What's the number one state in the U.S. for solar installations? Easy answer -- California, which had more than half of U.S. demand at more than 200 megawatts in 2009.
What's the number two state in solar? Slightly harder question to answer. You'd imagine it would be a large, sunny Southwestern state but, of course, the correct answer is The Garden State, New Jersey, with more than 50 megawatts in 2009. The state installed more than 60 megawatts in the first half of 2010 alone. New Jersey is the sixth-largest solar market in the world, and in the U.S., second only to California in installed solar capacity, with approximately 260 megawatts. If solar capacity were to be calculated on a per-square-mile basis, New Jersey would lead the nation.
And it's not because of ample solar resources, but rather because of political will and an informed renewable energy policy. In New Jersey's case, it's an SREC program as opposed to a feed-in tariff or California Solar Initiative-type rebate.
MJ Shiao of GTM Research defines SRECs as specialized tradable renewable/alternative energy credits (measured in megawatt-hours) created by generation portfolio standards that require a certain percentage of the utilities' electricity to be generated from solar. Due to this photovoltaic “carve-out,” SRECs have a built-in premium in comparison to RECs from other sources. The price of SRECs is determined by the supply of solar generation and the demand to meet state RPS requirements, with a price ceiling created by the Solar Alternative Compliance Payment (SACP) -- the penalty that electricity suppliers must pay if they fail to acquire the requisite SRECs.
As detailed by Shayle Kann, Managing Director of GTM Solar Research in his recent U.S. Utility PV Report, "New Jersey has long been the country’s second-largest state market behind California, but has only recently begun to develop a utility market. With a large RPS solar requirement that ramps up increasingly in later years the state is poised to lead the East Coast utility market."
I spoke with Jamie Hahn, managing director of of Manasquan, N.J.-based Solis Partners, a developer and integrator of solar power systems for commercial, industrial, and utility clients, who is involved in the project from initial feasibility studies all the way to operation and maintenance of the finished project.
Solis has installed about 3.5 megawatts of solar in the last 12 to 18 months and Hahn said that they, "will easily double that in 2011."
Hahn attributed the growth in New Jersey solar to a number of factors, including state and federal incentives, the extension of the 1603 tax grant program, and the 100 percent bonus depreciation provision in the 2010 Tax Relief Act. The bonus depreciation allows companies to claim an immediate deduction of 100 percent of the eligible costs of a solar facility in the first year, instead of depreciating it over five years. Hahn spoke of getting 80 percent of your investment back in 12 months as long as you can monetize that bonus depreciation.
“The combination of the Treasury Grant, the 100 percent bonus depreciation and the SREC program reduce the payback for a commercial solar system from five to seven years to three to four years,” said Hahn. “The financials are so attractive that many commercial building owners initially view the investment as too good to be true.”
Solis is "agnostic about the technology" and has used thin-film CIGS panels from Solyndra on some of their projects. Hahn attests that "Solyndra is good for high wind" areas and roofs without a lot of reserve weight-bearing margin. New Jersey, as mentioned, is the Saudi Arabia of flat roofs and Hahn estimates that only about 60 percent of the roofs can accommodate the additional 6 to 8 pounds per square foot that a ballasted c-Si panel installation would add. (Editor's note: Hahn also mentioned to us last year that building owners can also claim the investment tax credit for a new roof when using Solyndra tubes, a really big deal.)
Solis says the company "just signed a contract on a 1.2-megawatt system with a roof that has only 3 to 4 pounds of reserve load bearing." For those who doubt these claims, Hahn assures us that the firm "knows roofing inside and out."
Hahn is a fan of Solyndra's cylindrical CIGS PV product calling it "a product that makes a lot of sense" in some cases, citing instances where penetrating a flat roof is just not a good decision. He sees the company as having made big changes in the last six months in both management and attitude and making the right moves to drive down cost and improve efficiency. He acknowledges that there are certainly instances where the product doesn't make sense, but insists that there are places where the highly differentiated product makes more sense than c-Si panels.
Hahn does the math on a solar project here: in the case of a $15 million commercial solar system, for example, the building owner would receive a 30 percent cash grant under the federal Treasury Grant Program for $4.5 million, as well as savings of approximately $4.5 million from the 100 percent bonus depreciation on a depreciable basis of $12.75 million ($15 million minus one-half of the cash grant), assuming a tax rate of 35 percent.
In this example, $9 million of the $15 million cost -- or 60 percent -- would be recoverable in 2011. In addition, the owner would receive income from the sale of SRECs. An SREC represents 1,000 kilowatt-hours of electricity and is a production-based state incentive for renewable energy.
"You have to design a system that performs optimally over 15 years," said Hahn, adding,"New Jersey had the foresight to go along a path that's resulted in job growth and sustainable energy. New Jersey is now a mature market. SRECs have started to bring in significant international and out-of-state investors into the state."
"It took a while for banks to get their heads around what an SREC is, but now banks are providing loans for solar in New Jersey."
Some other New Jersey solar news:
- Petra Solar warrants a mention when discussing New Jersey solar for its innovative solar/microinverter on power pole plans and 200-megawatt utility contract with PSE&G.
- Assembly Bill A1084 was recently introduced in the New Jersey Assembly which requires that solar panels be incorporated into the design and construction of all new public schools.
- Princeton Power, a N.J.-based PV inverter manufacturer and a SEGIS award finalist opened a 12-megawatt per year plant in January.
- NJ's Renewable Energy Incentive Program (REIP), the upfront rebate, closed applications for PV in November, making N.J. the first pure SREC market in the U.S.
- MX Group is opening a solar module factory in Somerset, New Jersey with an initial production capacity of 65 megawatts, increasing to 130 megawatts from August 2011.