When the New Jersey legislature passed its solar energy friendly legislation in 2001, it probably didn’t anticipate the just how successful the program would become. Home Power touts New Jersey as a solar super-state, second only to California in terms of installed capacity. In fact, New Jersey wins first place in terms of solar energy installations per capita. And its statewide daily average of 4.6 sun-peak hours proves once again that solar power works pretty much anywhere.
Like other “solar states,” New Jersey established ambitious goals to increase renewable energy. The State mandates that 22.5 percent of its electricity comes from renewable sources by 2021. The mandate also specifies that 2.12 percent must come from solar.
New Jersey’s policies and incentives for building a solar energy infrastructure have evolved over time. In 2001, when the program began there were six solar panels installed somewhere in the state, by the end of 2007 the number of solar installations exceeded 2,700 – with the bulk of installations occurring between 2004 and 2006.
The original legislation relied on a statewide tax to fund the program and offered generous benefits to participants. At the time of the program’s inception, residents could receive a one-time rebate of $5.50 per watt, or 70% of the cost for the installed system (whichever was lower) for systems no larger than 10 kilowatts. The state also had attractive net metering policies so property owners could gain revenue from any excess electricity they generated.
Perhaps it’s not surprising the program succeeded so well, with average electricity rates at about 5.5 cents per kilowatt hour in 2004 to a jump of 6.5 cents in 2005 (and then to 9.88 cents per kilowatt by 2007), many residents could not pass up the State’s generous offer.
Though over time the rebates were slightly reduced to keep pace with consumer demand, by the end of 2007 the state had essentially depleted its fund. Recognizing the need to restructure its incentives, New Jersey has adopted a new and still innovative policy to ensure solar energy infrastructure still grows within the state. Now New Jersey’s program will move from one where its upfront incentives were based on the capacity of the system installed to one that pays for energy produced by each system.
The new model, which will begin in earnest in 2009, relies on Solar Renewable Energy Certificates (SREC). One SREC will be issued for each 100 kilowatt hours of electricity generated. System owners can then sell or trade their SRECs to the utilities who can count these credits toward meeting the State’s renewable portfolio goal.
In the meantime the statewide tax will be reduced, though not entirely go away, and the rebate program phased out by 2012. New Jersey’s net metering policies are also being revised to complement the new initiatives. And in a separate, yet complementary, move the state’s largest utility PSE&G announced in October 2007 that it would lend nearly $100 million to customers who install solar photovoltaic systems which can be repaid with interest over 15 years.
It seems that the “Garden State” has added even more substance to its nickname – it’s not just about gardens, New Jersey has embraced arrays of solar gardens as well.