Wednesday, August 24, 2011

New Jersey Installs More Than 10,000 Solar Projects

New Jersey announced last month that it had reached a solar-energy milestone - more than 10,000 solar installations statewide.

But now some worry that the state's solar industry, second behind only California's in the United States, is being hurt by its own success.

That's because an oversupply of solar renewable-energy certificates, a major means of financing solar projects, has led to a dramatic drop in their price in the spot market.

Solar customers earn a certificate every time their system generates 1,000 kilowatt-hours of electricity. Power suppliers are required to buy a certain amount of the credits, known as SRECs, to meet New Jersey's renewable-energy standards.

"If the price of the [certificates] drops, then the time period I get my money back to break even is longer," said Gene Mulligan.

The Wildwood Crest resident received federal and state incentives to install a $30,000 solar system on his condominium last year. But he had also counted on paying off the system by selling solar certificates, which were selling for more than $600 on the Flett Exchange, an online trading exchange, when his system started generating power.

The price in New Jersey has fallen below $300 on such exchanges during the last six months.

Pennsylvania's solar market, fueled by the state's generous rebate program, has also led to an oversupply of SRECs and a dramatic drop in prices, analysts say.

In New Jersey, "we've done such a good job at stimulating solar that the market is now crashing," said State Sen. Bob Smith (D., Middlesex), chairman of the Senate Environment and Energy Committee.

Smith is the sponsor of legislation that would accelerate by one year state requirements for how much renewable energy must be produced, forcing power companies to buy more SRECs. The bill passed the Senate in late June and awaits action in the Assembly.

In the first three months of 2011, New Jersey installed 49 percent more megawatts of solar capacity than it did in the same period last year, the Board of Public Utilities said.

It reported that 520 solar projects totaling more than 40 megawatts had been installed in June - a record number of projects and solar capacity for one month.

Nearly 5,000 more approved projects are in the pipeline, the BPU said.

But industry observers project that in the next year or two, at least, the market will slow down.


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