New Jersey remains one of the top 5 states in the country for Residential Solar Power, yet the market is in a transition period as the SREC 1, the original New Jersey SREC program, transitions into a yet to be defined new program for state incentives. New Jersey has been booming for residential solar power over the past decade. New Jersey this past month installed its 100,000th solar installation; a truly remarkable accomplishment.
The increase in solar capacity has been due in large part to New Jersey’s RPS, also known as the Renewable Energy Portfolio Standard. This is the renewable energy milestones that need to be reached according to state legislature along with the cooperation with the BPU (board of public utilities), and NJ’s Clean Energy Program. The money needed to pay for this renewable capacity comes largely from New Jersey’s ratepayer, which creates a difficult juggling act between hitting the state’s RPS and staying under the state’s “cost cap” which is the max that the cost to provide solar to New Jersey can be realized on a New Jersey customer’s bill.
Currently, the NJ SREC is set to stop once NJ hits 5.1% capacity. After this point, there will need to be a transition program until the next official program rolls out. At this point, one of the biggest struggles is defining when to stop submitting applications for SRECS. New Jersey solar giant, KDC (Kamine Development Company), wrote the legislation which calls for a stop to the SREC program at the “obtainment of 5.1%” of sales. This is, unfortunately, being misinterpreted by the state as being “installed.” Thankfully, MSEIA, New Jersey’s premier solar lobbying group, is working with New Jersey to adjust this understanding. The problem is, if they go to “installed” capacity then those who submitted for SRECs and are still in the queue will be completely out of luck and there is a very real chance of oversupply to the market. If the SREC market is oversupplied by even 1%, there is a risk for catastrophic failure and market crash. This is because the oversupply compounds year over year. For example, if the state is 101% of capacity in year 1, it will install 101%, and then next year still have a 1% overage with the 1% overage from the previous year carrying over making the new overage 102.2% according to the compounding principles.
It is not all scary for solar in New Jersey, it actually appears that sunny skies are ahead. According to MSEIA’s 4th Quarter 2018 member meeting, the BPU will act swiftly to introduce an SREC transition program, and it appears that stopping the 5.1% will occur according to the State’s solar pipeline, rather than the state’s solar capacity. Right now, MSEIA believes that state will hit the 5.1% capacity between December 2018 and March 2019. This can be a great sense of urgency for those considering Residential Solar Power in New Jersey. You may get a better Return on Investment and/or better economics on a solar loan or solar ppa by going solar now. Right now, the SREC program is a 10-year program with a “trade now” price of $211. According to MSEIA, the transition program will look something like 10-year SREC with a fixed price of $170. Still not so bad, considering the SREC market today can always experience some volatility. Installing residential solar power in NJ now or in 2019 means you still get SRECs and will get a chance to take advantage of the 30% solar tax credit in its final year.