designing an incentive program for all future projects right now. Instead, it’s creating a transition program for a limited set of projects that were developed based on the old SREC rules. These are projects that were planned, permitted, ready to create jobs, and in some cases are moving forward with construction.
If the TREC values are outside a reasonable range of the old program, then those projects and their jobs will evaporate, as will the credibility of the state in providing a predictable structure that investments can reliably be based upon.
Risking state’s status as a solar leader
Regulators are only trying to determine what happens to this limited set of projects. In her comments in the press, Brand fails to recognize that much lower incentive levels will simply stop these projects in their tracks. Simply saying “too bad” to solar projects that started development before the cap is hit, but later are deemed too late for the old SREC program is not a reasonable option.
New Jersey has been an early leader in solar energy. Forward-thinking energy polices such as the federal investment tax credit for solar — which should be extended — and state incentive policies have made New Jersey a perennial top-10 solar state. Ranked seventh in 2018 for overall solar capacity, New Jersey now has enough solar installed to power 479,924 homes and provide 6,410 solar careers with 586 solar companies.
A shortsighted TREC program puts all of this progress at risk.
TRECs can and should be lower than today’s SREC values. The solar industry supports lower incentives and agrees with Brand with that fixed-price TRECs are the best option for the transition. But the best place to lower costs for solar incentives will be the discussions over the long-term successor program.
Transition incentive levels cannot be reduced so much that solar firms would need to go back and renegotiate deals or cause already-built projects to fail.
The BPU must develop a balanced order that protects investments and keeps New Jersey on track to meeting its clean-energy goals.