Solar Developers Ready to Fight New Cap on Incentives

The Board of Public Utilities has proposed slashing the incentives, which cost utility customers hundreds of millions of dollars
Credit: Twenty/20
Solar developers argues that a 16-month-old law threatens to undermine the sector and hinder investments in new projects.

Frustrated with actions by a state agency, solar developers plan to lobby the Legislature to relax provisions in a 16-month-old law they argue threaten to undermine the sector and hinder investments in new projects.

The dispute revolves around efforts by the Murphy administration and lawmakers to rein in the cost to utility customers of the subsidies developers receive to build new solar systems across New Jersey, an expense that could top $695 million a year by next June.

The task of achieving cheaper and better results for ratepayers has fallen to the Board of Public Utilities, but its proposal to slash incentives has been opposed by the industry, which contends the proposed subsidies are too low and will result in investments in the sector drying up, leading to widespread layoffs.

As a result, industry lobbyists told the BPU staff at a stakeholder hearing last Friday they plan to petition lawmakers to amend a cost cap in the 2018 Clean Energy Act that limits how much the solar incentives can grow each year.

“We can’t invest based on the incentives we see,’’ said Larry Barth, director of corporate strategies for New Jersey Resources Clean Energy Ventures. “We have to think creatively around the cost caps. This is something that will have to happen.’’

The cap was supposed to cut cost of solar program

Whether the sector will find the Legislature more accommodating than the BPU is another question. The cost cap was included in the new law as a way of cutting the cost of the solar program, which led to more than 100,000 solar installations in New Jersey.

But with the Murphy administration seeking to aggressively ramp up use of clean energy through offshore wind farms and development of energy storage systems, lawmakers have become increasingly worried about rate spikes in consumers’ energy bills.

Fred DeSanti, representing the New Jersey Solar Energy Coalition, said the sector is hoping to begin meeting with lawmakers as early as this week, hopeful the issue will be taken up in the lame-duck session after the November election.

“At least, by the end of this lame-duck session, the industry will then know with certainty that the decision to reduce the size and scope of the current solar program was a decision of policy and not one of unintended consequence,’’ he said.

But developers say they are only seeking modest changes in the cap that would last only a few years until the costs of solar begin falling as more so-called legacy projects end up losing what had been 15-year subsidies for installation. Under the current program, owners of systems received incentives for up to 15 years (now reduced to 10 years) for the electricity their systems produce.

The residential side — where about 40 percent of the sector works — would be most impacted by the changes in incentives contemplated by the BPU, according to solar executives.

“We are going to see the residential market come to a halt without changes,’’ said Glen Koedding, president and managing partner of Green Sun Energy Services, a solar company based in Middlesex. “We are going to be in trouble.’’

“I’ve got 700 employees I am trying to protect,’’ added Ed Merrick, of Trinity Solar, the largest residential solar installer. “The results are going to have a very detrimental impact on our employees.’’