Almost one month after New Jersey’s bill obligating companies to purchase more solar energy, the US state’s governor Chris Christie has signed legislation S1925/A2966 acknowledging the imbalance of its current renewable energy policy. Spearheaded by senator Bob Smith and assemblyman Upendra Chivukula, this legislation addresses the current oversupply of solar renewable energy credits (SRECs), with the intention to bring back stability to the New Jersey solar market, ensuring growth over the next several years.

The Solar Energy Industries Association (SEIA), who worked with a number of stakeholders to advocate the legislation, highlighted the principle expectations of the bill in its latest report:

1. The solar renewable portfolio standard (RPS) will be accelerated by approximately four years in order to absorb high demand from previous years to bring supply and demand back into balance but reducing the RPS in later years.

2. Solar alternative compliance payment (SACP) is significantly reduced due to the dramatic declines in the cost of installing solar power and codifies a 15-year SACP schedule.

3. The extension of SREC shelf-life from three to five years to give developers more flexibility to retain SRECs rather than sell them into a long market. However this would make it more difficult to assess future market conditions, resulting in the establishment of a board of public utilities (BPU) review process to review the impact on the SREC market for future grid-connected projects.

4. 80MW allowance per year authorized for grid-connected projects in energy years 14-16.

5. Non-net metered systems located on brownfields and landfills to be given favoured status, including automatic qualification for the SREC program and potential additional incentives.

6. The introduction of aggregated net metering for certain public entities under certain conditions.

7. The distribution system has been clarified to include distribution lines that are 69kV and lower, now allowing for large net metered systems to connect to higher voltage lines, creating more space on the distribution system for all solar systems.

Until the bill was passed, the amount of solar built was several hundred megawatts more than originally planned and the excess threatened to put the industry into a severe decline for the next several years.

“Bipartisan support for solar in New Jersey is a useful a model for policymakers across the country,” said Rhone Resch, president and CEO of SEIA. “Solar is an industry that is creating jobs and driving investment in New Jersey and in states across the country. All politicians should take notice.”

Although the legislation is expected to avert the current crisis, SEIA asserts that it does not prevent a recurrence of the crisis. Dennis Wilson, president of the Mid-Atlantic branch of SEIA, stated, “The sponsors of the legislation and the governor worked long and hard to craft this bill and we are grateful for their strong commitment to keeping the Jersey solar industry alive. But this legislation only solves half the problem. We still need to solve the other half.”

According to Lyle Rawlings, MSEIA vice president for New Jersey, “It is necessary now for the legislature, the administration and the BPU to take up the task of ensuring that the solar market does not return to severe oversupply in the near future. In order to do this, acceleration of the RPS must be matched by responsible management and that means controlling the pace of construction of solar power. New Jersey’s solar industry must ‘live within a budget.’”

MSEIA and several partners are currently funding a study to provide solid evidence that the cost of solar power has dropped below the actual value of the power delivered to the grid. In other words, New Jersey ratepayers, even those who do not participate in solar projects directly, save money from every solar kilowatt-hour produced. Under these circumstances, MSEIA believes that the state should double its solar goal to 10,000MW of solar generation in ten years.

Germany has already achieved this goal on a per capita basis and solar electric generation delivered nearly half of all electricity consumed in the country at one point in late May of 2012.

New Jersey is the second largest market for solar energy in the United States according to the 2012 Q1 Solar Market Insight report, published by SEIA and GTM Research and even surpassed California for installations in the first three months of 2012. In the first quarter of this year, 174MW of new solar capacity were connected to the New Jersey grid. Cumulatively, more than 775MW of solar has been installed in the state, enough to power about 130,000 homes. 

The solar potential displayed in New Jersey has attracted the attention of the Chinese. In May, the country’s Ministry of Commerce (MOFCOM) identified six renewable energy initiatives in the US that it believed was flouting World Trade Organization rules, one of which was New Jersey’s renewable energy projects.

A total of over 800MW of solar generation is now operating in New Jersey, which is more than even the peak capacity of the state’s first nuclear power plant.