New Jersey’s Boom in the Solar Panel Industry Has Stalled, But a Rescue Strategy is in Place
U.S. solar panel installations in the U.S. have increased by a whopping 85% as compared to last year’s first quarter, according to the Solar Energy Industries Association. A total of 506 megawatts in generating capacity was added between January and March as a result of strong growth in commercial projects. If the first quarter is an indication of what will happen throughout the year, the U.S.A. is on track to become the fourth largest solar market, behind Germany, Italy, and China. And besides California, the leader in solar panel installations among the 50 states is New Jersey.
Solar energy has indeed been a booming market in the state of New Jersey. Among those having solar panels installed are schools, municipalities, and private homeowners. Solar panels have been installed on roofs, in empty fields, and on public property. Besides a growing mindset to get in on the benefits of going green, factors which have driven the success of the NJ solar panel market include:
- Attractive incentives provided by the Federal and state government
- Inexpensive solar panels from China
- The price of Solar Renewable Energy Credits (SRECs)
In New Jersey, the value of a Solar PV system is increased with Solar Renewable Energy Credits (SRECs). One SREC is received for every 1000 killowatt-hours of electricity produced and then these credits can be used to generate additional income. To earn these credits, the solar facility must first be registered and certified.
Utility companies in New Jersey are required to provide a certain amount of solar energy. Last year the value of an SREC purchased by the utility companies was in excess of $690. At this time, SRECs are selling at just $135. This significant drop in the value of an SREC has caused the growth of the solar industry in New Jersey to stall. After all, the long-term plan for most who install solar panels is to see a return on their investment due in large part to the value of SRECs.
But help may soon be on the way. State Senate President Steve Sweeney (D-West Deptford) and Senator Bob Smith (D-Middlesex) have sponsored Senate bill S1925, which has been dubbed “the solar rescue bill.” With a vote of 24-7, the bill has already passed the state Senate and is headed through the Assembly.
What S1925 proposes to do is require utility companies to buy a higher percentage of solar power than they are currently required by law to purchase. If the bill is successful, one result will be that the demand for SRECs is increased, which means that the value of the credits also increases.
The bill would also protect ratepayers from having massive increases by creating a cost ceiling for an SREC of $325 per certificate beginning in the year 2014.
The boom in the solar industry has been good for the New Jersey economy, supplying statewide well-paying installation and construction jobs. The extreme drop in incentive prices, however, threatens to put a lot of people in the solar industry out of work. One of the primary goals of S1925 is to stabilize the New Jersey solar market so that individuals and businesses are encouraged to continue purchasing and installing solar panels on their property.
Local energy companies who stand to pay more for SRECs with the proposed legislation take the position that increasing solar usage is a good thing for the state and in keeping with New Jersey’s goal to use more clean energy. There is a strong consensus that stabilizing the solar market is a win-win for everyone.
This legislation is aimed at large providers of solar power and utility companies that are willing to invest in green energy. Hopefully this type of development will also spur interest among consumers and small business owners who can declare energy independence from large utility companies with Solar PV installations on their own roofs!
If you are interested in going solar be sure to contact our NASS member store located in Hamilton, NJ. Bowden’s Solar Store provides solar electric modules, solar thermal collectors, solar hot water equipment and solar space heating equipment to the central New Jersey area. Bowden’s has been providing heating solutions and alternative energy for homes and small businesses since 1904. This well-established store is committed to the continued growth of the solar industry and fully supports Senate Bill 1925.