New Jersey and Pennsylvania Solar Markets Facing Short Term Pain

Recently, I wrote about how the incredible success of the New Jersey solar and Pennsylvania solar markets was beginning to have adverse consequences with respect to each state’s primary solar incentive, the Solar Renewable Energy Credit (SREC). Two months later the trend is continuing to get worse but solar advocates in both states are beginning to get a grip on the problem and are putting the downturn in proper market context.

As a refresher, SRECs exist in states that have Renewable Portfolio Standard (RPS) and represent the environmental attributes from a solar facility. They are produced each time a solar system produces one megawatt-hour (MWh) of production, and more importantly, they are a critical mechanism to help finance the cost of a solar system. Most RPS requirements demand that energy suppliers or utilities procure a certain percentage of electricity from qualified solar renewable energy resources in a state. These energy suppliers and/or utilities can meet these RPS requirements by purchasing SRECs from homeowners and businesses who own solar systems and produce SRECs.

SREC’s used to sell in Pennsylvania for around $300 but have recently been selling for around $100. And New Jersey SRECs used to be priced around $600 but have been selling for as low as $200-$300. The decline in price has been due to the fact that SREC’s have been incredibly effective at stimulating demand for solar in these states, so much so that they have over-supplied the market with SREC’s…much more than power companies need to satisfy their state RPS requirements.

In New Jersey, for example, in the first three months of 2011, the state installed 49% more megawatts of solar capacity than it did in the same period last year with 520 solar projects totaling more than 40 megawatts installed in June – a record number of projects and solar capacity for one month. That is a lot of SRECs flooding the market in a relatively short period of time…

Read More at Clean Energy Experts