Bill 4226, sponsored by Assemblyman Upendra Chivakula (District 17), and Assemblyman Daniel Benson (District 14), is not a “devil in the details” approach to keeping the N.J. solar market thriving. Introduced in November 2011, it clearly states the economic levers needed to turn a long market into a short one. This bill could place the risk back on ratepayers.

SREC requirements in the current RPS rise twenty percent a year through 2027, if the state meets or exceeds solar requirements for three consecutive years and SREC prices decline in those years. Bill 4226 proposes to reduce three years to one. The compliance year would be 2013.

A primary solar investor in N.J. with twenty-four solar plants is Public Service Electric and Gas Company (PSE&G). They are one of four Energy Distribution Companies in N.J. Unlike the others, they own their factors of production. With no long-term SREC purchase contracts on their books, PSE&G prefers long markets to keep downward pressure on SRECs.

“When the SREC market is long, this directly affects what we can do for ratepayers,” said Al Matos, PSE&G’s Vice President of Renewables and Energy Solutions. “Regardless of the outcome, we look forward to working with the bill’s sponsor and the solar industry to craft a proposal that will support a strong solar market in N.J.”

PSE&G planned early on to lower their risk by building and owning their factors of solar production. In 2009, the Board of Public Utilities (BPU) approved their Solar 4 All program. The remaining investor-owned Energy Distribution Companies, Atlantic City Electric (ACE), Jersey Central Power and Light (JCP&L), and Rockland Electric Company (RECO), were mandated by the BPU to offer ten-fifteen year SREC purchase contracts to solar system owners.

“We didn’t want that type of liability on the books,” said Matos.

Lower prices on SRECs mean Energy Distribution Companies (EDC) could pass savings off to ratepayers, but that’s not so for EDCs with long term SREC purchase contracts. They’re vulnerable to short and long market fluctuations. This risk is passed along to ratepayers.

In early 2008, PSE&G stakeholders met to discuss inevitable economic and environmental forces headed their way through the Energy Master Plan.

“There were specific areas we needed to address, and we wanted to do this in a very transparent way for ratepayers,” said Matos. “We drafted the Solar 4 All Program and presented it to the Board of Public Utilities.”

PSE&G made strategic use of their own brownfields to build solar plants. Their intention is to continue building on underutilized land through the Solar 4 All program to reach an agreed eighty-megawatt goal by 2013. By the way, they’re interest in extending the program.