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By: Henry T. Chou, Esq.
The New Jersey Legislature is set to introduce a bill that aims to stablize the state’s solar industry, which has been in free fall since early summer. Assemblyman Upendra Chivakula (D-Middlesex) expects to introduce a bill in the lame duck session that would halt the precipitous drop of prices for solar renewable energy certificates (SRECs), which is a major mechanism for financing photovoltaic (PV) systems in New Jersey.
In recent years, New Jersey’s SREC program was a major driver of solar projects, propelling New Jersey to the nation’s number two position for solar capacity, behind only California. However, the rush to develop solar projects has also led to an oversupply of SRECs, which has caused SRECs to lose half their value since June 2011. As a result of the SREC market crash, many domestic and foreign investors have abandoned their solar projects and/or agreements to pursue solar projects.
Chivakula’s bill proposes to increase the Renewable Energy Portfolio Standard (RPS), which is the percentage of total electricity that power companies must generate from renewable energy sources. An increase in the RPS would compel power companies to buy more SRECs, a move that would address the current oversupply and increase SREC prices to levels that will once again spur solar development.
The proposed bill has the backing many stakeholders, including the solar industry and an advisory group to the New Jersey Board of Public Utilities. Chivakula anticipates introducing the bill in mid-November 2011.