BPU Debuts Solar Transition Plan to Help Ease Costs for Utility Customers

Tom Johnson | December 9, 2019 | Energy & Environment
New incentive program reduces the subsidies given to developers and owners of solar arrays in New Jersey
Credit: ODT
The solar industry employs about 7,000 people in New Jersey.

The state has adopted a much-debated plan to help the solar sector transition to a new way of financing solar projects, an overhaul the Murphy administration hopes will rein in costs to utility customers who pay for the program.

The plan, the first step to scrapping a decade-old system of subsidizing solar projects, has met a mixed reception from solar developers who have helped build a robust solar industry in New Jersey. The industry employs about 7,000 people, and homes and businesses have installed a total of 117,893 solar arrays.

But the state Board of Public Utilities’ vote to approve the new program will allow the agency and solar advocates to focus on designing a more permanent program in which the sector can continue to thrive using a less expensive system. Ratepayers have been hit with $2.6 billion in subsidies since the program began about a decade ago.

The new incentive program reduces the subsidies given to developers and owners of solar arrays, as was sought by a law enacted in 2018. It sets up a tiered level of incentives depending on what solar projects are installed — those built on homes; on corporate campuses and businesses; on landfills and brownfield; grid supply projects and community solar facilities.

“Our mission is to achieve 100 percent clean energy by 2050, and we won’t get there without solar power, a critical industry for our state,’’ said BPU president Joseph Fiordaliso. “Ultimately, our aim is to balance ratepayer impacts with ensuring a thriving and stable solar industry.’’

Skepticism among solar advocates

Whether that is achieved provokes skepticism among some solar advocates. Modeling for a new energy master plan for the state projects solar energy will provide up to 34% of the state’s electricity by 2050.

“Our members are in a panic right now,’’ said Lyle Rawlings, founder of Advanced Solar Products in Flemington, referring to the Mid-Atlantic Solar and Storage Industries Association. “They don’t see how they can stay in business.’’

Rawlings claimed the new incentives are too small to grow some segments of the solar sector, and too rich for other parts of the sector. Residential solar projects and commercial ground-mounted solar arrays could be hurt the most, according to Rawlings.

Fred DeSanti, of the New Jersey Solar Energy Coalition, agreed. “Very few businesses will do new projects unless we get legislation and up the numbers,’’ he said.

A bill (S-4275) up for consideration in the Senate Environment and Energy Committee today would afford solar developers some relief from a cost cap imposed under the 2018 Clean Energy Act, which they argue would have limited how many solar installations could be built in the next few years.

Meanwhile, the BPU, announcing its solar transition plan, also said it would open up a similar proceeding, revising the cap to make it easier for solar developers to build projects over the next few years.

The new proceeding, scheduled for early next year, would determine the annual value of the new 15-year incentive, dubbed the Transition Renewable Energy Certificates (TREC). Essentially, the proceeding is looking to determine whether there is sufficient headroom for a flat TREC of $152, or instead maintain a lower price of $65 for the first three years and $189 for the remaining 12 years.

A question of survival

The question among solar developers is whether they could survive those three years with the lower subsidy. The current price of SRECs (solar renewable energy certificates) is about $219. Under either scenario of the new transition subsidy, the cost will be the same, according to the board.

“The big news today is the board says it has the administrative authority to fine-tune the cost cap, not abolish it,’’ said Scott Weiner, an attorney representing solar developers and a former president of the BPU. It could free up financing that solar developers are seeking, Weiner said.

In any event, the debate over both the transition program and whatever the successor program turns out to be takes place against ever-increasing price increases for utility customers. Not only do they face increasing costs to subsidize nuclear power plants, but the state is pushing to promote offshore wind farms and to modernize the century-old gas and electric grids.

In the board’s Friday meeting, Fiordaliso sought to assure the solar sector. “We are not going to allow the solar industry to dissolve,’’ he said. “It’s an important part of the economy of New Jersey.’’