Amid Jitters over NJ Solar Program, State Looks for Best Way to Maintain It

Tom Johnson | January 16, 2020 | Energy & Environment
Search still goes on for a method that will rein in costs for ratepayers while protecting older solar projects
Credit: Charlie Wilde/Pixabay
There’s concern that hundreds of so-called legacy projects could be left underwater financially.

With uncertainty mounting about New Jersey’s solar program, the state is exploring ways to ensure prices for energy produced by older solar projects do not fall so low the systems no longer will recover their initial investments.

That could leave hundreds of so-called legacy projects underwater, a prospect that could affect projects developed by many school systems, local governments and others built with the expectation they would deliver cheaper energy bills while producing cleaner electricity.

The issue is the latest problem arising out of a decision by the Legislature and Gov. Phil Murphy in 2018 to shut down the current method of financing solar projects — a system that paid owners of solar arrays for the electricity their projects produced. The move came after lawmakers, environmentalists and even solar advocates agreed the current program was too expensive for utility customers, who mostly footed the bill.

The decision poses a huge dilemma for policymakers, lawmakers and the administration: What type of new funding program needs to be enacted to rein in costs of solar for ratepayers, while at the same time retaining a robust solar program that will help New Jersey achieve its goals of 100% clean energy by 2050?

It also has ramifications for the state’s efforts to transition to other clean energy programs, such as offshore wind, retaining the state’s carbon-free nuclear fleet, and efforts to cut energy use, according to Larry Barth, director of corporate strategies for New Jersey Resources Clean Energy Ventures.

‘A whole lot of money at stake’

Barth cautioned about going back and resetting terms of contracts and agreements reached in the past, a strategy that would undermine confidence in the regulatory system. “That really bogs down the economy; it doesn’t work,’’ he said.

“There is a whole lot of money at stake,’’ conceded Abe Silverman, general counsel of the New Jersey Board of Public Utilities, the state agency overseeing the process. The agency is likely to come back with a draft proposal outlining possible options, but it is likely not to be resolved quickly, he said.

Some solar developers contend the revamping of the program could eventually lead to an oversupply of solar renewable energy certificates (SRECs) that could crash the market, as happened about a decade ago, according to Lyle Rawlings, a solar developer based in Flemington.

“There are hundreds of projects out there,’’ said Greg Tyson of Gabel Associates in Highlands Park. “We don’t want to throw them under the bus for the next phase of the solar program … Something has to be done.’’

Various options for dealing with the legacy projects were mentioned during a Board of Public Utilities hearing Wednesday at Thomas Edison State College, but no clear remedy seemed to attract widespread support.

Meanwhile, there seemed to be rare unanimity about a proposal that won approval Monday in both houses of the Legislature that would provide a way to manage cost caps, which threatened to disrupt the continuing solar program. The proposal, now on the governor’s desk, would give the BPU added flexibility to avoid exceeding the cost cap over the next several years.