State’s Big Solar Problem: How to Boost the Sector at Far Less Cost

If Murphy administration wants New Jersey to reach ambitious clean-energy targets, it must come up with a cheaper alternative to current system of solar subsidies
Credit: coniferconifer from Flickr (CC BY 2.0)
Should incentives be targeted away from residential projects and toward bigger solar projects?

The state is looking at ways to finance new solar projects in New Jersey, a task of enormous complexity given the goals of the Murphy administration to have 34% of its electricity come from solar systems by mid-century.

The overriding concern is how to do it more cheaply than under the current system, which has cost ratepayers $2.6 billion since the state begin subsidizing the program more than a decade ago. A new law that was passed in 2018 directed regulatory authorities to scrap the current system, which lawmakers viewed as too expensive.

The dilemma facing the industry and regulators is how to maintain a robust solar sector that trims profits for the industry that has fueled one of the growing sectors of the economy in New Jersey but still include enough incentives to keep it growing even with possible less subsidies at the state and federal levels.

The backdrop for the Murphy administration is how to keep its drive to promote a 100% clean-energy agenda by 2050 without escalating costs to consumers, who will end up paying a big portion of those costs, perhaps the bulk.

At a hearing yesterday at Mercer Community College, there was little support for continuing a market-based system for rewarding solar developers as now in place, but there was backing for developers who are building solar systems that align with state policy priorities, specifically community solar projects in low- and moderate-income communities.

But others questioned whether the state would achieve the administration’s aggressive goals, without targeting incentives away from residential projects — which account for about 40% of solar jobs in New Jersey — and toward bigger solar projects.

If the state is going to meet its 50% renewable energy goal by 2030, it is going to need to focus on building a larger number of solar projects, according to Tom Lynch, executive vice president of KDC Solar, which builds large commercial projects.

New focus on big projects?

Huge rooftop solar projects offer the state large opportunities to grow the solar industry according to Lyle Rawlings, president of the Mid-Atlantic Solar Industries and Energy Storage Industry. He called the facilities the most cost-effective way of building solar.

Others suggested the new long-term financing system ought to include not only incentives to new solar projects, but compensation for other attributes that solar systems provide, but not yet compensated.

Scott Weiner, a former Board of Public Utilities president, suggested that solar systems produce a value that ought to be compensated, above and beyond what incentives they are awarded. Those benefits include the value of energy produced, environmental attributes, locational values (by reducing congesting on the grid), and other factors, he said.

When that value is recognized, it reduces the amount ratepayers have to pay to subsidize renewable energy, Weiner said, similar to a system enacted in New York when he worked there. That view was endorsed by others at the hearing.

Sarah Steindel, deputy director of the New Jersey Division of Rate Counsel, backed competitive solicitations for future solar projects as a way of reining in future costs to ratepayers.

Lynch and others questioned whether the state’s goals to promote solar so aggressively could be achieved. Fred DeSanti of the New Jersey Solar Energy Coalition, questioned whether costs of interconnecting with the existing power grid would preclude many of the projects now awaiting approval.