New Jersey’s Board of Public Utilities (BPU) on May 29 approved Public Service Electric and Gas Company’s (PSE&G’s) solar expansion proposals. Under the approval PSEG&G — the state’s largest utility — will allocate a significant amount of the $447 million it plans to spend on solar to support $193 million in distributed generation (smaller) projects through the Solar Loan III program. The balance will support large-scale solar projects primarily on landfills and brownfield sites through the Solar 4 All Extension program. In all, the utility could support about 143 megawatts of new solar through both programs, with the majority (97.5 megawatts) being derived from the loan program. The approval was praised by solar industry experts nationally and locally.
The approvals will greatly help reinvigorate the small and mid-sized markets for solar in the state, explains Jamie Hahn, co-founder and managing director of commercial installer Solis Partners. By approving the expansion of the loan program, he says it will offer consumers fixed prices for the solar renewable energy credits (SREC) that solar systems produce for a 10-year period. That’s a drastic change from the current SREC situation in the state. “In general, we have a significant amount of volatility and pricing on the SREC market over the past year,” he says.
Since most people and companies investing in solar have had to sell SREC on the spot market, prices have varied greatly — one day an SREC could be worth $600, the next $100. Based on supply and demand, and unsecure, unpredictable long-term levels, there’s no telling how soon a small- or medium-sized PV system will pay for itself. “It’s been difficult to invest in those types of projects because they have not had any mechanism to de-risk or securitize the investment for years forward,” Hahn says. Without that security a lot of businesses have lost interest in solar. “Now with the PSE&G loan, it should help facilitate financing, because it will enable business and homeowners to lock in a 10-year SREC; limiting the risk.”
The board’s decision to allow the program also was praised nationally by the Solar Energy Industries Association (SEIA). “[The] decision by the BPU will certainly help New Jersey reach the goals that Governor Christie laid out in his Energy Master Plan,” says Katie Bolcar Rever, director of Mid-Atlantic States at SEIA. In addition to reducing SREC volatility, it supports reuse of lands. “By allowing PSE&G to invest directly in solar projects on brownfields and landfills, the BPU is placing a high priority on solar development on these lands.”
The approval, as well as a solar bill signed into law last year by Gov. Chris Christie (R) will likely have an even larger impact on the state’s solar industry, according to Hahn. It will help bring back the Electric Distribution Co. (EDC) SREC programs from other energy companies in the state. “EDC SREC finance programs will come back into the program by the end of the year,” Hahn says. “By being able to obtain a fixed SREC price for a long-term basis, it will allow them to re-engage and reinvest in solar again.”
The bill signed last year, will — starting this weekend — vastly increase the market for SRECs, too. “It’s going to be up over 100 percent of what was required going into energy year 2014,” Hahn says. As such, energy producers in the state will have to purchase vastly more SRECs than they previously were required too, which should help drive the price up.
“The other primary component of the bill was, and this is very evident in the energy master plan as well, is to begin drastically limiting and ultimately not allowing for larger, direct grid solar farms,” Hahn says. The Solis Partners co-founder also believes that this bill makes it more difficult for larger solar farms and direct grid projects, because "when you bring on a 20 megawatt solar farm, that could be absolutely disruptive to the SREC market overnight.”
“I think the trend is going full-circle and the focus is going to predominately be on behind-the-meter applications,” Hahn adds.
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