When Too Much (Solar) Success Is a Bad Thing

New Jersey is known as the "Garden State," but drive through it these days and you see a different kind of harvest: solar energy.

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.

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.

Clean Tech: Village Green Energy and Wineries Team Up to Promote Renewables Through Facebook

Four Sonoma and Napa County, California, wineries are trying to power their operations with renewable energy.

Now you can help them by loading the "Green My Vino" application on Facebook.

"Green My Vino" allows Facebook users to promote environmental change in the wine business. The application, developed by Village Green Energy, creates three free gifts in Facebook, representing 1, 5, and 10 minutes of renewable energy.

When a user gives the gift, Village Green Energy purchases an equivalent amount of renewable electricity from a wind farm or solar array on the Facebook user's behalf, according to Village Green. If Facebook users pass 10,000 minutes, the first winery will convert to green power.

Seems like a tall order, but it is based upon the success of other applications with high volume of use and effectiveness, such as the Lil' Green Patch, which helps save rainforest as friends give each other cartoon plants.

To date, according to the application developers, the Lil' Green Patch community has saved 29,259,567 square feet of Rainforest by using sponsorship revenue from advertisers to make donations to the Nature Conservancy's Adopt an Acre program.

The first four wineries to participate in Green My Vino are Iron Horse Vineyards, Girard Winery, Windsor Vineyards, and Windsor Sonoma. Village Green intends to recruit additional wineries once the original four have converted.

"We jumped at the opportunity to participate in the application," said Pat Roney of Windsor Vineyards. "'Green My Vino' gives the community the opportunity to interact with businesses and make their voices heard. When people participate in the application, they're telling us that clean energy is a priority for them, and we'll make supporting renewable energy a part of our commitment as a business."

Village Green Energy enables households and businesses to purchase renewable energy from wind farms, solar arrays, and other renewable technologies through the purchase of Renewable Energy Certificates (RECs), the legal rights to renewable power.