Thursday July 16, 2009

In just a few short years, the Garden State has become the Sunshine State

BY JOE TYRRELL
NEWJERSEYNEWSROOM.COM

As Congress wrestles with national energy policies and gubernatorial candidates tout their plans here, New Jersey officials say the state deserves credit as a leader in promoting solar power.

In just a few years of coordinated efforts, New Jersey has gone from a non-factor to number two among the states in solar installations connected to the power grid. While far behind California, New Jersey currently generates about twice as many solar kilowatt hours as number three Colorado.

While applauding the gains, many in the industry also say the state, like the nation, has fallen well short of performance goals. New Jersey rose to the top of solar charts in a period when there was little competition from other states.

Now, as the federal government begins to pay attention to renewable energy, New Jersey is in the midst of a challenging transition away from an easy to understand program, which gave rebates to install solar power cells.

The new program shifts the focus away from consumers to utility companies and investors by creating a marketplace for renewable energy credits. The concept has its supporters, though many are more hopeful than confident.

Still, at a time when solar businesses believe the technology is on the verge of a belated boom in the United States, recent New Jersey statistics wowed some attendees at a recent industry conference in Philadelphia.

“Making this even more remarkable is that in 2001 New Jersey had only six” solar cell installations connected to the power grid, compared to more than 4,000 today, wrote Bob Haavind of Photovoltaics World.

His report can be viewed here.

During the session, the state’s top regulator, Board of Public Utilities President Jeanne Fox, proclaimed that when it comes to government policy, New Jersey is “the best place to do solar in the country.”

Around the country, many in solar trade groups and businesses credit New Jersey for showing what a small, partly cloudy state can do to grab its place in the sun.

“Obviously what they have been doing has worked,” said Monique Hanis, director of communications for the Solar Energy Industries Association in Washington, D.C.

“What makes New Jersey stand out is the specific language in the state’s energy master plan, calling for the generation of 2.1 percent of its electricity to be coming from solar in 2021,” said Neal Lurie, director of marketing and communications for the American Solar Energy Society of Boulder, Colo.

Closer to home, though, reactions are more muted.

The rebate program “came out of advocacy” by solar power proponents, “it was not a BPU idea,” said Delores Phillips, the society’s Mid-Atlantic executive director.

Even with improving technology and rising costs for fossil fuels, the cost of solar power remains higher than those dirtier energy sources. Solar advocates maintain other forms of energy benefit directly and indirectly from government subsidies, such as state funds to decommission nuclear facilities, or cleanups of coal ash landfills.

New Jersey’s small spurt of solar power materialized during a BPU rebate program that turned out to be too popular for the board’s limited financial commitment. The initial surge in applications eventually bogged down as the release of funds slowed.

So the board decided on an innovative approach, creating financial instruments, solar renewable energy credits, or SRECs. The idea is that investors buy credits from solar producers, each pegged to 1 megawatt of power. The investors help producers expand, while reaping benefits from energy sales to utilities.

“We’re all looking to see how it’s going to make out,” Hanis said.

Compared to the rebates, grants or tax credits offered elsewhere, New Jersey’s approach is more ambitious but “still a little bit vague for some people,” she said.

“It’s not really tried and tested,” Phillips said, adding it requires two inter-related factors to success.

To be attractive to investors, SRECs need to be based on reliable values, meaning utilities must contract for long-term power purchases, she said. To serve those utilities, the investments must finance enough power to meet their requirements for more clean power, she said.

Judged on that basis, “New Jersey’s program is good, but only half as good as they said it was going to be,” said Edward O’Brien, a partner in McConnell Energy Solutions of Wilmington, De. Last year, instead of a projected 90 megawatts of solar power, the state was at 45, the result of continuing uncertainty over credit values, he said.

The theory is simple, O’Brien said. While not completely supplanting the mom-and-pop approach to solar panels, securitizing the solar marketplace should put it on the same funding as other major energy sources.

“Why are you out putting solar panels up on your house, which is hard to do, instead of buying five kilowatts worth of solar power from some producer?” O’Brien said.

In practice, though, the SREC system “has not been fully thought out,” he said.

Added to the current recession, investors are cautious because of America’s patchwork of energy policies and regulations, which vary from state to state, O’Brien said. States have not helped by altering programs, he said.

“Every state is different, and every state has a bait-and-switch,” O’Brien said.

Still, he is optimistic that New Jersey will regain its momentum, and others in the field view the problems as a hiccough in the growth of solar power.

In the short-run, “there could be a shake-out” during the transition from rebates, said Rick Brooke of Jersey Solar in Hopewell. But 25 years in the business and a number of false dawns, this opportunity looks golden.

As long as the state SREC market allows small systems to participate, people who installed solar panels on the roofs of their homes or businesses still have a chance to participate, Brooke said.

Moreover, people in the industry are expecting good things from the energy bill making its way through Congress. Nearby states have launched incentive programs, whether inspired by New Jersey or California, which has roughly two-thirds of the nation’s grid-connected solar systems, Brooke said.

“It’s a good time to be in the business,” he said. “The state is committed to it, they have goals. People are moving ahead with it. Before, the interest came and went, but now it’s here.”

Rebates and SRECs are not the only way to support the growth of solar power. This month, Gov. Jon Corzine and Republican challenger Chris Christie each highlighted their support for renewable energy.

Democrat Corzine was able to announce the availability $20 million in federal grants for projects at public institutions in the state. Christie promised to create a new agency to promote clean energy technology and jobs, and would remove those functions from the BPU.

The Republican’s approach seemingly echoes Phillips’ complaints about the board’s “antiquated” procedures and primary purpose to regulate rates. But she said members of her association “were very underwhelmed by Chris Christie’s plan,” because it looks at the big picture and avoids the nitty-gritty.

While the Corzine Administration has set laudable goals for increasing clean energy, Phillips said most of the growth in solar power can be traced to his predecessor, former Gov. Jim McGreevey. There’s been “some stagnation” in state efforts since then, she said.

“Everybody likes to talk about clean energy job creation, but nobody explains how they’re going to do it,” she said.

Whether the New Jersey approach catches on remains uncertain. Around the nation, some communities are coming up with their own answers. Many solar advocates are looking beyond America to more successful programs abroad.

For more information on state incentives for renewable energy, visit njcleanenergy.com.

Our Perspective:

NJ has made great strides to join the alternative energy evolution. Not to say it is perfect, but for the first time people can see an acceleraed return on their investment that makes sense.

Rebates for systems under 5okw and the REC program has allowed funding to help underwrite these investments. Add the Federal incentives of a 30% tax credit and accelerated depreciation and the market is positioned to take off.

Would you like to know more? Contact us 856-857-1230 or email george@hbsadvantage.com.

We can provide an overview of your return on investment and help to develop the opportunity and make it become a reality.

Visit us on the web www.hutchinsonbusinesssolutions.com

HARRISBURG – Pennsylvania’s long-stalled solar-rebate program for homeowners and small businesses will soon have funding – an infusion of cash that could result in the creation of scores of “green” jobs.

The Commonwealth Financing Authority board voted unanimously yesterday to borrow $30 million to get the Pennsylvania Sunshine Program under way.

Enacted in July as part of Gov. Rendell’s $650 million Alternative Energy Funding Act, Sunshine is expected to provide rebates of 35 percent to help cover the cost of buying solar-power systems.

“Time is of the essence,” said George Cornelius, chairman of the seven-member authority board and the state’s acting secretary of community and economic development.

The DEPartment of Environmental Protection, which will administer the Sunshine Program, expects rebate applications to be available within two weeks.

“We think this is the front edge of a huge development of renewable energy in Pennsylvania,” said Dan Griffiths, deputy secretary at the DEP.

Those are inspiring words to Jeremy Klotz, 44, of South Philadelphia, who traveled to the state capital yesterday along with 30 other solar contractors to urge the authority to approve funding for Sunshine.

Klotz was laid off three weeks ago from a solar company that had hired him months ago in anticipation of Sunshine funds that never came.

Solar-contracting companies throughout the state had hundreds of thousands of dollars in installation jobs and planned hires on hold because homeowners and small businesses were reluctant to commit to solar projects without assurance that state help to offset the cost was, indeed, on the way. An average 5-kilowatt residential system costs $35,000 to $40,000.

“If this [funding] had passed, I might be working right now,” Klotz told the authority board prior to yesterday’s vote.

A quick polling of his colleagues in the audience revealed at least 350 installation projects on hold because of uncertainty over when – if ever – Sunshine funds would become available, Ron Celentano, a principal with Celentano Energy Services in Wyndmoor, told the authority board.

 

‘Dire need’

“We are in dire need of this money,” said Celentano, who is also vice president of the Mid-Atlantic Solar Energy Industries Association.

Rising from the back row, a soft-spoken Wes Checkeye, a 24-year-old part-time solar installer at Heat Shed Inc. near Quakertown, told the board he was “looking forward to a solar future – if that’s possible.”

In all, the legislature allotted $100 million for Sunshine. The Commonwealth Financing Authority, an independent agency established to administer Pennsylvania’s stimulus packages, anticipates issuing a number of bonds over the next few years to fund the Sunshine program entirely, as well as other alternative-energy programs the state intends to launch.

The authority intends to go to market to finance Sunshine’s first funding infusion the first week of May, said executive director Scott Dunkelberger.

 

‘All those green jobs’

That was a good-enough assurance for Kira Costanza of Collegeville-based Sunpower Builders, which has about 40 contracts with potential customers sitting in a drawer and about a half-dozen planned hires that have been in limbo.

“We’re thrilled,” Costanza said of yesterday’s funding vote. “This is going to create all of those green jobs everybody’s been talking about.”

Within a month, that will mean the rehiring of an administrative assistant, an electrician, and a plumber at Open Sky Energy Systems in Swarthmore, said Michael Matotek, chief operating officer.

The company was formed a month or two after the legislature approved the Sunshine program. With rebates still unavailable by January, Matotek said, “we had to let everybody go.”

After the vote, he told Klotz he’d like him to consider working at Open Sky.

Said an elated Klotz: “I’m going to go celebrate my daughter’s 13th birthday.”

Our perspective:

The long awaited door has been opened. Governor Rendell approved this measure in July 2008, from there it had to be defined.

This is a small but necessary steps. The bill is designed for residential and small businesses. It will not prove to be the be all…end all.

PA has to take significant steps if it wishes to jump start a program needed to address the growing demand for energy. We are faced with a dilemna. Demand is growing   1 1/2% a year. We are unable to meet this growing demand in the next 8 to 10 years with our existing facilities.

I do not believe that people will accept rolling brown outs as a possible solution to meeting this growing demand. Incentives are needed to open the gates to larger facilities / businesses. Providing a ROI that will not only make sense but also allow us to meet this demand.

Let us know your thoughts?

Should you be interested in knowing more of how to set up the proper financial structure needed to take advantage of Federal and State Incentives…email george@hbsadvantage.com