In April, we reported that New Jersey was putting its popular solar rebate program on hold for a month — until the state could get its financing straight. Last Monday, the state started accepting applications again. While the new rebate level was revised downward, to $1.35 per watt, it was still something. Now, it seems the Board of Public Utilities (BPU), which administers the rebates, has suspended the program outright.

Why? Strong consumer demand. As relayed today by the New Jersey Star Ledger,

When applications began being accepted again on May 3, some people were camping out to turn theirs in early. That day, more than 1,100 applications were submitted. Since then, another 125 have rolled in.

Faced with dwindling funds — and eager applicants with sleeping bags and flashlights, apparently — the BPU won’t look at any additional applications until September 1, when the next funding cycle begins.

With solar rebates off the table, at least for the time being, New Jersey homeowners who are set on installing a solar energy system over the summer would have to rely solely on income provided through the state’s solar renewable energy credit (SREC) program. Unlike rebates, which provide an incentive up front, SRECs are, in effect, a production-based incentive that helps offset costs over time. Here’s how it works:

An owner of a distributed generation system, like solar electric panels, also owns the SRECs associated with the electricity generated by their system. To comply with New Jersey’s renewable energy standards, utilities are required to purchase a certain number of (1) renewable energy credits (RECs), or (2) something called a Solar Alternative Compliance Payment (SACP). The Board of Public utilities has set the SACP level as depicted at left:

What in the world does this mean? In effect, the state is setting a price ceiling for electricity that comes from solar panels — denominated in this case in megwatt-hours (MWhs). To meet NJ standards, utilities may either buy SRECs from homeowners and businesses or alternative compliance payments from the state. According to DSIRE, “[t]he price for an SREC is expected to average approximately $100 per MWh lower than the SACP during a given year, although actual prices will vary with market demand.”

So, while SREC payments are neither guaranteed nor, like New Jersey’s solar rebates, provided upfront, they can certainly help improve the return on investment of a given solar panel installation. Please note that the SREC incentive and solar rebate programs are not mutually exclusive.

As the second-biggest solar market in the U.S. (behind California), New Jersey has in past years been a strong support of solar energy incentives. Let’s hope the suspension of solar rebates is merely a hiccup in the state’s overall growth in solar power.