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The future of solar in New Jersey is looking very bright. The state solar program has been generating investments. We’re taking a look at the future of solar in New Jersey.
By: Keith Peltzman, President of Independence Solar
The New Jersey state solar program stimulates approximately $1 billion of investment annually. This level of investment is supported by the trading of SRECs (Solar Renewable Energy Certificates) mandated by the state RPS (Renewable Portfolio Standard). Although this mechanism has driven a stable level of investment over the last 10 years, there is always an underpinning of a potential crash in SREC prices due to oversupply – as occurred briefly in 2012.
In order to protect against future volatility in the SREC market, the solar industry in NJ is working on two new state programs to ensure the stability of the solar markets for the next 15 years:
1. Transition Program (2018-2021)
2. Long-Term Successor Program (2021-2033)
1. TRANSITION PROGRAM (2018-2021)
The transition program is structured to ensure that the SREC remains stable over the next three years while a longer-term successor program is enacted. This transitional program (Senate Bill S-592) has not yet passed, but key provisions include:
- Increasing the solar requirement from 3.5% to 5.3% (2021) to ensure stable SREC values
- Reducing the lifetime of an SREC from 15 years to 10 years
- Phasing-out SRECs for projects after June 2021
- Reducing the maximum ceiling price of SRECs
- Requiring a deposit of $40/kW upon SREC application to help the state maintain market balance
2. LONG-TERM SUCCESSOR PROGRAM (2021-2033)
Solar stakeholders in NJ are exploring options for a long-term successor program to replace the existing RPS/SREC mechanism. The goal would be to continue to stimulate long-term investment in solar energy with a stable incentive, while minimizing the impact to NJ residents and businesses. Most of these options are already being implemented by other states – such as MA, NY, CA, CT. Over the next two years, NJ can observe how these state programs perform and can adopt successful aspects of each program. Some options that are currently being considered include:
- SREC II (5-year SREC with segment factoring/adders)
- Tariff (fixed payment by segments for 20 years)
- Block Grant (capacity based payments)
- Reverse-Auctions (project bids on their incentive)
The long-term successor program will have a significant impact on the viability of a solar energy economy in the state of NJ. The niches for solar energy development may differ significantly from today. For example, there may be greater opportunity for larger utility-scale projects on farmland and landfills, for shared community solar projects on ancillary land or for pairing solar with battery storage. If you are considering solar in New Jersey, please connect with an experienced solar partner like Independence Solar who can help navigate the future of solar energy in New Jersey.
President & Founder
1008 Astoria Boulevard
Cherry Hill, NJ 08003
Keith Peltzman is president and founder of Independence Solar with offices in Cherry Hill, NJ and Boston, MA.
Independence Solar is a turnkey installer of commercial solar energy. Since 2007, the team has developed and built over $200 million of solar projects, including the largest rooftop solar array (9 MW) in North America at the Gloucester Marine Terminal in NJ. Independence Solar forges long-term partnerships to maximize returns on our customers’ solar energy investments.
Commercial solar installations have no moving parts and require little maintenance. Unlike major mechanical systems, there is no replacing lubricants, inspecting fan belts or cleaning fuel tanks. Does this mean that solar requires no ongoing attention? No, it is critical that your commercial solar installation receive ongoing attention on a regular basis.
There are many reasons to have an experienced solar company maintain your existing commercial solar installation:
2. Preventative Maintenance
Commercial solar installations are generally safe and have redundant safety systems in-place. However, a regular inspection would identify any failing conditions. These failures could include blown fuses, overheated terminations, worn wires and separated connections. Electrical equipment that is compromised can cause arcing, heat or fire and should be corrected immediately.
In many cases, catastrophic system failures will present warning signs in advance. A regular, proactive solar inspection can identify potentially dangerous conditions and prevent future failures. Experienced commercial solar technicians would look for indications such as loose or dangling connections, solar panel “hot spots”, moisture infiltration and stressed wires. By correcting these warning signs proactively, you may be able to prevent safety
hazards in the future.
A regular inspection could also ensure that your commercial solar installation is maximizing output. Typically, most solar owners believe that their installation is operating at peak, but it hard to know for certain. With many monitoring applications, the solar output is captured at a high-level and minor system under performance is lost. Commercial solar installations may suffer from minor losses caused by panel-level issues such as bypass diodes, “snail trails”, degradation or soiling. In addition, inverters or combiner boxes may have issues that are not obvious when monitoring at a system-wide level. The cost of a regular solar review is easily recouped by correcting these under performance issues.
Commercial Solar Installation Maintenance Checklist
A regular solar inspection should include a thorough review of all system components and should be performed at least on an annual basis. Some key items on the inspection checklist would include:
1. Visual Inspection
• Check racking, ballast, wires, connectors
2. Electrical Inspection
• Check electrical readings at all termination points
3. IR Scan
• Check for signs of heat on modules, terminations and electrical gear
4. Torque Check
• Check hardware for loose or failing fasteners
5. IV Curve Trace
• Check module strings for actual vs. expected performance
• Inspect for excessive dirt and debris and replace/clean air filters
7. Corrective Plan
• Summarize findings to establish baseline and provide recommended action plan
Solar is generally a low-maintenance investment, but a proper maintenance plan is essential to safe operations. In addition, regular inspections can ensure that your solar installation maximizes its electricity yield. This will increase not only the savings to your bottom line, but also help increase the carbon savings for our planet.
President & Founder
1008 Astoria Boulevard
Cherry Hill, NJ 08003
Keith Peltzman is president and founder of Independence Solar with offices in Cherry Hill, NJ and Boston, MA. Independence Solar is a turnkey installer of commercial solar energy. Since 2007, the team has developed and built over $200 million of solar projects, including the largest rooftop solar array (9 MW) in North America at the Gloucester Marine Terminal in NJ. Independence Solar forges long-term partnerships to maximize returns on our customers’ solar energy investments.
This article explores the solar resurgence in New Jersey based on SREC prices and increased financing opportunities. Special thanks to Keith Peltzman, President of Independence Solar for writing this article for Wolf Commercial Real Estate.
The economic return for solar energy in NJ has experienced cycles of highs and lows. Currently, the NJ state incentive for solar (the SREC), is at a 4-year high – approaching almost $300. At this SREC value, the annual return on investment (ROI) for solar is 15 – 25%. In addition, sophisticated new financing structures allow for solar with no upfront cost that can generate $2 per square foot in incremental operating income. With high SREC values and financing, solar is experiencing a resurgence in NJ. If you own property or are a tenant, this would be the ideal time to review the numbers for solar energy at your property. There are now almost 50,000 solar installations in NJ and many of your neighbors are already reaping these financial benefits.
Top reasons for solar resurgence in New Jersey:
A) SREC Pricing
Due to an undersupply of solar projects in NJ in 2015, the SREC price has increased above $200 and has even recently approached $300. In addition, long-term SREC pricing can be secured via forward contracts for 3-10 years. This strategy removes long-term SREC pricing volatility from a solar investment and supports financing. This chart illustrates recent trends in NJ SREC pricing:
B) Financing Structures
There are now multiple financing structures that allow for solar with no upfront investment. With financing in place, solar generates net positive operating income from day one. In many cases, solar would create $2 per square foot in incremental operating income after debt repayment. Some of these financing structures are outlined below. The most appropriate structure will be a function of your:
1) tax position and 2) balance sheet and credit. I would recommend consulting with an experienced commercial solar company and your tax advisor to determine which approach would make the most sense.
1. Line of Credit
• Leverage existing banking relationship
• 3-5% interest rate
• Minimal fees
2. Project-Specific Loan
• Create new solar-specific LLC
• No recourse back to company
• Tax benefits accrue
• Cash flows of solar project support debt payments
• 5-8% interest rate
3. Operating / Tax Lease
• If unable to monetize tax credits
• Lender absorbs tax benefits
• Borrow 100%, but repay only 60 – 70%
4. 3rd-Party Ownership (“PPA”)
•Investor owns solar on your property
•In return, receive rent or discounted price for electricity
•10-20 year contract to purchase solar electricity (“PPA”)
For more information on the solar resurgence in New Jersey, please contact:
Keith Peltzman President & Founder
1008 Astoria Boulevard
Cherry Hill, NJ 08003
About Independence Solar
Keith Peltzman is president and founder of Independence Solar with offices in Cherry Hill, NJ and Boston, MA. Independence Solar is a turnkey installer of commercial solar energy. Since 2007, the team has developed and built over $200 million of solar projects, including the largest rooftop solar array (9 MW) in North America at the Gloucester Marine Terminal in NJ. Independence Solar forges long-term partnerships to maximize returns on our customers’ solar energy investments. Keith Peltzman President & Founder 1008 Astoria Boulevard Suite E Cherry Hill, NJ 08003 856.393.1250