The East Coast’s solar market is booming, and New Jersey is one of those states that continues to surprise on the renewables front. The Garden State has been one of the more aggressive states when it comes to incentivizing solar, and the results are showing. During a conversation I had with Cy Yablonsky of PowerLutions, a New Jersey–based solar systems designer and installer, he explained why this tiny state is now pulling a relatively big solar punch.
Interestingly enough, most of New Jersey’s solar capacity is centered in the middle of the state. That concentration lessens as you move north or south towards the suburban areas of New York City and Philadelphia, and fades further as you approach upstate New York or the Jersey Shore. So what is going on with solar installations in the country’s fourth-smallest state?
Solar is mostly concentrated in Middlesex County, home to New Brunswick and Rutgers University. The county, home to more than 800,000 people, has a good mix of commercial space, which is attractive to larger solar installations, and of course residential properties. Ranking in the top 100 US counties when measured by median income, Middlesex County also hosts a population that is more receptive, and able to afford, a rooftop solar system.
But solar is catching on all over New Jersey because of the state’s aggressive Clean Energy Program, which dates back to 2001. The key has been the 10-year-old Solar Renewable Energy Certificates (SREC) program. New Jersey does not currently offer tax incentives or rebates for solar projects, but before their construction, solar systems must be registered with the state’s SREC Registration Program in order to assess the project’s eligibility for earning these certificates. Once the project is completed and required paperwork is submitted, the individual system scores a certification number and then the benefits can start stacking up.
Each time a solar power system generates 1,000 kWh of electricity, the owner earns an SREC. Those SRECS are then deposited into the customer’s (most of which are utilities running large-scale solar projects) account. The SRECs in turn can then be sold on a tracking system, allowing the project to generate income for the first 15 years of its operation.
The SRECs are then traded in a competitive market, the way commodities or carbon credits would be sold within an exchange. Many of the purchasers are utilities that are not compliant with New Jersey’s solar power mandates. As is the case with any commodity, the prices of these SRECs can fluctuate, based on supply and demand. Over the last several months, the cost per SREC has ranged from $167 to $183 as of January 2015, the most current month at which prices are available. For the past year, the average price has been relatively stable. When the market for SRECs first opened in August 2012, prices took a wild ride, starting out over $300 per SREC, falling to $150 in late 2012 to a high of over $270 in January 2013.
The SREC program has resulted in the exponential growth of solar in New Jersey. When New Jersey’s leaders started cobbling together a clean energy program 14 years ago, there were 6 large solar projects in the entire state. Now, there are thousands, from the rural counties in the north to Cape May, the state’s southernmost county and summer playground.
Overall, according to Mr. Yablonsky, solar has been a net positive with steady economic and environmental benefits for New Jersey. But there is always more improvement. True, solar can take the strain off of local grids, especially during those peak power demand times, such as the middle of the day in summertime when demand for air conditioning surges. Nearby New York has structured its incentive program to give bonuses to regions that have an overstressed grid, allowing solar power to play a robust role in that state’s energy mix. A tax credit, also similar to one currently available in New York, would also make solar attractive to more customers, but that is probably not going to happen anytime soon considering Governor Chris Christie’s presidential ambitions. A minimum value on SRECs, which is current policy in Massachusetts, could also present solar as a good long-term investment value to more residents and investors.
Nevertheless, New Jersey, from post Bergen County to the Jersey Shore, is on the right track. Solar is also a small but growing segment of New Jersey’s clean economy: according to Yablonsky, there are over 7,200 jobs directly related to solar in the state. With the cost of fossil fuels on the rise again, New Jersey shows long-term planning can reap solid financial results while ensuring residents have a safe and reliable supply of power.
Image Credit: Doc Searls