Clear Skies Solar, Inc.(fka CSKH)

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N.J. solar energy boom's frantic pace could slow

Wednesday, April 20, 2011, 6:30 AM
By Eliot Caroom

The Star-Ledger The Star-Ledger



EDISON — Gray clouds covered Edison yesterday and rain drizzled onto a crowd celebrating the largest rooftop solar farm in the country.

There was hearty applause as politicians and businessmen lauded the 17-acre solar farm, which can generate more than 4 megawatts of energy, enough to power half the warehouse full of offices and industrial freezers.

"I would like to thank the state of New Jersey for policies that helped Avidan Management develop renewable energy," said Avi Avidan, head of the commercial real estate company.

Off the stage Avidan told another story: He isn’t sure whether to go ahead with two more solar projects.

The state is unquestionably a leader in solar energy — two more projects are planned that would beat the record set in Edison — but the industry’s period of exponential growth is bound to slow, industry insiders say.

New Jersey has seen a swift solar expansion in large part because of state rules that force power companies to either produce solar power or buy it on a market where companies like Avidan sell "SRECs," credits representing energy.

"Will the SREC values come down? Yes, they will come down," said Jamie Hahn, managing director of Solis Partners, a Manasquan company that designs solar panel systems for commercial clients. "It’s like taking the training wheels off a new industry."

Solar capacity in the state doubled last year and now totals 305 megawatts of power, enough for 45,000 households. That amounts to less than 1 percent of the electricity consumed in the state each year.

PSE&G has led the way, investing $140 million in its own solar projects.

Commercial landlord Hartz Mountain has 6 megawatts of rooftop panels and is starting an 8.5-megawatt project in Hamilton Township near the Turnpike.

Then there are smaller businesses getting a share of the action like Jersey Lanes in Linden, which is installing $550,000 worth of panels.

"We’re going to look at on average $4,000 to $5,000 a month of SREC income, which is considerable," said Jersey Lanes owner John Fatigati.

But as solar panels keep popping up, Fatigati and Avidan both worry that the solar credits will lose value.

For that reason, Avidan isn’t sure if he will go ahead with new solar projects.

"I am not as optimistic that I can make these two projects financially feasible as I did with this project," he said.

Douglas Kelly, a commercial mortgage banker who arranges financing for solar projects and worked with Avidan, agreed that SREC prices will go down, but said the industry can keep growing as long as both the state credits and a federal incentive for 30 percent of a project’s cost stay in place.

"It is not a bubble for the next eight months," Kelly said. "Next year, if there is no 30 percent incentive from the federal government, it’s a different story."

If the federal incentive remains, a drop in SREC prices will slow the burst of solar expansion, but won’t end it, according to Kevin Book, managing director at ClearView Energy Partners, a research analysis firm.

"That’s still a pretty hefty premium," Book said. "That is a very strong regulatory support for solar. It speaks to the fact that New Jersey is serious, or at least has been up to this point."

http://www.nj.com/business/index.ssf/2011/04/nj_solar_energy_booms_frantic.html