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Market for solar credits dips across Mercer region

Published: Sunday, October 16, 2011, 7:00 AM
Erin Duffy/The Times By Erin Duffy/The Times
http://www.nj.com/mercer/index.ssf/2011/10/market_for_solar_credits_down.html


The new rooftop solar panel system at Grace Cathedral Fellowship Ministried church on Southard St. in Trenton, N.J. Wednesday, April 8, 2009. The church estimates that the solar system will supply 3/4 of their needs and be paid off in 6 years.

From farmland and fields to the roofs of schools, churches and big corporations, solar panels seem to be cropping up everywhere.

But the boom of the last two years comes with a price — a recent drop in demand and value for solar energy credits.

The market for solar credits promised a whole new source of revenue for solar users and contributed to decisions to invest in solar, but the market value of these credits has plummeted.

“Overall New Jersey has a very strong growth rate for solar and it goes out for 15 years,” said Michael Flett, president of energy brokerage and exchange firm Flett Exchange. “It’s just in the short term too many people put solar in too quickly.”

Solar Renewable Energy Credits, known as SRECs, were fetching prices as high as $680 one year ago. In August, prices fell to a low of $151, though they bounced back to $220 per credit late last week.

Bolstered by state and federal incentives for renewable energy projects, there are now 10,000 solar installations across the state providing close to 400 megawatts of power.

In Mercer County, few have been able to resist jumping on the solar bandwagon.

Crystalline panels have shown up on light poles, warehouses, parking lots and on the roofs of churches including Grace Cathedral Fellowship Ministries in Ewing and Shiloh Baptist Church in Trenton.

In the past, the Lawrence school district has sold credits from its 5,300 rooftop panels for as much as $660 a pop, for a total of $1 million in one year.

But even as officials and environmentalists extol the virtues of clean, sustainable solar energy, falling SREC prices could pose a problem.

“We’re in a crash,” Lyle Rawlings of the Mid-Atlantic Solar Energy Industry Association said at a state hearing on the solar energy market last month. “If a market crash is allowed, all of the people who invested in good faith are feeling a lot of pain.”

For every 1,000 kilowatt hours that solar panels produce, one SREC is received. One-thousand kilowatt hours equals about two-thirds of the monthly electricity needs of the average New Jersey household.

Those SREC certificates are then sold on the open market, usually to energy providers.
The sale of SRECs usually provides extra revenue to residents, schools, municipalities — any organization that installs solar panels. The money is also used to pay down the cost of installing the costly solar panels.

In the Robbinsville school district, a solar project that would have included roof repairs has been scrapped due to the deflating solar market. An energy provider was set to install thousands of panels on the roofs of district schools and to repair the roofs of Sharon Elementary School and Pond Road Middle School at no cost to the school system. But the developer backed out as the market for SRECs slowed, and the school will now have to pay for the repairs itself, including at least $419,000 for the Sharon School roof, according to published reports.

“Our project did fall apart and we were impacted by the market,” said Robbinsville Superintendent Steven Mayer.

Others involved with solar projects are confident the market will stabilize in coming months.

Phillip Miller is executive director at the Mercer County Improvement Authority, which is financing $29 million for a 43-acre solar site at Mercer County Community College’s West Windsor campus. The 10-megawatt facility should produce up to 70 percent of the college’s energy needs.

Declining prices for SRECs shouldn’t hurt the MCIA or the college, Miller said. The energy provider, SunLight General Capital and Power Partners, will pay the MCIA back through the sale of SRECs and electricity.

And while the market may be down temporarily, the college’s solar farm isn’t set to be completed until 2012, and the developer is signed on for a 15-year power-purchase agreement.

Miller said some projects around the state may not go online, and that will allow the market to adjust. “The project we’re looking at won’t be finished ’til 2012, which will be a whole new energy year anyway,” he added.

The West Windsor-Plainsboro Regional School District has been waiting for state approval to hold a referendum on a $6.4 million bond issue to install solar panels on seven school roofs. With $7.5 million in federal Clean Renewable Energy Bonds on the line, the school district is still waiting for the state to sign off on the referendum.

In the meantime, the district did receive $576,000 in rebates recently for a previous solar project involving arrays on two high school roofs.

“That’s very nice and kind of takes the edge off the conversation of these SRECs running at $200 plus when last year they were running at $650,” said Larry Shanok, the district’s assistant superintendent for finance.

The state Board of Public Utilities last month held a meeting on the state of the solar market, and Flett, the energy broker with Flett Exchange, said help stabilizing energy credit prices could come from the board or the state Legislature.

Several ideas were floated at the meeting. Officials from the Solar Alliance, a solar trade group, for example, wanted longer-term contracts for credits that could give financiers greater confidence to invest.

The state’s own renewable energy plan sets certain benchmarks in place for the next 15 years, giving the market plenty of time to smooth out, some analysts say.