Law News Alerts - The Story

May 2012 - Solar Energy Update – Pending Legislation

CONTACT:

Angelo J. Bolcato, Esq.

New Jersey’s solar energy industry received a boost last week when the New Jersey Senate Environment and Energy Committee approved an amended version of S1925.

One of the main purposes behind the legislation is to prop up the sagging price of Solar Renewable Energy Credits, which in recent months have dropped below $100 and are currently trading around $150.   The current law pegs the solar renewable energy portfolio at a specific number of gigawatt hours which must be generated through solar energy. The proposed law provides that the solar renewable portfolio is to be determined as a percentage of the total kilowatt hours of electricity sold in New Jersey. Initial estimates reflect if the law is adopted that the number of SRECs required to be purchased by electric power suppliers will increase dramatically from 2014 through 2022.

 The proposed legislation also reduces the Solar Alternative Compliance Payment (“SACP”), which is a penalty that electric power suppliers must pay if they do not purchase or generate the required level of solar energy, from $625 in 2014 to $325 and drops each year until 2028 when the SACP will be $228. The SACP essentially serves as a ceiling for SREC prices since if the cost for an SREC exceeds the SACP it is anticipated that the electric power suppliers will pay the SACP rather than pay the higher SREC price.

 The bill also proposes to extend the life of an SREC from 3 to 5 years.

At this point the bill will proceed to a second reading in the Senate. We will continue to monitor S1925 and provide you with updates on this legislation as well as other issues involving solar energy in New Jersey.