New Jersey wants to boost energy production from solar panels. But builders say its incentive offer won’t get the job done.
The state projects it will quickly ramp up the pace of new solar energy projects under a proposed policy that could more than double the amount of solar capacity installed every year in New Jersey.
Those capacity targets are established in a straw proposal to restructure how the state finances incentives for the solar industry, one of the fastest-growing sectors in creating jobs. If successful, the policy change could mark a significant first step in the Murphy administration’s plan to transition to a point at which 34% of New Jersey’s electricity is generated by solar facilities by 2050.
But the private solar sector is unconvinced. Solar developers have argued the incentives, essentially subsidies from utility customers, are, in many cases, too low to spur them to invest in solar projects. That would make it impossible, they argue, for the state to achieve its huge targets for putting more solar installations on homes, businesses, parking lots and unused land like brownfields and landfills.
Maintaining a solar balance
The debate is occurring as the New Jersey Board of Public Utilities is trying to establish a permanent solar program that balances two competing goals — reducing costs imposed on utility customers by solar subsidies and mapping out a plan to reflect the Murphy administration’s clean-energy goals.
In New Jersey, the solar program costs customers about $800 million a year. A big part of that is already owed to homeowners and businesses that participated early in the program and installed systems designed to pay out credits for 15 years, or until 2026.
Those costs spurred the Legislature to shut down that solar incentive program, an action approved by the BPU in June 2020. Since then, the BPU first established a transition solar program and then a process to create a permanent incentive program.
Lower incentives for rooftop solar?
So far, after a series of so-called workshops, the ongoing dispute has yet to be resolved. To some developers and other clean-energy advocates, a possible compromise could emerge by increasing incentives for many solar projects and decreasing incentives for other categories, like rooftop solar installations.
But many other project categories may not be built at all, the developers said, such as deploying solar on carports, brownfields and landfills, as well as on commercial and industrial properties. The incentive levels are simply too low to convince investors to pump money into those projects.
“The numbers, as presented in the straw proposal, has forced my company to focus our resources to other states,’’ said Thomas Lynch, executive vice president of KDC Solar, a company formerly active in putting solar installations on commercial and industrial facilities in New Jersey.
Lynch, along with others, mentioned that costs of installing solar are higher in part because many of their projects pay prevailing wages, unlike many other states.
Several developers of Community Solar projects also had issues with the straw proposal, primarily because it reduces financial incentives for those projects. The program is designed to bring renewable energy to low- and moderate-income families that have yet to benefit from the shift to clean-energy sources, like solar.
‘Killing’ solar momentum
“We risk killing the momentum that has been created over the last two years,’’ said Mark Schottinger, general counsel of Solar Landscapes in Asbury Park, a developer of Community Solar projects.
The state’s Community Solar pilot project has been one of the most popular initiatives launched by the BPU. In the second year, it had 410 applications seeking approval from the agency. All but one involved low- and moderate-income family projects.
A major concern for critics of the BPU proposal is that it failed to include the health and environmental benefits of switching to clean energy like solar — even though it took those considerations into account in approving on Tuesday $300 million in annual subsidies to New Jersey’s three nuclear power plants.
Fred DeSantis, a lobbyist for the solar-energy sector, was a bit incredulous about the omission. “That’s why we are doing all this,’’ DeSantis said of the state’s aggressive embrace of clean energy.