NJ Solar Industry Impact by NJ Energy Master Plan

New Jersey Energy Master Plan Released by the Christie Administration: Addresses SREC Price Decline

     The final version of the New Jersey Energy Master Plan was released yesterday. It recommends solutions to stabilize the solar industry in NJ while at the same time reduce ratepayer impacts. It contains language that recognizes the unexpected influx of solar investing in the last year which has led to a collapse in SREC prices. It states that an increase in the RPS (Renewable Portfolio Standard: amount of SRECs required to be purchased by power companies) would provide an opportunity for the solar industry to adjust. At the same time it suggests to reduce the SACP (Solar Alternative Compliance Payment: fine that power companies pay for not producing solar or purchasing SRECs from others who invested in solar infrastructure) in order to minimize the rate impact of an RPS acceleration. It is widely recognized in the solar industry that the SACP needs to be adjusted to account for the reduced cost of installing solar. Here are the most significant segments of the Energy Master Plan and how it relates to SREC prices: 

Accelerate the RPS

     A temporary acceleration of the RPS would provide some interim relief for the current market in SRECs and an opportunity for the industry to adjust. This acceleration would require increasing the RPS over the next three years and reducing the outlier years of the RPS schedule to minimize the impact to ratepayers. This should provide the foundation for the solar industry to continue to develop and receive SREC payments trading within a reasonable range and would facilitate a reduced SACP schedule.

Reduce the SACP

     In order to minimize the rate impact of RPS acceleration and reduce the cost burden borne by non-participants in New Jersey’s solar market, the State has initiated action to materially reduce the SACP. The efficacy of lower cost C&I programs coupled with the anticipated continued cost decline in installing solar PV support a step-down in the SACP levels through 2025.According to the CEEEP analysis, with SREC prices starting at $500/MWh and declining 2.5%every year, the cost of a new solar installation can be recouped in about five years for a C&Iproject of 10-1,000 kW, and in ten years for a residential or small commercial project of less than 10 kW.130There have been a number of proposals to modify the SACP schedule; within the industry, there’s general agreement that a reduction in the overall schedule is warranted to reflect the Continuing downward trend in installed costs. The BPU will propose a new schedule following the release of the EMP.” 

     Keep in mind that the EMP is JUST A PLAN! It takes legislation to implement the increase in the RPS and decrease the SACP. If, and when, a bill is passed in the New Jersey Legislature it still has to be signed into law by Governor Christie. This bill will have to be sensitive to ratepayer impact and if it overreaches there is a high probability that it will not be singed into law.

Beware of the Fine Print

     Solar industry insiders will most likely try to insert special perks in a bill like requirements for ratepayers to enter into long term SREC contracts. Long term SREC contracts have shifted all risk on ratepayers in the past while locking in profits for developers. ($475 10 year fixed rate contracts were prevalent). Mandated long term contracts will create risk free investing for new solar investors while the ratepayer and most current solar owners will suffer any future losses in an oversupply and if solar becomes cheaper during the next 10 years. Long term contracting decisions should be flexible and the decision as to how much of the market should benefit should rest with the Board of Public Utilities like it has in the past. This BPU decision making is best and can be used to promote land use issues and satisfy net benefits tests when siting solar.

Job Retention and Stable SREC Prices

     Adjustments like these advocated by the Christie Administration will sustain the investment in solar in New Jersey thus retain thousands of jobs associated with the installation of solar. In the absence of an adjustment it is estimated that the solar industry in New Jersey will have to contract for years (Job losses) before the current state mandates catch up. It makes sense to speed up development due to the significant drop in the installed cost of solar. This drop was not modeled to happen for at least another decade when the current solar legislation was passed in January of 2010. Business’s, homeowners, schools and municipalities that invested in solar in the last few years can expect supported SREC prices if a bill is introduced and signed by the Governor. Hopefully this will happen within the next month! 

This is a great synposis provided by Flett Exchange for anyone curious on how the New Energy Plan would impact the SREC prices. So if you are a solar investor/developer then you need to be aware of these proposed ideas. Remember these are not laws yet but a plan of action to eventually become law.

Happy Investing

-Ankit 

Have you been thinking about getting into Solar PV or Solar thermal?  With recent changes to incentive programs at federal, state and local levels, there has never been a better time.  And if you need any more incentive, just peek at the graph above of real costs over the last quarter century.  Even if prices don’t hit the forecast of $0.74/watt, prices have already fallen 98%.  Are you really waiting for that last 1%?

As David Eves, the CEO of Xcel’s Colorado subsidiary recently said:  “This is the first time that we’ve seen, purely on a price basis, that the solar projects made the cut — without considering carbon costs or the need to comply with a renewable energy standard — strictly on an economic basis.”  This will make solar competitive with natural gas!

Entellis Collaborative has just completed several very interesting solar installations on multifamily buildings in Washington and Maryland.  Contact Prescott Gaylord today to find out how Solar PV and Solar thermal can enhance your current projects.

Graph and quote courtesy Climate Progress website.

HOUSTON, Texas—Just last Saturday, Daniel McCool was elected by the delegates of the Senate District 11 to be their representative on the Republican Party of Texas State Republican Executive Committee (SREC). Less than one week later, his family, friends, loved ones and fellow Republicans are gathering in prayer to remember a man who was taken from us much too quickly. Daniel died Friday evening of a sudden heart attack shortly after coming home from his shift working traffic control 

GP RENEWABLES & TRADING EXPECTS TO PURCHASE $15 MILLION IN OPERATING SOLAR PROJECTS IN NJ AND MD BEFORE YEAR’S END

Manhattan-based Energy Services Company Will Hit Reset on Stressed Solar Investments 

NEW YORK, NY (October 21, 2013) — GP Renewables & Trading (www.gprenew.com), a multifaceted energy services company, today announced its plan to acquire up to $15 million in operating commercial solar photovoltaic projects from system owners who took advantage of the 1603 Payments for Specified Energy Property in Lieu of Tax Credits before its expiration at the end of 2011. Its focus is projects in New Jersey and Maryland where the owners are struggling to recoup their investment.

“There are thousands of system owners in New Jersey and Maryland who have been negatively impacted by sharp SREC price declines and are now caught up managing complex activities to maintain the value of their investment,” said Gabriel Phillips, CEO of GP Renewables & Trading. “GP Renewables will purchase these commercial-scale solar projects, specifically in New Jersey and Maryland.” 

An incentives system, the Solar Renewable Energy Credit (SREC) program, helped encouraged thousands of solar installations in New Jersey and Maryland. Now, both states are experiencing a slowdown in SREC-related projects, and existing system owners are finding themselves below earlier levels of profitability. 

At the time they were introduced, the high value of SRECs was driven by aggressive state and local policy measures and penalty prices intended to spur solar development. In its earlier days, the program caused what many now refer to as the “solar gold rush.” 

“Faulty assumptions led many installers and investors to ignore the need for hedging their investments with SREC futures contracts,” added Phillips. “Projects were built predicated on 3 – 4 year payoffs, but the new reality is a 10 – 15 year period.” 

GP Renewables & Trading will acquire the investors’ equipment and sell the power back to the investor at a discounted rate through a Power Purchase Agreement. This allows current owners to recover an upfront payment on their solar investments along with locking in a discounted power price into the 10 to 20 year horizon. 

The purchase plan, however, constitutes a limited window for system owners. The federal 50% bonus depreciation for renewables under the “Modified Accelerated Cost Recovery System” in the Internal Revenue code is set to expire at the end of the year, at which point the value of purchasing a solar installation is likely to drop. At that point, according to Phillips, GP Renewables & Trading may not be able to offer as favorable prices to system owners.

Watch on thebuzzingbee93.tumblr.com

Watching old family home videos, and found this gem. Lord almighty! 😏😉🐴😰 @ktfran86 #bartles #eps #supermanthatstandard #ouch #jumpers #lastjump #katielaughs #srec #2007 #fall #fail #supermansaturday #naughtypony

day 6 » favorite moment

"I must know how you learned that Quentyn was abroad. Your brother went with Cletus Yronwood. Macster Kedry. and Srec of Lord Yronvvood’s best young knights on a long and perilous voyage, wim an uncertain welcome at its end. He has gone to bring us back our heart’s desire."
She narrowed her eves. “What is our heart’s desire?”
Vengeance.” His voice was soft, as if he were afraid that someone might be listening, “justice.”’ Prince Doran pressed the onyx dragon into her palm with his swollen, gouty’ fingers, and whispered. “Fire and blood.”

Watch on thebuzzingbee93.tumblr.com

Throwback to one of my first jumper shows with Bartles 🐴❤️☺️✨🌙💜
#2006 #oakridge #srec #tipperary #jodhs #shortboots #imayhaveforgottenthecourse #flying #ponyjumpers #damnthoseturns #eps #tbt #stirrupsaretoolong #trickyjumpoffs

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