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Part III – Possible Death Blow to New Jersey’s Solar Energy Projects!

June 9, 2011

DATELINE JUNE 7, 2011: “NEW JERSEY LEADER SCRAPS MORE AMBITIOUS RENEWABLE ENERGY GOAL”

Sunset Landscape by Vector Graphic

Gov. Chris Christie called for revisions to New Jersey’s 10-year energy master plan at a news conference in Trenton on Tuesday.”

Governor Chris Christie is abandoning a 30% renewable portfolio standard goal by 2021 set by his predecessor for New Jersey, saying 22.5% already required by law is a good start toward improving the state’s carbon profile and energy security.”

Richard A. Kessler of RECHARGE News reported that New Jersey Gov. Christi’s announcement was part of a 10-year Energy Master Plan (EMP) to save money, promote economic development, create jobs and protect the environment. He further stated:

• “….. (the plan will) drive down the cost of energy of all consumers”

• “….. (the plan) contains generous carve-outs for offshore wind and solar,”

• :….. reaffirm (Christie’s) support of solar, offshore wind and also biomass for power generation, but cautions that all three must be developed in ways that do not impose a burden on ratepayers.”

• “Electricity costs in New Jersey are the fourth highest among states in the country.”

• “Solar and offshore wind project development must provide net economic benefits…..”

• “….. developers must demonstrate their projects are of sufficient quality to offset the costs.”

• “….. with 330MW, New Jersey ranks second to California in solar installations.”

• “….. that state may cut or terminate subsidies for the sector (solar) as too high a percentage of development costs are being passed on to consumers.”

• “The Christie administration does not support the unreasonable transference of wealth from ratepayers at large to solar developers as well as residential, commercial and industrial participants,”

• “Christie argues that the EMP will shift the focus on solar to commercial and industrial large-scale use.”

• “….. offshore wind, the EMP endorses the Christie administration’s 2010 programme that offers financial subsidies to support a minimal initial 1.1GW installation in the Atlantic Ocean off New Jersey’s coast.”

• “….. biomass, the EMP notes that New Jersey residents generate more waste per capita than almost any other state, but only 17% is converted into energy. It defines biomass as agricultural material, and industrial and residential waste. It estimates that New Jersey could utilize as much as 65% of this substance to produce about 1.3GW of power, or 9% of the state’s requirements.”

Anyone, following my series on “Possible Death Blow to New Jersey’s Solar Energy Projects,” are well aware of the controversy raised by the discussions concerning Governor  Chris Christie’s May 26, 2001 announcement that New Jersey intends to drop out of Northeast’s greenhouse gas reduction program by the end of the year.

In light of Gov. Christie’s announced plans, my position remains that New Jersey’s soon to be ratified EMP may have a possible downside impact to future solar installations in NJ.

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4 Comments leave one →
  1. June 9, 2011 11:55 AM

    Barry,

    “may have a possible downside impact to future solar installations in NJ”

    I’m seeing a lot of this thrown around and was just wondering what specifically you expect to happen. They floated around in the EMP draft a reduction in the SACP schedule by around 20% between now and EY 2016, essentially driving down the cost of SRECs. Do you have any ideas on whether the Christie administration is looking to follow through with this reduction?

    I just don’t see the direct impact on solar yet from the downward revision of the RPS unless the Christie administration starts letting the LSE’s/EDC’s more off the hook w/ regard to solar.

  2. June 9, 2011 5:29 PM

    John,

    SREC revenues are uncertain and risky business. It is difficult to conservatively project strong unlevered IRRs anymore!

    Prior to the recent increase in solar installations (near fulfillment of the RPS benchmarks) and Christie’s announcements, SRECs were projected to be:

    Years 1 to 5 – $450
    Years 6 to 10 – $350
    Years 11 to 15 – $250

    Now, SREC pricing being looked at:

    Years 1 to 5 – $350
    Years 6 to 10 – $225
    Years 11 to 15 – $75

    All is left to: obtain a five year price lock, which is currently rather difficult, or base the business plan on 15 year spot market prices. With the high expense of solar farms and lower returns, new solar installations are in jeopardy.

    Barry

  3. June 13, 2011 9:24 AM

    Interesting – I wonder what the BPU etc. are going to decide as far as these SREC pricings being “looked at.” Seems to me like there are 3 public forums before they make final decisions on the SACP. Could we see Christie picking winners and losers here unilaterally? Thanks for your response – John

  4. June 30, 2011 6:36 PM

    Currently no United States-based facility exists that produces the parts needed for offshore wind projects…New Jersey is one of several states along the Eastern Seaboard planning offshore wind projects. Working swiftly to create a New Jersey-based manufacturing sector could mean other states projects would have to place their orders with businesses based in-state creating a long-term market that could support hundreds of high paying permanent manufacturing jobs… The disaster in the Gulf of Mexico has opened our eyes to the need for clean sustainable energy that we can produce here at home Senate President Stephen M. New Jersey already is a national leader in solar energy production but we have yet to truly tap into the potential of our offshore winds.

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