After months of controversy, a bill to promote grid-scale solar projects in New Jersey, while at the same time aiming to rein in costs to ratepayers who foot the bill, has won final approval from the Legislature.
In the end, the legislation, now on Gov. Phil Murphy’s desk, succeeded in the former goal, but fell short on the latter, increasing annual costs of subsidizing solar projects from $750 million to $1.2 billion per year to utility customers, according to critics.
The bill also effectively eliminates a cap that lawmakers instituted just two years ago aimed at reducing excessive subsidies paid by utility customers to solar developers for many years, said New Jersey Division of Rate Counsel Director Stefanie Brand.
For the solar industry, it’s a time of turmoil.
The two-year-old Clean Energy Act also required the New Jersey Board of Utilities to scrap its decade-old program of financing solar installations in the state. The agency is preparing a solar successor program, expected to be adopted as early as this month.
Developers complain incentives are too low
But many in the solar energy sector say the proposed incentives in the solar successor program are too low to continue a robust solar industry in New Jersey, which currently employs more than 6,000 workers.
The turmoil illustrates the conflicts and competing state goals confronting the Murphy administration as it pushes initiatives that will advance its goal of transitioning New Jersey to 100% clean energy by 2050 — at an affordable cost to ratepayers, already paying some of the highest electric bills in the country.
Solar energy is projected to provide 34% of the state’s electricity by mid-century; currently it provides only 5% of the state’s energy load, at a cost of $750 million to ratepayers.
‘We have to be smart consumers’
“We believe that if we are going to achieve our clean energy goals, we have to be smart consumers and not overpay for any single portion of our clean energy economy,’’ Brand said last week in a letter to the Senate before it approved the bill (A-4554) Wednesday in a 24-12 vote. There was no debate.
The legislation, initiated by Sen. Bob Smith (D-Middlesex), chairman of the Senate Environment and Energy Committee, had been heavily lobbied for by environmentalists and solar developers, who backed it largely because it encouraged lower, cost-effective, grid-scale solar projects to advance more easily.
Because of economies of scale, grid-scale projects generate electricity at a much lower cost than residential solar installations and other types of solar projects in New Jersey, like solar carports and rooftops. The state is looking to build 900 megawatts of solar power by 2030.
“It is a great start,’’ said Fred DeSanti, executive director of the New Jersey Solar Energy Coalition. “It opens the door for us to do good things with grid-based solar.’’
Conservation groups criticize
But some conservation groups opposed opening up some of New Jersey’s prime farmland —about 4,000 acres — to potential conversion to solar farms. They also were not happy with the elimination of the cap.
“We will not meet our clean energy goals if we don’t do it in an affordable way,’’ said Tom Gilbert, campaign director of the New Jersey Conservation Foundation and ReThink Energy NJ.
Smith, however, praised the resulting bill. “Everyone got sensible,’’ he said of the bill, which came before his committee on two occasions. “We made a lot of progress.’’
As for criticism the legislation will increase costs to ratepayers, Smith, a sponsor, said there will be processes to mitigate the costs of solar. Even so, he argued, “in this situation, pay me now or pay me later.’’ The costs of funding cleaner sources of energy are far less now than if the state waits to address climate change mitigation, he said.
Combining farming with solar
The legislation was amended to allow up to 200 acres of dual farming — a pilot policy that allows farming to continue on agricultural land along with solar installations. The state’s budget provides $2 million to study the so-called, dual-use approach.
“This may be the future of farming for the agricultural sector,’’ Smith said. Also, it would prevent farmland from being converted to warehouses, a policy that is attracting more controversy throughout New Jersey.
This summer, Smith said he plans to work on legislation to promote more solar power systems on rooftops of existing warehouses.