New Jersey’s generous solar renewable energy credit (SREC) program created such a boom in solar installations that the state surpassed California in new PV capacity during Q1 of 2012.
SRECs first reached the market in 2004, at about $160 (a SREC represents 1 megawatt-hour). Driven by an RPS solar carve-out target of 5,316 gigawatt-hours by 2026, utilities steadily bid up the market to an average of $616 in May, 2011, when the state had 311 megawatts of grid-connected PV capacity. A year later, capacity had reached 740 megawatts, significantly exceeding the interim target. The RPS SREC requirement for the year was 442,000, but the PV systems were theoretically capable of supplying upwards of 1 million (that is, 1 gigawatt-hour of solar electricity over the year).
The dramatic oversupply of SRECs led to a 75-percent drop in New Jersey SREC auction prices, from about $650 during most of 2011 to below $150 by May of 2012. As capacity neared interim RPS targets, utilities could see a ceiling on the number of SRECs they would need to buy in coming years.
The solar industry called on the state to raise that ceiling by raising the RPS, or bringing its interim targets up to earlier dates.
Last week, both houses of the state legislature passed – without debate – a compromise bill (S1925/A2966) accelerating RPS requirements by four years, and amending some of the SREC rules. Republican Governor Chris Christie, who endorsed the solar industry during his campaign, signed the bill on Monday.
In addition to the RPS expansion, the new regulations:
- Extend shelf life of a SREC from three years to five, giving SREC holders more flexibility to wait for better pricing.
- Reduces the solar alternative compliance payment (SACP), a fine levied on utilities unable to buy enough SRECs, to acknowledge the lower installed cost of PV.
- Creates incentives to build PV arrays on brownfields, and discourages them on productive farmland.
- Other provisions encourage aggregated net metering for public buildings and new transmission lines.
Also see this article.