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The Future of Solar in New Jersey

The Future of Solar in New JerseyThe 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.

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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)

The Future of Solar in New Jersey

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.

Keith Peltzman

Keith Peltzman
President & Founder
1008 Astoria Boulevard
Suite E
Cherry Hill, NJ 08003
856.393.1250

 

About Us

Independence SolarKeith 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.

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Top 5 Challenges of Commercial Industrial Solar Energy

Commercial Industrial Solar EnergyCommercial Industrial Solar Energy is a great solution for many businesses. Many are taking advantage of commercial industrial solar energy however, there are some issues to be considered.

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Thousands of commercial and industrial business owners have already installed solar energy and are enjoying the benefits of free energy from the sun, but that doesn’t mean solar is an easy solution for every building. There may be challenges inherent in the rent roll of tenants, or even in the physical structure of the building itself.

Below, we summarize the top five challenges to commercial solar projects that we see most often. In most cases, these challenges can be overcome – either by aligning landlord and tenant incentives, designing creative engineering solutions, or structuring financing and tax incentives.

Commercial Industrial Solar Energy Challenges

1. LANDLORD-TENANT ALIGNMENT
While not a problem for owner-occupied buildings, issues sometimes arise with landlord-owned properties. For example, a landlord might be interested in commercial industrial solar energy, but their tenant controls the electric meter in their name and pays directly for electricity. The landlord has little incentive to invest in a benefit accruing only to the tenant. A solution would be for the landlord to own the solar and sell the electricity back to the tenant. But, even this structure could be risky, if the tenant’s lease expires within the next 1-3 years. Conversely, a tenant on a decades-long lease may prefer to own the solar panels outright, but the landlord may not see the benefit, or has concerns about installing solar on their roof. In other cases, a flex building might be ideal for solar energy, but the building has dozens of tenants, each with their own electric meter and various lease terms/ expirations. In each of these scenarios, creative structures can allow for solar and produce incremental benefits for both landlord and tenants.

2. ELECTRICAL LOAD
Many industrial buildings have large rooftops capable of accommodating extensive solar energy installations. In general, however, commercial industrial solar energy is limited in sizing to offset the annual electric bill on the metered account within the building. Large industrial buildings often serve as warehouses without the electric bills that accompany heating, cooling and industrial processing, thus capping the size of a potential solar installation. To leverage solar energy, it might make sense to convert gas or propane equipment to electrical equipment. In other cases, it may be worthwhile to fill a large rooftop with solar panels and re-direct the electricity not to the building, but directly onto the grid.

3. ROOF AGE
Solar panels are warranted for 25 years and last 30-40 years. This timeline may present problems if not aligned with the age of the underlying roof. If solar panels are installed and the roof then needs to be replaced, the building will incur incremental expenses to remove the solar panels, replace the roof and then re-install the solar. For any roof less than 5 years old, the remaining lifetime of the roof lines up perfectly with the lifetime of the solar installation, so this is not a problem. Conversely, for any roof 15-25 years old, it can be more cost-effective to replace the roof in conjunction with a solar
panel installation. In some cases, it may make sense to accelerate a planned roof replacement by a few years in order to undertake a solar installation sooner. When installing solar on a roof, it is critical that your solar installer and roofer work together to integrate the two systems.

4. STRUCTURAL
On the East Coast, rooftop solar is mostly secured by ballast and not attached to the roof with penetrations. Solar panels will add some additional weight on a building – generally 3-6 psf. Many buildings are built to withstand this additional weight, however it is critical that a qualified structural engineer inspect a building to determine its structural capacity. Many pre-fabricated “Butler-style” buildings were not built with much incremental capacity and should be carefully analyzed. Solar can be engineered to minimize its weight and work within the constraints of the building.

5. CAPITAL
Business owners have many competing uses for their capital, and there are always internal needs of the core business – both operating and growth. Solar can offer returns that exceed investments in core operations, but solar is still considered a “nice to have” rather than a “must have.” To address this issue, the solar industry has created financing structures that are recourse to the solar project only. These structures are non-recourse to a company or its balance sheet and have no impact on a company’s ability to borrow or use funds for core operations. In many cases, lenders prefer a solar investment because it is less risky than core operations and it improves the financial stability of their borrowers. A good solar installer should not steer you to their preferred financing structure, but rather help you explore the many solar financing options available to your company.


Keith Peltzman
President & Founder
1008 Astoria Boulevard
Suite E
Cherry Hill, NJ 08003
856.393.1250

 

 

ABOUT US
independence solarKeith 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.

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New Jersey Outlook for Commercial Solar in 2017

nj-commercial-solarAs we look towards 2017 in New Jersey, we are confident that commercial solar will continue to generate strong returns for landlords. In New Jersey, over 5,000 commercial properties have already adopted solar energy. Many more commercial property owners have considered solar energy. In addition, solar can help to differentiate a property and retain or attract tenants.

Reasons to be Optimistic about NJ Commercial Solar

1. Costs are Down
2. 30% ITC was Extended
3. Depreciation (Bonus MACRS) was Extended
4. SREC is Stable
5. Safety is Improved

1) COSTS
Solar panel costs have declined 30% – in just the last 12 months. As the global solar manufacturing industry grows, manufacturing improvements and scale efficiencies continue to drive down the cost of a solar panel. If you received a quote for a commercial solar installation more than 6 months ago, it might be time to refresh that quote.

2) 30% ITC
The ITC or Investment Tax Credit is a 30% tax credit on the cost of a commercial solar project. So, if a solar project costs $1 million, then you are entitled to a tax credit of $300,000. This credit is not a deduction, but is a full credit against tax liability due to the IRS. The 30% ITC was extended by Congress in December 2015 and now extends through December 31, 2019.

3) DEPRECIATION (BONUS MACRS)
In addition to the 30% ITC, the IRS allows an accelerated depreciation schedule for solar – almost 70% of the project cost can be deducted in the first two years. Solar projects completed in 2017 still qualify for this 50% bonus. This benefit was extended by Congress in 2015 and greatly enhances the tax advantages from a solar installation.

4) SREC
The SREC is another source of income from a commercial solar project. The value of the NJ SRECs (Solar Renewable Energy Certificates) continues to support strong returns on investment (ROI). There are many strategies to secure stable SREC pricing for the long-term. Your solar developer/installer should establish the optimal SREC strategy for your project before starting construction.

5) SAFETY
New technologies allow for much safer commercial solar installations. Solar panels can now be monitored and shut down individually. This allows solar companies to de-energize the panels when personnel operate on the roof. In addition, monitoring each individual panel maximizes output and increases income generated. This safety configuration will become more common in 2017 and should be considered on every commercial installation. Again, if your commercial solar proposal is over 6 months old, it might be time to request a refreshed quote from an experienced solar installer that now includes these solar panel optimizers.

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ABOUT US
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’ commercial solar energy investments.

 

Keith Peltzman
President & Founder
1008 Astoria Boulevard
Suite E
Cherry Hill, NJ 08003
856.393.1250

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