BPU to Shutter Longtime Funding System for Solar Projects

Tom Johnson | April 7, 2020 | Energy & Environment
While a permanent program is still in the works, transition program will drastically cut incentives, a concern for some solar developers
Credit: ODT
The solar industry employs about 7,000 people in New Jersey.

The state yesterday moved to close the way it funds new solar projects by the end of this month, a system that once propelled New Jersey into second place nationally in the number of solar installations.

The decision by the state Board of Public Utilities had been expected sometime this spring, but not quite so soon. Nevertheless, it marks a critical evolution of New Jersey’s solar program, which now generates roughly 5.1% of the electricity in the state.

What comes next is largely uncertain. The state’s energy plan projects one-third of New Jersey’s electricity will be generated from solar systems by midcentury, but right now solar developers will transition to a less lucrative system for building new arrays with a still undefined permanent program to follow.

The closing of the existing system was mandated under the 2018 Clean Energy Act, which required the BPU to shutter the program by June 2021, or whenever the goal was met for 5.1% of the electricity in New Jersey to come from solar.

Many clean energy advocates, including some solar developers, said that while the current system is highly popular, it burdened utility customers who subsidized solar installations. The costs run roughly a half-billion dollars annually.

“While today marks the end of one chapter, it also marks the beginning of a new chapter that I believe will lead to a very successful solar future while also lowering costs for New Jerseyans,’’ said BPU president Joseph Fiordaliso. The action to close the existing program was unanimously approved at the board’s monthly meeting.

The current program was established in 2004 to replace a system giving rebates to fund solar growth. Since then, more than 118,000 residential solar systems were installed in New Jersey, not including many larger commercial and utility-scale projects.

COVID-19 layoffs, new program cuts incentives

Despite its growth, solar still faces a number of issues to continue to develop — the latest being the outbreak related to COVID-19, which has led to layoffs throughout the sector, according to industry officials.

Some solar developers also are unhappy about incentives in the transition program, which they argue are too small to continue to fund new projects, particularly in the residential sector, and also for larger ground-mounted solar arrays. The new program cuts incentives by 40% for those projects, according to Lyle Rawlings, founder of Advanced Solar Products in Flemington.

“It’s really rough,’’ said Rawlings, who is also the head of a solar trade organization. “For my members, we don’t think how we can survive this.’’

“It’s a nightmare,’’ agreed Bill Hoey, managing member of NJ Solar Power LLC. “One of the most lucrative businesses in the state, they are going to shut down.’’

Other developers were more optimistic. Larry Barth, director of corporate strategies for New Jersey Resources Clean Energy Ventures, called it a positive step toward a stable and balanced market. “In the unprecedented and challenged times, we appreciate (the BPU) staff’s efforts, persistence and transparency on defining the timing and administrative procedures associated with the market closure,’’ he said.

The board’s order on the closure directed the state’s utilities to purchase credits from new solar systems that come online on a monthly basis from qualified developers and accelerate the infrastructure to process those payments.