New Bill to Accelerate New Jersey’s Solar Goals

By Fred Profeta, President of EcoMatters

This week the New Jersey legislature introduced a new bill to stabilize the New Jersey solar market.  On May 14, 2012, Senate bill S-1925 was proposed by Senator Bob Smith (D-Piscataway), Chairman of the Senate Environment Committee and Senate President Stephen Sweeney (D-West Deptford).

The proposed legislation centers on the SREC market, which is oversupplied in New Jersey. The term SREC stands for Solar Renewable Energy Credit and is a tradable credit that represents all the clean energy benefits of electricity generated from a solar electric system. Each time a solar electric system generates 1000kWh (1MWh) of electricity, an SREC is issued which can then be sold or traded separately from the power.

SRECs are purchased by electricity suppliers who need to meet a Renewable Portfolio Standard (RPS), and SRECs can be bought by renewable energy marketers, private businesses and individuals interested in supporting the development of solar energy.  An RPS requires a state and its electricity suppliers to produce a certain percentage of their electricity from renewable resources by a certain year.   For example, New Jersey’s requires the state to produce 22.5 percent of its electricity from renewable resources by 2020.  The new legislation proposes to accelerate the RPS starting in Energy Year 2014, so it will accelerate the amount of SRECs that the power companies are required to purchase.

If an electricity provider does not meet this percentage, it purchases SRECs to correct their deficit rather than incurring a large fine.  SRECs are therefore sold for prices determined by the market for Renewable Portfolio Standard compliance. The fewer solar installations there are means higher prices for available SRECs.  This creates an incentive for future solar installations.

In New Jersey, under the current Renewable Portfolio Standard (RPS), more solar has been installed than is necessary to meet the state’s RPS goals for the next several years.  This is one reason why the new legislation is needed.

The bill proposes a number of additional positive changes to improve the New Jersey solar market.  Review Senate bill s-1925 for complete information and check back on the EcoMatters site and I will keep you updated on how the bill progresses and what you can do to support it.