The Board of Public Utilities is expected to decide this week whether to let the state's largest utility proceed with a major solar investment program.
The program, which is set for a May 29 hearing, has the potential to create hundreds of jobs and boost the state's green-energy portfolio, but it's also raising concerns about costs, and whether the program is even necessary.
Public Service Electric & Gas wants to spend $446 million on solar in two different programs. A $199 million expansion of the utility's Solar Loan program would finance some 97.5 megawatts of commercial and residential solar, while a $247 million Solar 4 All extension would put 42 megawatts of solar on landfills and brownfields, and fund three 1-megawatt pilot projects.
The proposal represents a scaled-back version of an $883 million plan PSE&G first announced in July. The company has since been in negotiations with regulators, resulting in the April 30 announcement of the smaller program. The BPU will decide whether to ratify that settlement at Wednesday's meeting.
Terry Moran, director of solar market strategy and development at PSE&G, said the programs have good track records. He said the solar loan program has been very well received by customers, and has helped promote solar development.
The Solar 4 All extension would bolster the state's energy goals, he said.
"Number one, we believe that it satisfies the state's energy master plan objectives," he said. "In the energy master plan, there's a reference to landfills and brownfields being a good application for solar."
Moran said the plan also calls for the state to move away from putting solar on farmland and other green spaces.
However, the proposal also comes before the board at a time when the regulator is deciding how much it wants utilities to spend on infrastructure hardening in the wake of Hurricane Sandy. The largest such proposal, by far, is PSE&G's $3.9 billion Energy Strong proposal, which has drawn both criticism and praise.
Stefanie Brand, director of the state's Division of Rate Counsel, said now isn't the time for a massive solar program.
"The solar industry is struggling a little bit, and it's struggling because we have more than we need to meet our renewable portfolio standard," she said.
The renewable portfolio standard, or RPS, is a state mandate that requires power suppliers here to incorporate a certain amount of renewable energy in their portfolios. One way companies can meet that standard is by purchasing SRECs — solar renewable energy certificates — which are credits earned by the owners of solar installations. Those credits can be sold for cash on the open market or through long-term contracts.
The SREC system fueled the rapid growth of solar in New Jersey, but in recent months, the supply of credits has outpaced demand, leading to a dramatic slowdown in the market.
Moran said it's unclear what the SREC market will look like in the future, but he said Brand's concerns were noted and addressed during the BPU negotiations, resulting in the endorsement of many in the solar industry.
"So I think where we've ended up is where we believe this to be a reasonable settlement that matches the concerns of all parties," he said.
Brand said she also is concerned about the cost of the program and what she said is a lack of built-in oversight —the project doesn't include spending caps, and she fears PSE&G's cost estimates might be far too low. Moran disputed the notion that the utility can't manage its costs effectively.
"We can't have a BPU just approving projects when we are not exactly sure how the money's going to be spent," Brand said.
On top of that, Brand said she's also concerned because utilities are making a pattern of coming to the board with special requests — like the solar program and Energy Strong — rather than making the requests as part of a broader rate case. A full rate case would let the BPU examine the utilities' books, potentially finding savings that could offset the costs of the new programs.
Bob Marshall, executive director of the New Jersey Energy Coalition, said his group hasn't taken a position on PSE&G's specific solar proposal. But he said by pushing solar, the state's policymakers already have made clear they're willing to pay more.
"I think the utility should get credit for stepping up and helping achieve the RPS goals," he said. "But at the end of the day, we've always said that generating resources should compete. We know that renewable resources are not cost competitive."
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