BPU Begins New Decade by Revising Solar Subsidies, Hoping to Keep Sector Strong

Tom Johnson | January 9, 2020 | Energy & Environment
State looks to protect developers during transition from current financing system to next stage of incentives mandated by Murphy’s 2018 Clean Energy Act
Credit: ODT
The solar industry employs about 7,000 people in New Jersey.

The state yesterday took a number of steps to overhaul its 16-year-old system for financing solar projects, actions officials hope will ensure a robust sector remains active in New Jersey over the coming decade.

In a bimonthly meeting, the state Board of Public Utilities moved to formally adopt new incentives to keep the industry afloat during a transitional period while directing its staff to figure out when to shut down the current financing system.

Perhaps more importantly, the agency scheduled a meeting with stakeholders next Wednesday to review critical issues that remain unresolved on how to create a program that will keep New Jersey’s solar market viable and growing.

A law signed by Gov. Phil Murphy in 2018 created widespread uncertainty about the state’s solar program, mostly because it said the incentives provided to developers were too costly and should be replaced by less expensive subsidies to reduce costs to utility customers.

The state, solar developers and clean-energy advocates have been struggling to balance those issues ever since.

Reassuring solar developers

BPU president Joseph Fiordaliso sought to reassure the sector once again at its meeting, describing its actions as another milestone in transitioning the program to take an additional burden off ratepayers. “We will monitor it (the solar sector), and we won’t allow the solar industry to go down the tubes,’’ he said.

The Legislature also is trying to prop up the sector. Solar developers have pushed a bill (S-4275) aimed at providing some relief from a cost cap mandated in the 2018 Clean Energy Act that was criticized as hindering new projects. The bill is up in the Senate Budget and Appropriations Committee this morning.

“It’s a great step,’’ said Lyle Rawlings, a solar developer based in Flemington active in the various regulatory proceedings. “It gives the BPU time to figure out how to keep solar going better than otherwise would happen.’’

In a straw proposal issued by BPU this week, the agency is seeking developers to answer various questions about how to move forward, including whether the cap should be revised to allow developers to build new projects over the next three years.

“These are very important and critical issues that have yet to be addressed,’’ said Scott Weiner, a lawyer representing solar developers. Weiner said both lawmakers and the board are seemingly moving in a direction to align their policies. “There seems to be alignment and a shared commitment to create a robust program for the future.’’

One of the issues involves legacy costs from solar projects developed under the existing program. Many projects, undertaken by school boards, municipalities and others, were promised high payments over 15 years for the electricity produced by their systems. Those payment might be far less under the transition program, raising the prospect some projects will be under water before the end of the financing period.

“The legacy costs are the elephant in the room, and we can solve that problem,’’ according to Rawlings. He and other developers have proposed solutions, and the BPU staff has come up with plans to rectify that issue, Rawlings said.