TRENTON – The discussion over New Jersey’s solar-energy future often comes down to two issues: state subsidies and market forces.
That was a theme last month when the Board of Public Utilities held a hearing on the dwindling price of solar energy certificates, it was a theme last week when BPU held a hearing into clean energy funding options, and it was a theme today when Assembly Utilities Committee Chairman Upendra Chivukula, (D-17), Franklin, convened a meeting of energy companies, solar installers, lawmakers, and government officials into several energy options facing New Jersey.
The practice of issuing SRECs, solar renewable energy certificates, helped drive New Jersey to the position of national leader in solar installations, but the proliferation of SRECs has driven down their value and left the market’s future murky.
An SREC is a certificate a manufacturer gets for every 1,000 kilowatt hours of solar energy produced. SRECs can be traded in the spot market to entities and can be used to demonstrate compliance of purchasing a minimum amount of energy from renewable sources.
But with their prices falling – Chivukula said they have dropped from over $600 to below $200 – the practice has grown complicated and the question has become should governments set a floor price to give SRECs a foundation, or is a feared SREC-market crash inevitable.
The problem with setting a floor is how you determine just what the price should be. “We don’t have a crystal ball,’’ Chivukula said. In addition, he told an audience of about 100 that setting a price floor could complicate the process of obtaining financing for some projects.
Assemblyman Dan Benson, (D-14), Hamilton, said the key during these boom times for solar is to keep the market stable and strong.
Chivukula talked of the need to develop legislation that would preserve jobs, protect ratepayers, and meet the need for renewables in the coming years.
One option might be to frontload the renewable portfolio standards into the early years of the program, while exercising caution to avoid overheating the marketplace more than it already is.
One piece of legislation that has been introduced is by Sen. Bob Smith, S2371, which among other things would accelerate the solar renewable energy portfolio standards by one year, beginning in energy year 2013.
However, the N.J. Solar Energy Coalition recommended, among other things, cooling down an overheated market by having companies recognize that they may have to trim sales for a time, and furthering transparency by having applicants register.
Steve Morgan, CEO of American Clean Energy, stressed the businessperson’s need for a predictable future in order to address price volatility and the reluctance to get involved in long-term projects.
The effect of deregulating the industry in the late 1990s has been a loss of integrated planning and transparency, he said.
Some other solar energy advocates urged accelerating the RPS schedule. “There’s nothing magical about delivering 5,000 megawatts by 2026,’’ said MidAlantic Solar Energy Association head Dennis Wilson.
“The cost of solar is now less than that of a new nuclear plant, per kilowatt hour,’’ he said in reference to one recent study.
And Pamela Frank of Sun Farm Ventures also raised the issue of why the state isn’t doing more than is planned and basically issued a call for the state to expand the conversation and be more forward-thinking.
Chivukula has a bill, A4226, that would limit eligibility for SRECs. Another bill would establish an alternative energy portfolio standard and certificate programs for combined heat and power facilities.
Under such measures, each power supplier must have a minimum of 5 percent of kilowatt hours derived from alternative energy by the program’s 12th year.
However, Chris McDermott of Hartz Mountain real estate urged expanding the minimum goal to 10 percent. Many of the projects already done were for smaller properties in which the occupier is the owner, but many projects in the future will be for larger, warehouse tenant-type of situations, he said.
Stefanie Brand, director of the Division of Rate Counsel, advised that a short-term fix, such as is offered in Chivukula’s proposals, has the benefit of carrying significantly less cost to ratepayers.
The governor’s draft Energy Master Plan unveiled earlier this year reduces the goal of renewable energy sources to 22.5 percent from 30 percent, and both that draft Plan and a BPU subcommittee raise the issue of shifting from government backing to a more market-based approach.