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Solar News

New Jersey: Solar Leader or Solar Loser?

05-19-2010

In what looks to be a major blow to the solar industry in New Jersey, Governor Chris Christie has diverted $158 million from the Clean Energy Fund, which is used for clean energy incentives and operated through the state Board of Public Utilities, to help reduce the Garden State's increasing budget deficit.

While being fiscally sound is a lofty goal, the actions of Gov. Christie have ruffled more than a few feathers and may have dire effects for New Jersey's solar energy market. The Jersey City Independent reports:

The state announced last week it will not accept any new rebate requests until September, throwing a substantial portion of the solar energy market into turmoil. Because of the diversion of funds, the state Office of Clean Energy had to scale back New Jersey's aggressive clean energy and energy efficiency programs.

The administration's cuts...led to the elimination of 29 energy efficiency and renewable energy programs run by the office, according to a lawsuit challenging the diversion of funds from a trade group representing solar power dealers. The group is contesting the administration's diversion of $158 million in clean energy funds to help plug a hole in the current state budget...

The administration has redirected more than $400 million in various clean energy funds, including the $158 million cited in the lawsuit, steps that have angered clean energy advocates and lawmakers alike. The cuts forced the state to temporarily shut down the rebate program for solar dealers, who mostly cater to residents and small businesses.

The recent rescind on clean energy funds has sparked a surge of new applications for incentives. Many are afraid they may not be able to continue existing or begin new solar projects. When the New Jersey Clean Energy Program opened for applications on May 3, it reached its budget for the quarter in a single day. Sunpluggers.com reports:

At least 1,110 applications were submitted on the first day the latest funding cycle opened May 3, the [New Jersey Clean Energy Program] said, far in excess of any previous demand for the state incentive program. For existing residential buildings, the latest funding cycle offered a rebate of up to $1.35 per watt for systems of up to10 kilowatts of rated production capacity.

The rebate program [had] reduced the cost of a residential solar installation by as much as $13,500 and helped make solar electricity an easy choice for many owners of properties with ample sun exposure. The average residential electricity user in the state paid nearly 16 cents per kilowatt-hour as of January 2010, one of the higher average residential rates nationally, according to data from the federal Energy Information Administration.

Without reliable funding, smaller solar projects may be on the rocks. An article covering the story on NJ.com quotes a clean energy advocate, "'Right now we are seeing the very real impact to business that the governor's cuts are making,' said Matt Elliott, clean energy advocate for Environment New Jersey. ‘Contractors lining up out the door to make sure they can get rebates for their customers.'" Another article on the same site again quotes Mr. Elliot, "'This is not money for the state to use on general programs...This raid represents about half of what Clean Energy money is available this year. We now will be doing less solar projects and less retrofitting of houses for energy efficiency.'"

While the rebate program is currently falling short, New Jersey residents also may take advantage of solar renewable energy credits, but these may prove ineffective for individuals and small businesses. The Jersey City Independent continues:

Dolores Phillips, executive director of the trade group, says the cuts would particularly hurt small businesses that install solar panels on homes and businesses, because their model relies on rebates and not financial instruments known as solar renewable energy credits (SRECs).

The larger solar vendors have created profitable businesses based on the SRECs, which are selling for more than $600 on the spot market. The credits are more attractive to large businesses and manufacturers with better access to the capital needed to finance solar projects.

New Jersey has been a leader in clean energy programs in recent years but Governor Christie's actions have created a question as to whether the Garden State will continue to take the lead in America's energy revolution.


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