You'll find solar panels on large suburban homes and apartment complexes, solar panels on many of the light poles, solar panels on large warehouse facilities, and box stores.
There's even a 7,000-panel, 1.4-megawatt (MW) solar installation on the Livingston, NJ, Campus of Rutgers University. And last fall one of the largest solar developments in the country -- a 20 MW solar farm – sprouted up on former farmland in Pilesgrove.
In April, the state's Board of Public Utilities announced it had exceeded 300 MW of installed capacity and over 8,000 projects statewide.
New Jersey became a solar leader – second in the nation to California -- through an aggressive Solar Renewable Energy Certificate (SREC) program. To meet state Renewable Portfolio Standards (RPS) utilities purchase SRECs -- tradable certificates equal to 1000 kilowatt-hours (kWh) of electricity -- from producers.
But after several years of high, stable SREC prices – the NJ SREC spot market price increased from September 2008 to March 2009 – those prices have plummeted over the past few months.
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| Chart by EnterSolar |
According to EnterSolar, a leading provider of solar photovoltaic systems for corporate customers in the Northeast, the price dropped from over $600 in May to almost $200 currently.
"The New Jersey solar market is coming out of a short-term installation boom," Peyton Boswell, managing director of EnterSolar, wrote in an email to me. "That was unsustainable in the sense that the solar MW capacity developed and installed was far in excess of what is required under the state's RPS."
Boswell remains optimistic about the long-term prospects for New Jersey's solar market. "It will remain vibrant over the long-haul -- over the next 10 years, but we are very concerned that the next 1-2 years could be extremely tough going."
As New Jersey State Senator Bob Smith (D) told the Philadelphia Inquirer recently, "We've done such a good job at stimulating solar that the market is now crashing."
Smith has sponsored a bill that will accelerate by one year requirements for how much renewable energy must be produced, which in turn will force power companies to buy more SRECs.
The question remains whether the government propping up the solar market further will have the desired effect when it is facing what is a fairly typical supply and demand problem.
"The basic SREC market structure in New Jersey is sound," says EnterSolar's Boswell. "Like many markets, there is a propensity for over-reaction and we think we are seeing that play out right now with SREC pricing."
What is needed, in Boswell's opinion, is for solar system owners to be able to sell long-term SREC contracts, exchanging lower SREC pricing for longer-term stability.
Another flaw in the New Jersey program, according to Boswell, is that all SRECs are treated equally, including those for both large-scale wholesale solar farms and distributed solar net-metered projects.
Boswell suggests it "would be better if these two types of solar installations were treated differently from an SREC standpoint as the project costs and related Internal Rates of Return (IRR) are dramatically different -- a 10-MW solar farm installed at $3/W can generate a far higher IRR given the same SREC price than a 1-MW rooftop net-metered system at same SREC price."
Sometimes too much success is too much of a good thing. For New Jersey's solar market, it sounds like some basic structural fixes may have more positive impact than accelerating an already flawed system.
