NJ Solar Energy Market Crash Could Cost Thousands of Jobs, Billions in Investments
TRENTON — State energy regulators have begun the process of reviewing the state of New Jersey’s solar market – something that could change the way the state encourages solar development, hopefully in time to keep the current subsidy structure from crashing.
The Board of Public Utilities says more than 80,000 solar projects have been completed in New Jersey. But in a way, that’s part of the problem.
Lyle Rawlings of the Mid-Atlantic Solar Energy Industries Association said the state already almost generates more power from solar than it once had expected by 2028 but hasn’t updated its goals or subsidies, despite efficiency improvements and reductions in cost.
That has its "solar energy renewable certificate" market, which was structured as a commodity, on the brink of a crash, Rawlings said.
“The solar market in New Jersey is facing an extreme crisis at the moment because the structure of the incentive system has been and is conducive to boom and bust cycles,” Rawlings said. “And we’re on the cusp of a very severe bust. You would probably call it a cliff.”
The BPU has opened a proceeding to review the state of the solar market, to explore changes through a process that will culminate with public hearings across the state.
In doing so, it acknowledged “significant changes in the technology and installation practices, economics and the financial models of the solar industry” and said it’s prudent to consider changes to how it manages the market in the future.
Rawlings said solar companies generally accept a need to move away from solar energy renewable certificates, perhaps toward a tariff-based system like Massachusetts adopted. He said New York operates a system also worth examining.
“This incentive structure needs to change to something more reliable, more sustainable, and lower cost to ratepayers,” Rawlings said.
“These incentives, they land on people’s electric bills eventually,” he said. “It’s not a large impact to date, but we want to make it smaller.”
But Rawlings said in the short term lawmakers must intervene to keep SRECs from crashing. He says a crash could cost 10,000 jobs in or supporting the solar industry, put billions in investments under water and eliminate an energy alternative helpful in responding to climate change.
Such changes would be more likely to be debated in the Legislature next year, rather than in the post-election, lame-duck legislative session.
Both major-party candidates for governor, Republican Lt. Gov. Kim Guadagno and Democratic nominee Phil Murphy, have called for increasing the state’s reliance on renewable energy.
Guadagno told the New Jersey Business & Industry Association “we need to recommit” to renewable energy, even if natural gas appears cheaper in the short term.
Murphy has pledged to start the process of creating a new state energy master plan within his first 100 days in office that aims to make 100 percent of New Jersey’s energy come from renewable sources by 2050, up from the current goal of 80 percent.