Despite Fears of a Crash, Solar Sector Remains White Hot

New Jersey's solar market is continuing its rapid pace of growth—even amid warnings by some the sector could be headed for a crash.

In October, more than 44 megawatts of new solar systems were installed in the state, bringing the total to more than 447 megawatts of installed capacity, according to information compiled by a state contractor who helps administer the solar program. That amount could be more than doubled (1,017 megawatts) if all of the projects in the pipeline are built.

In fact, so much solar is being built that New Jersey is more than a year ahead of meeting a state-mandated requirement that specifies how much of the its electricity comes from solar energy. For most, that would be viewed as good news, but some say the explosive growth has created an oversupply of solar renewable energy certificates (SRECs), the primary means of financing solar projects.

The result has been prices for the certificates have dropped by more than half since this past June, creating widespread uncertainty among investors as to whether to pump new money into building additional systems in New Jersey. It also has led the state and industry executives to begin looking for ways to stabilize the sector, an issue that was the subject of a four-and-a-half hour meeting yesterday in Iselin, which settled little.

It also led to some to question if the sector is crashing when the state is still getting 700 applications a month to install solar systems.

But Lyle Rawlings, a vice president of the Mid-Atlantic Solar Energy Industries Association and the owner of a solar firm in Flemington, said he's seen a slowing in the pace of projects going forward, but conceded the number of project entering the pipeline is still greater than the requirement set by the state under its solar energy renewable portfolio standard.

"The momentum in market is very stubborn, even irrational," he said. "The numbers don't add up. There has to be a reckoning."

He and others argue that without bringing more stability to the marketplace, investors will either stop pumping money into new projects or, failing that, will simply wait for prices of solar certificates on the spot market to spike again, which will inflate the cost to electric customers, who ultimately pay off the certificates.

The Office of Clean Energy, which oversees the program, has been directed by the Board of Public Utilities (BPU) to determine ways to stabilize the market as well as to decide whether to extend utility-run programs that promote solar projects, mostly through long-term contracts. Many industry officials say that is the best way to stabilize the marketplace and lower the costs of solar energy to ratepayers.

"We need some structure so we don't have wild swings in the market," said Michael Winka, director of the clean energy office. "I don't know what it is at this time."

Continue reading this story in NJ Spotlight.

NJ Spotlight is an issue-driven news website that provides critical insight to New Jersey’s communities and businesses. It is non-partisan, independent, policy-centered and community-minded.