by Jordan Schneider
If you’re looking for a good example of the power of smart policy changes to grow clean energy markets, look no further than New Jersey, which has just installed 1 gigawatt (GW) of solar PV capacity – ensuring its continued reputation as one of the nation’s solar leaders.
New Jersey reached this milestone despite fears that the state’s solar market was collapsing in early 2012 – but smart policy changes in the middle of last year helped give the market the course correction it needed to get back on its feet.
New Jersey’s solar market is supported by a renewable energy credit market (as opposed to rebates, which other states use to incentivize solar installations). Homeowners and businesses receive these credits when they install solar PV systems; they can then sell these credits to utilities, which are required to get a certain percentage of their electricity from solar power under the state’s renewable electricity standard.
This program, combined with federal incentives that helped cover up to 30 percent of the cost of solar installations, was extremely successful. Businesses, in particular, rushed to install solar panels in 2011, causing so many renewable energy credits to flood the market in 2012 that prices dropped and installations began to slump.
However, the state’s leaders intervened in July 2012 and passed a bill that ramped up the amount of solar credits utilities would need to purchase, boosting renewable energy credit prices and making solar power an attractive investment once again. Basically, the state moved the solar power target contained in its renewable portfolio standard up by one year.
And it worked. According to the Solar Energy Industries Association, New Jersey was responsible for nearly one-third of all commercial solar installations in the country in 2012, adding about 415 MW of solar power to its electricity grid – the equivalent of one coal-fired power plant.
In New Jersey, the benefits of solar power as a distributed, local, clean, and renewable source of energy cannot be understated. New Jersey is the most densely populated state in the country, and high electricity demand places a strain on the transmission infrastructure the state relies on to import electricity from out-of-state. Much of the state electricity comes from dirty energy sources, such as coal and natural gas, which contributes to the state’s air pollution problems. Solar power generated by rooftop PV systems all over the state will reduce the need for imported electricity in the future, relieving stress on the state’s power grid and cleaning up New Jersey’s air.
New Jersey’s shows how powerful strong clean energy policies and programs can drive development of renewable power sources. It also shows that as clean energy markets grow and change, the policies and programs that support them should be strengthen or accelerated, not weakened.