BPU Gives Assurance that State’s Solar Projects Will Stay on Track

NJ Spotlight- The state yesterday sought to assure the solar sector that its steps to close the current system of financing new solar projects will not disrupt what may be a too lucrative and fast-growing segment of the emerging green economy.

In proposing a new rule that would establish the parameters of how it would end its process of solar project funding, the New Jersey Board of Public Utilities tried to calm concerns among solar developers that legacy projects undertaken years ago by residents, school systems and local governments would be left in the red.

The issue is triggered by a year-old law mandating that costs for installing solar systems be reduced, an expense largely borne by utility customers, who fork over more than a half-billion dollars in subsidies on their electric bills annually.

“We know it has been too costly to ratepayers to maintain without change,’’ said BPU president Joseph Fiordaliso, who added that the state has heard concerns from stakeholders about shutting down the existing program.

“We have made clear through the new rule proposal, the board is committed to a balanced and stable solar market,’’ Fiordaliso said.

For the most part, solar developers who attended the agency’s monthly meeting in the State House found comfort in the BPU president’s pledge, but they still expressed worries about the agency’s methodology for closing down the existing program and its potential impact on the solar market.
“It’s an important step,’’ said Scott Weiner, a senior consultant in the renewable energy sector, referring to Fiordaliso’s statement. “That now becomes an articulated goal that we all can work to achieve.’’

Solar developers air concerns

“The commitment to a stable and balanced solar market is what we wanted to hear,’’ agreed Lyle Rawlings, a solar developer from Flemington who’s active in New Jersey. But he added that the proposal adopted yesterday will create an oversupply in the market and require a market balancing mechanism to protect prices for solar incentives.

The current system, which the agency is scheduled to shut down under a law passed a year ago this past May, pays owners of solar systems for the electricity they produce. Developers fear an oversupply of these solar renewable energy certificates (SRECs) will drive the prices down and cause the market to crash.

If that happens, solar projects developed years ago may not realize the revenue they had anticipated, leaving some owners of solar systems unable to recoup their original investments, including residents, school systems and local governments. Many of those systems were built under the premise that SREC prices would remain high, more of an uncertainty today than previously because of the impending closure of the market.

Under the new state law, the agency is supposed to close down the existing SREC program when 5.1 percent of the state’s electricity comes from solar systems. The new rule proposal lays out a schedule for when that would happen, a methodology questioned by solar developers.

As proposed, staff at the agency would provide the board with quarterly progress reports on meeting the 5.1 percent threshold — a mark some developers say already has been reached — until the milestone is reached within six months. At that point, staff will monitor with monthly forecasts, until it determines the threshold has been reached.

But solar developers say projects in the pipeline that have not commenced commercial operations will not qualify for new SRECs, and they will not know what new incentives may be available.

That possibility left some observers troubled.

“The industry has been treated fairly by the board for a long time,’’ said Fred DeSanti, executive director of the New Jersey Solar Energy Coalition. “Next month, the board will come out with its transition order. The proof will be whether the incentives will represent the real cost of doing business in New Jersey.’’

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