N.J.: Saudi Arabia of rooftop solar?
Note: This article by Keith Zakheim, CEO of Antenna Group, and Caroline Venza, executive vice president, originally appeared in the Saturday, July 21 edition of the Star-Ledger, New Jersey’s largest newspaper.
Mark Twain’s famous remark, “Reports of my death are greatly exaggerated,” made after his obituary was published by mistake, could apply in equal measure to New Jersey’s solar industry. Despite widespread references to “death,” “collapse” and other expressions of doom and gloom, the state’s solar industry is doing fine: In the first quarter of 2012, the Garden State surpassed California as the nation’s leader in installed solar capacity.
But the fact that the declining health of the solar industry may have been overstated doesn’t mean it doesn’t need some TLC: While not totally moribund, it hasn’t been a picture of blooming health, either. Which is why the governor’s signing of the solar “resurrection bill” recently passed by the state Legislature, scheduled for Monday, is so important. It will serve as a nostrum to get the solar industry — which has created thousands of vital green jobs — back on its feet.
The source of the industry’s trouble is a state financial incentive called an SREC, or Solar Renewable Energy Certificate. Utilities must buy SRECs, which represent the environmental benefit of solar, from solar producers in order to meet a mandate called a Renewable Portfolio Standard, which requires that they produce an increasing amount of power from solar each year. If they don’t meet the mandate, they must pay a penalty, which serves as a de facto cap on SREC prices.
This incentive has been too successful. Motivated by federal incentives such as a cash grant (now expired), which covered 30 percent of the cost of a solar project, and by SREC prices in the $600-plus range, businesses stampeded to install solar, creating a solar “gold rush” that persisted through 2011. The result was the flooding of the SREC market, which caused prices to drop precipitously, thus inspiring the death knells.
The new solar bill puts the solar industry on a firmer footing by moving the RPS forward starting in energy year 2014 (which begins on June 1, 2013) — in other words, by calling for more solar now, less later. The aim is to create a greater demand for SRECs, increasing the financial feasibility of solar projects by propping up SREC prices.
This is a good thing. Although our solar industry has grown exponentially, there’s still plenty of room for more. In fact, we have the potential to become a world solar leader. The reason? All those flat-roofed commercial buildings that drivers see from the New Jersey Turnpike, which are ideal for solar. Because of our location at the heart of a huge distribution network, we have the nation’s largest per capita concentration of such buildings, of which only a fraction has yet been tapped for solar.
In terms of solar growth potential, the comparison has often been drawn between New Jersey and Germany, which is the world’s largest solar market, despite a lack of solar resources. Germany produces more than 50 percent of the world’s solar energy, with 80 percent being generated by on-site rooftop systems, as in New Jersey. Germany is actively promoting renewable energy with the goal of becoming a world leader in the new “green” economy.
There’s no reason why New Jersey can’t do the same, especially given our history in solar, which includes two of the technology’s greatest achievements: the awarding of the Nobel Prize in physics in 1921 to Albert Einstein, then a resident of Princeton, for his discovery of the law of the photoelectric effect, which serves as the scientific foundation for solar electricity generation, and the introduction of the first commercial modern silicon solar cell by scientists at Bell Labs in Holmdel in 1954.
Given our achievements in solar technology and our position as a national solar leader, we can challenge Germany’s global solar dominance by becoming — as one state energy official put it — “the Saudi Arabia of rooftop solar.” The solar bill that the governor is due to sign this week is a major step along that path.