NJ reduces amount utilities pay when they cannot source enough solar

NJ reduces amount utilities pay when they cannot source enough solar New Jersey’s recent Energy Management Plan reduced the amount for the state’s Solar Alternative Compliance Payment—basically, what utilities must pay when they cannot source enough solar energy to meet the renewable portfolio standard.

In long markets, payments don’t happen anyway, according to former Board of Utilities’ Chief of Policy and Planning Lance Miller, so why did the governor include a reduction of payments in the adopted EMP?

“The SACP only comes into play if the market is short,” said Miller. “This is the most fundamental aspect of how solar is financed. This is the first energy year that we’ve gone from a short market to a long market. The SACP no longer has an influence on what people are paying.”

To protect ratepayers, a Solar Transition Group was formed by the BPU to address industry challenges. In support of these efforts, a Rutgers team of economists and environmental planners were in the process of doing a cost-benefit analysis. In fact, three of the four Electric Distribution Companies were taking a wait-and-see approach on the utility financing programs until the Rutgers’ analysis came in.

“The BPU was out holding solar transition stakeholder meetings to focus on these issues, and then the EMP comes out and answered the questions. Also, there’s been no cost-benefit analysis done to indicate that raising the RPS is a good thing to do,” said Miller.

According to Miller, a question needs to be raised.

“If the carve out is increased,” he said, “is that going to create a short market again?”

If the goal is to keep the cost low for ratepayers, Miller contends that the market needs to remain long. On the supply side, keeping the market long means the SACP doesn’t get factored into the bidding and selling prices. This savings gets passed along to ratepayers.

By increasing the solar carve out, the governor intends to influence the price of SRECs in the supply and demand cycle to stimulate investing. However, nobody knows where the data came form to drive the decision.

“The SREC trading data is all over the place. Some are valued at $100 and others at $600. The weighted average for October and November is $400,” said Miller.

For people that run their businesses on hard data, the numbers aren’t adding up just yet.