October 29, 2011

NJ: Bill could deliver what solar sector needs most - stability

The legislature appears poised to act to stabilize a solar market that some have argued threatens to curtail the rapid growth of solar systems in New Jersey. But the initiative will have to wait until the lame-duck session after the election next month.

Assemblyman Upendra Chivukula (D-Middlesex), the influential chairman of the Assembly Telecommunications and Utilities Committee, said he expects to move a bill in mid-November that would deal with issues that have caused widespread uncertainty among investors as to whether solar energy is still a good bet in New Jersey.

The biggest issue revolves around a steep drop in prices for solar renewable energy certificates (SRECs), which have declined by more than half over the past couple of months. The certificates are a primary means of financing solar systems, rewarding owners of the arrays in dollars for the electricity they produce.

The prices have dropped because a combination of lucrative state and federal incentives have sparked a gold rush of investment in solar projects in New Jersey. That has led to an oversupply of the certificates and a corresponding drop in value.

In recent weeks, how to deal with the drop in prices has fragmented the industry, but there appears to be a growing consensus of what actions are necessary to stabilize the market, albeit with some disagreements on the details.

Chivukula held an informal stakeholders meeting yesterday in the Statehouse on a bill he is preparing to move, a measure that incorporates several ideas for stemming the decline in SREC prices, which some say could dry up investment in the sector.

His bill adopts a proposal gathering support among industry executives as well as an advisory group to the state Board of Public Utilities (BPU) that was asked to look into the issue. It would increase the amount of electricity power suppliers must purchase from solar systems, a step that should soak up the oversupply of SRECs, presumably increasing their value and making investments in solar financially viable once again.

"It's a good start," said Chivukula, after the hearing. "We're sending a market signal that we are serious."

The bill, however, goes beyond what the advisory group recommended—a one-time intervention to accelerate how much solar power suppliers must purchase -- by extending the mandate over several years.

That provision is opposed by some industry executives, as well as the administration. They argue it will create further uncertainty in the sector, increasing both the risk and the cost of solar systems.

"I don't think we will have to go and continually retool [the requirement]," said Jamie Hahn, managing director of Solis Partners, a developer of solar systems, at a conference on Clean Tech in Woodbridge yesterday, adding it will create uncertainty among investors.

Still, he and others at the conference endorsed the onetime effort to ramp up how much electricity must be purchased by power suppliers as a way of stabilizing the market.

Chivukula's bill aims to minimize the impact on ratepayers, who end up bearing the cost of promoting solar and other clean energy technologies. It would do so by reducing payments from power suppliers that are not able to purchase the needed SRECs, lowering what they have to pay to compensate for not acquiring the certificates. The net result is no increase in what consumers pay to promote clean energy.

The reduction in payments, known as Solar Alternative Compliance Payments (SACP), could help reduce the cost of solar to consumers, according to Stefanie Brand, director of the Division of Rate Counsel. Because of the wide divide between those payments and what it costs to buy SRECs, a reduction in payments save ratepayers up to $2 billion, Brand said.

Others said the committee is on the right track. Fred DeSanti, a lobbyist for MC2 Public Affairs LLC, said Chivukula's bill will not increase costs to consumers, but only shift it more forward, and then rates will drop in later years.

"I think this a terrific vehicle and I think it is going to work," DeSanti said.


No comments:

Post a Comment