New Jersey pushes 'Restart button' on SRECs

S1925/A2966 is designed to stimulate new demand for Solar Renewable Energy Certificates (SRECs) from load-serving entities (LSEs), as well as to spur additional distributed, grid-tied solar installations, and save industry jobs. The law also contains a number of stipulations intended to regulate the growth of the state’s solar industry.

Among the key provisions of the law are those geared to:

  • Stabilize the price of Solar Renewable Energy Certificates (SRECs) in the state at US$339 by 2014 – down from the pricey $680 certificate cost of 2010, but up from the trifling $90 rate of earlier this year.
  • Alter the Renewable Portfolio Standard (RPS) schedule, which dictates the amount of solar energy that electric energy suppliers must purchase each year through 2028. Specifically, effective June 1, 2013, the market will see an increase in SREC requirements, represented as a percentage-based target rather than a fixed megawatt-hour allotment. Although the percentages will rise through 2017, future allocations will decline. As a consequence, solar deployments should ramp up in the near future and then default to a market-driven level at the end of the decade.
  • Reduce solar alternative compliance payments (SACPs) to $339, beginning in 2014 – and continuing to cut SACPs incrementally, to $239 by 2028. This will set a de facto ceiling on SREC prices, stabilizing the market; and keeping the cost of SRECs reasonable, so that energy suppliers will not have to pass on high prices to their ratepayers.
  • Amend the compliance obligations of LSEs by making SRECs effective for five years: SRECs will be eligible to meet compliance obligations, not only during the year in which they are generated, but for the following four compliance periods.

BPU approval

As aforementioned, in addition to its more high-profile provisions, the law is also looking to regulate the growth of New Jersey’s solar industry. From EY (electricity year) 2014 through EY 2016 (June 2013 through May 2016), the first 80 MW of grid-supplied solar projects installed will not require New Jersey Board of Public Utility (BPU) oversight.

Any project over that first 80 MW, no matter the size of the individual project, will require BPU approval, which will be determined based on the project’s effect on the statewide SREC market, the environmental impact of building the installation, and the benefit to electric rates and economic development. After EY 2016, all non-metered solar installations will require BPU approval. Certain exemptions for brownfield remediation, landfills, and parking lots have been included. The capacity of a single project shall not be greater than 10 MW.

In addition, the bill will enable public entities, such as schools, counties, or other municipal agencies to aggregate their net metering virtually and, thus, to meet the requirements for SRECs. In an era characterized by low municipal budgets and layoffs, this will provide extra income to public agencies.

Finally, the bill would provide an oversight provision to review solar installations that are not net-metered, but still wish to receive SRECs. An example of a net-metered site is a house, office, or other facility that generates electricity via solar equipment for its own use, with the surplus electricity fed back into the electric grid to earn credit. Non-net-metered sites produce electricity directly into the grid, and do not use electricity produced by solar equipment for the facility’s use. An example of a non-net-metered site would be a power station or large-scale solar farm.

Inundated

Until last year, and even through the first months of 2012, the New Jersey market had been inundated with work. However, without legislation to move up SREC requirements, New Jersey would have had an oversupply of 208,000 Solar Renewable Energy Certificates this year, with 802.3 MW installed as of May 31, according to SREC Trade.

Already, new demand had begun to drop off drastically. In fact, according to Northeastern solar installers, many of the deployments during the first three months of the year resulted from a backlog of projects that already were in progress. Those companies that were not fortunate enough to have booked work during boom times were forced to lay off workers, down from the 10,000 employed by the industry at its peak.

Industry reaction

The Solar Energy Industries Association (SEIA) worked with a number of stakeholders to advocate for S1925/A2966, which was passed by the New Jersey legislature on June 25. Noting that additional market growth in the state would have been threatened without this legislative action, Rhone Resch, president and CEO of SEIA stated, "New Jersey’s solar industry will now continue to provide jobs, investment, and energy security for years to come."

Commenting on the passing of the bill, Governor Christie said, "We pledge to continue to move forward with our commitment to develop these sources to meet the goals that we have in the Energy Master Plan, and to continue to lead the way in solar energy throughout the country … Having renewable energy in our state – having it be a larger part of our portfolio, creating jobs – is not a Republican issue or a Democratic issue; it’s an issue that the people of our state demand that we work on together."

Mid-Atlantic Solar Energy Industries Association President Dennis Wilson hailed the number of jobs that the bill will salvage. "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," he said.

Senate President Stephen Sweeney (D-Gloucester, Cumberland and Salem) released a statement emphasizing, "This law is vital to the continued success of the state’s solar market and in ensuring that the good-paying construction and installation jobs created by the solar industry stay in New Jersey." He added, "There is great economic potential in growing this industry here in the Garden State and this law will help to attract more investment in the industry and ultimately provide more jobs for New Jersey’s workers. That is what this measure is really about – supporting quality, good-paying jobs for New Jersey’s workers."

Edited by Becky Beetz.