A new law meant to rescue the state market for solar subsidies has been in place for a week, but so far values are still dropping.
Experts say that’s because the law is the first step to stabilizing prices, and the hard part lies ahead: The state solar industry must shrink.
The subsidy credits called SRECs are awarded to homeowners, businesses and utilities that generate energy with solar panels. Prices are set on a market in which utilities buy credits to meet state-mandated quotas.
In the past year, a huge build-out, or expansion of the market, meant that supply exceeded demand and prices fell so low that experts predicted projects would grind to a halt, causing significant layoffs.
So legislators moved to increase the number of SRECs that utilities must buy for three years, starting next summer.
Gov. Chris Christie said the move was meant to raise prices when he signed the legislation last Tuesday, but in the week since the new law was passed, prices for the credits dropped by a few dollars on day-to-day spot markets.
Now prices are between $125 and $140, according to the Flett Exchange.
“This market still has to shrink significantly compared to where the market build-out was in the last year,” said Michael Flett, founder of the exchange, yesterday. “This legislation doesn’t match that current building.”
If construction slows enough, prices will rise again — something that both state officials and experts involved with the legislation said was necessary to avoid many layoffs:
• Bill sponsor Assemblyman Upendra Chivukula (D-Somerset) said the industry needed prices between $250 and $300, give or take, to make money.
• Ratepayer advocate Stefanie Brand said the price developers needed to finance solar projects varied between $135 a credit and $200 or $250.
• For projects that can lock in long-term contracts, $175 SRECs would be sufficient, according to Jamie Hahn, co-founder of Solis Partners, which develops and constructs large solar power systems.
Flett said the only way for prices to rise is if the pace of solar construction slows.
“That’s the big question out here: Are the installers and people investing in New Jersey going to blatantly disregard the goals set out for solar in New Jersey?” Flett said. “They did it once … they totally overinstalled compared to what the current needs are … Now we have to see whether the industry is going to build within those parameters.”
Source: http://www.nj.com/business/index.ssf/2012/07/solar_credit_market_faces_turn.html
Experts say that’s because the law is the first step to stabilizing prices, and the hard part lies ahead: The state solar industry must shrink.
The subsidy credits called SRECs are awarded to homeowners, businesses and utilities that generate energy with solar panels. Prices are set on a market in which utilities buy credits to meet state-mandated quotas.
In the past year, a huge build-out, or expansion of the market, meant that supply exceeded demand and prices fell so low that experts predicted projects would grind to a halt, causing significant layoffs.
So legislators moved to increase the number of SRECs that utilities must buy for three years, starting next summer.
Gov. Chris Christie said the move was meant to raise prices when he signed the legislation last Tuesday, but in the week since the new law was passed, prices for the credits dropped by a few dollars on day-to-day spot markets.
Now prices are between $125 and $140, according to the Flett Exchange.
“This market still has to shrink significantly compared to where the market build-out was in the last year,” said Michael Flett, founder of the exchange, yesterday. “This legislation doesn’t match that current building.”
If construction slows enough, prices will rise again — something that both state officials and experts involved with the legislation said was necessary to avoid many layoffs:
• Bill sponsor Assemblyman Upendra Chivukula (D-Somerset) said the industry needed prices between $250 and $300, give or take, to make money.
• Ratepayer advocate Stefanie Brand said the price developers needed to finance solar projects varied between $135 a credit and $200 or $250.
• For projects that can lock in long-term contracts, $175 SRECs would be sufficient, according to Jamie Hahn, co-founder of Solis Partners, which develops and constructs large solar power systems.
Flett said the only way for prices to rise is if the pace of solar construction slows.
“That’s the big question out here: Are the installers and people investing in New Jersey going to blatantly disregard the goals set out for solar in New Jersey?” Flett said. “They did it once … they totally overinstalled compared to what the current needs are … Now we have to see whether the industry is going to build within those parameters.”
Source: http://www.nj.com/business/index.ssf/2012/07/solar_credit_market_faces_turn.html
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