New Jersey Gov. Chris Christie's recent announcement that $400 million in funding for state clean energy programs — including funds for the solar energy rebate program — will be diverted to close the state's budget gap has thrown much of the state's solar energy industry into disarray.
Although the governor's action, which has resulted in a moratorium on solar rebates until the fall, affects mainly residential and small business solar installations, it has nevertheless focused attention on the state's solar energy program as a whole.As a result of New Jersey's generous incentives, including solar energy rebates, it is second only to California in solar energy installations. Unfortunately, that is not saying much. As of April 30, New Jersey had approximately 5,800 solar installations, but they produce only tiny fraction percent of the state's electricity.
In order to achieve its clean energy objectives, New Jersey will need to generate three percent of the state's electricity from solar by 2026.
To meet that goal, it will be necessary not only to continue to support the construction of small-scale residential solar installations through rebates and other incentives, but also to build large, utility-scale solar installations such as Atlantic Green Power's proposed solar energy farm in Salem County.
New Jersey's solar energy incentives have established the state as a national leader in solar energy. While Atlantic Green Power recognizes the need for the governor to address the budget gap, we also believe it is important to maintain the considerable momentum that the state has gained as a leader in renewable energy.
Until now, that momentum has depended on small-scale residential and business solar installations, but with Atlantic Green Power's proposed utility-scale solar energy farm, which will be the largest in New Jersey and one of the largest in the East, New Jersey is poised to move into the solar big-time.
Atlantic Green Power has proposed a 74.6-megawatt solar energy farm for a 512-acre site in Upper Pittsgrove Township. The solar energy farm will generate electricity that will be fed into the PJM Interconnection grid through Atlantic City Electric, the local utility.
When completed, Atlantic Green Power's solar energy farm will double the size of New Jersey's installed solar capacity, catapulting the state into first place in solar production.
Our solar energy farm will benefit from a state clean energy incentive called the Solar Renewable Energy Certificate (SREC) program, which allows solar producers to sell financial instruments called SRECs (one SREC is obtained for every Megawatt-hour of solar electricity generated) to help utilities meet state-mandated requirements for solar energy production.
Residential and small-business solar energy producers can also sell SRECs. The state Board of Public Utilities (BPU) maintains that it is the sale of SRECS by residential and small business producers of solar power -- along with liberal federal incentives -- that is driving the demand for new solar installations, not the solar rebates.
Even before Christie took office, the BPU was planning a shift away from rebates and toward the performance-based SREC program, with the rebates to be phased out by 2012. The rebates would be replaced by policies promoting increased SREC values.
But we maintain that the rebates are important too. The state's Renewable Energy Incentive Program (REIP), as the rebate program is called, helps homeowners and small businesses reduce the upfront costs of installing solar energy systems by reimbursing them at the rate of $1.35 per watt.
An 8-kilowatter residential installation, for example, costs about $48,000, with the $10,800 rebate representing about a quarter of the upfront cost. For many the loss of the rebate is sufficient to tip the financial equation in favor of a decision not to move ahead with solar, despite the long-term promise of increased SREC values.
Although programs exist that will fund the installation costs of small-scale solar systems using the SRECs that will be generated in the future as collateral, for many homeowners and small businesses these do not hold the same appeal as an upfront rebate.
The amount of power produced by residential and small business solar systems is small by comparison with our utllity-scale facility. But even a 4-kilowatt system will offset 18,000 pounds of carbon dioxide, which is the equivalent of driving a car 22,600 miles per year, or the amount of carbon dioxide absorbed by two acres of trees.
And each new solar producer — even those who are producing as little as 4 kilowatts — becomes a stakeholder in a new clean energy technology.
In order to maintain New Jersey's position as a leader in solar power, it is therefore essential to support renewable energy at all levels, including through rebates, SRECS and other incentives.
The recent oil spill in the Gulf of Mexico has focused attention on the need to reduce American dependence on energy from fossil fuels. Even before the oil spill, the Obama adminstration had vowed to invest $150 billion over the next 10 years to catalyze private efforts to build a clean energy future, helping to create five million new "green" jobs.
As a result of its leadership in solar, New Jersey is ideally positioned to benefit from federal policies promoting clean energy. Now is therefore the time to double down on that commitment, rather than to scale back. In the balance is the success of a fledgling industry with its prospects of increased employment and tax revenues.
But the importance of New Jersey's commitment to clean energy reaches well beyond our economy. New Jersey stands to become a model for the world of an energy technology that emits no harmful gases, supports no petro-dictators and damages no fragile ecosystems, helping to make it a cleaner and safer place for generations to come.
Robert Demos Jr. is Chief Executive Officer and Chairman of the Board at Atlantic Green Power.