New Jersey’s Public Service Electric and Gas Co. (PSE&G) is preparing to launch its Solar Loan III solicitations to support the development of 97.5 megawatts of commercial solar over the next two to three years. The program allows solar electric system owners to sign contracts for the solar renewable energy certificates (SRECs) their systems will produce over time.
"Solar remains a great investment in New Jersey because of the state's progressive financial incentives," said Jamie Hahn, principal of solar developer and integrator Solis Partners. "But the Solar Loan III program will revitalize the market for commercial solar in New Jersey by providing greater SREC market stability. As with many financial incentives, however, those who act fast will reap the biggest rewards."
Up for stake is a total of $193 million in the Solar Loan program, according to Solis. The company, which has worked with other companies to reap the benefits of PSE&G’s earlier Solar Loan programs, is urging companies to sign up now for the first-come, first-serve offering. Solis anticipates that PSE&G's first solicitation for the 10-year fixed price SRECs will be held in early October. “The companies that successfully file in the early rounds can expect to be awarded attractive [SREC] pricing,” Solis said.
The Solar Loan program increases the options for project financing, Hahn said.
"PSE&G's loan program provides an investment structure that hasn't been offered before and many believe it will be the key driver of future solar adoption in New Jersey over the next few years," he explained.
The program allows companies to pay for their PV systems by selling the SRECs at fixed prices. PSE&G is auctioning off the SRECs and Solis cautioned that the highest SREC prices will likely be awarded to earliest bidders.
"This new round of loans will mitigate the volatility by offering project owners fixed prices for the SRECs that the system produces over the 10-year term of the loan," Hahn added. "This significantly de-risks the investment by securing a key revenue stream, so now is the time for building owners and third-party investors who have debated the economic viability of solar assets in New Jersey to re-enter the market."
Since the SREC prices are guaranteed investors like banks or other financial institutions can be assured of a return on the investment, which makes it easier for them to choose to invest in solar, according to Solis.