The solar industry finally got its rescue bill this week, as the state Senate and Assembly passed legislation aimed at reviving and stabilizing the state's solar market.
The bill's passage was a big relief for many in the industry, including Gaurav Naik, principal at Old Bridge-based solar developer GeoGenix.
"I'm extremely thankful that finally, at the last minute, before they broke away for the summer session, they got together basically with a sense of urgency, and got the legislation passed," Naik said.
The bill passed with broad bipartisan support after months of discussion, amendments and drafts. It significantly increases the renewable energy obligations placed on the state's power suppliers, but also significantly decreases the ceiling price of solar renewable energy certificates going forward. SRECs are credits earned by the owners of solar power arrays. Those credits can be sold to power suppliers, which use the SRECs to offset their renewable energy requirements.
Gov. Chris Christie has indicated he'll sign the bill, ending a year of uncertainty for the once-booming industry.
In a press release, Senate President Steve Sweeney said the solar and renewable energy production is "key to powering the future economy" in New Jersey.
"With thousands of New Jerseyans already working in the green economy jobs sector, and many more entering the field to construct and install solar installations, it is imperative that we stabilize the market to secure these jobs," said Sweeney (D-West Deptford).
Until last year, SRECs sold at or near the ceiling prices set by the government, just above $600. But the SREC program proved so successful that the market was flooded with SRECs last spring, causing prices to plummet to the $100 range. The new bill cuts the ceiling price nearly in half, something many in the solar industry say is more sustainable and realistic.
Naik said the bill's passage should have the immediate benefit of renewing negotiations with power suppliers — known as load-serving entities — about long-term SREC purchase contracts.
"I think now we can start having a healthy conversation with the load-serving entities to say, hey, let's talk about realistic values (for SRECs) to help get these projects financed," Naik said.
Naik believes the new bill, which moderates the ceiling price to $339 in 2014, will inject the stability needed to convince suppliers to sign long-term deals to buy SRECs. In turn, those long-term deals would give potential clients the stable return on investment needed to invest in solar.
Naik said the bill should also reignite utility-based solar programs, though he said the effects on those programs won't be felt until at least the end of the year, since utilities are regulated, and thus need approvals by the Board of Public Utilities as they proceed.
The higher renewable portfolio standards will be phased in for some power suppliers, thanks to a provision in the bill exempting existing power supply contracts from the new standards. Specifically, suppliers that sell power through the state's base generation service won't have to adopt the new standards until their existing contracts expire and they sign new ones.
That exemption doesn't extend to third-party power suppliers, however, despite intense lobbying from the trade group Retail Energy Supply Association. RESA says their customers will unfairly be burdened as a result.