New Jersey Facing Tough Challenge Maintaining Crucial Solar Incentives
Thursday, January 12th 2012 1:47 PM
By GetSolar Staff.
New Jersey, one of the top solar markets in the U.S., has seen a stark drop off in one of its most important solar incentives. Now Platts reports that a last ditch effort to provide a boost for New Jersey solar installers before the end of the most recent legislative session failed.
While it might not seem as convenient a location for solar installations than market leader California, only that state stands ahead of New Jersey in terms of solar capacity. The Solar Energy Industries Association reports that the Garden State added 137.1 megawatts of solar installations in 2010, with another 181.9 megawatts through the first three quarters of 2011.
A major component of this recent success has been the strong renewable portfolio standards the state set for its utility companies. These standards require a certain proportion of all energy distributed by utilities to come from renewable sources and, in many cases, set aside a particular amount that must come from solar energy. In 2011, the Database of State Incentives for Renewables and Efficiency notes that New Jersey utilities were required to produce at least 442 gigawatt-hours of solar energy, in addition to drawing more than 8.8 percent of all electricity from renewables.
Unlike some states, however, New Jersey gave businesses and residents who might be interested in rooftop solar installations a means of benefiting from these policies directly. Utilities in New Jersey are no longer allowed to own generation capacity themselves, but rather than purchasing renewable energy exclusively from power plants, New Jersey created a market for so-called Solar Renewable Energy Certificates.
These SRECs represent the production of 1 megawatt-hour of electricity. That amounts to slightly less than one-and-a-half months of electricity usage from the average New Jersey home, and well within the capabilities of most residential solar installations. Homeowners could then take these credits and, often through a third party that specializes in bundling and selling SRECs, sell them to utilities on an open market.
The benefit of this open market is that it provides a sizable return on residential and commercial solar installations, helping support the growth of renewables in the state, but it uses competitive processes to ensure utilities are not paying exorbitant amounts.
The problem in New Jersey came as high SRECs in the early years of the system encouraged heavy investment in solar power that pushed the price dramatically downward. SRECs started at $680 each in 2009, according to SRECTrade, and rarely fell below $600 in 2010, before plummeting as low as $225 in December of last year. Platts notes that more than 775,000 SRECs are expected to be available in 2012, more than 30 percent above the required 596,000.
Solar installers and state legislators took action in early January in the hopes of rejuvenating the SREC market. The plan was to step up the timeline for the solar requirements in the renewable portfolio standards, as well as to ease standards for the approval of new projects from those currently proposed by Governor Chris Christie.
But critics of the bill cited a potential impact on electricity rates in a state that already has some of the highest in the country, along with some long-standing opposition to continued support for solar power. So, in a hectic final session, the bill was defeated and many think it could be the last chance for some time.
"I'm not surprised, but upset," Jeff Tittel, director of the New Jersey chapter of the Sierra Club, told Platts. "We needed a bill to get passed [Monday] to keep the New Jersey solar market robust. The legislature starts slow. I don't think you'll see anything of substance until at least March. We lost some momentum."
NJSpotlight reports that, despite the recent failure, there is some hope that movement could come from the executive branch, with the Office of Clean Energy exerting some control over the renewable portfolio standards.
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New Jersey, one of the top solar markets in the U.S., has seen a stark drop off in one of its most important 
