New Jersey Solar Advocates Pushing For Policy Change

Last June, Governor Chris Christie ruffled the feathers of many in the clean energy community by released a draft of his administration’s Energy Master Plan (EMP) which called for more focus be devoted to larger projects that would be located in brownfields and larger commercial warehouses. This would less support for smaller scale projects, such as residential or small commercial solar, and is a result of Governor Christie’s desire that any renewable energy projects demonstrate larger “bang for the buck” and do not result in additional rate increases for taxpayers.

This was quite a blow for the New Jersey solar industry as it had already been dealing with substantial decline in solar renewable energy certificates (SREC). Owners of solar systems earn a SREC for each megawatt of energy their system produces which they can then typically sell for upwards of $600-$700 to utility providers who are required to comply with the states renewable energy production mandates. Due to a massive over-supply of SRECs in the market, their re-sale value has fallen in the $200 range which has dramatically changed the economics of financing a solar system in New Jersey to the point where some industry insiders fear that the whole New Jersey solar market may crash.

So in an attempt to provide some price stability in state market, New Jersey’s Office of Clean Energy has proposed extending utility-sponsored loan programs to residential and small business customers as they are set to expire at the end of the year. Under these loan programs, participants can borrow money from PG&E to cover 40-60% of solar power system costs. These loans, which are funded by rate payers, offer residential systems 10 year loans at a 6.5% interest rate and non-residential systems a 15 year loan at an 11.3092% interest rate. The actual loan amount is based on how much energy the system is expected to generate in its’ lifetime. These loans are only available to systems smaller than 2 megawatts in installed capacity that are net metered (see below) and generate SRECS, which can then be used to help pay off the loan.

No one knows whether the New Jersey Board of Public Utilities (BUP) will adopt the proposal to expand the utility loan programs but there is a substantial push from the industry participants who say that extending the loans is critical to combatting the drop in SCRE prices and preventing a crash of the state solar market. Unfortunately the BUP will likely vote the proposal down, and any proposal, if there is any likelihood that extending the loan program will increase utility rates for tax payers, per the mandates of the EMP. If the proposal is adopted, the loan programs would not start up again some time in 2013 when state officials expect the oversupply of SRECs to stop.