By: Christopher Soper and Lane Kelman
Recently New Jersey State Senator, Bob Smith (D., Middlesex), chairman of the Senate Environment and Energy Committee, explained that New Jersey has “done such a good job at stimulating solar that the market is now crashing.”
In order to address this problem, Smith sponsored Senate Bill S2371 (Bill S2371) that would accelerate by one year the state requirements for how much renewable energy must be produced and consequently how many Solar Renewable Energy Credits (SRECs) power companies are required to purchase.
The Purpose of Senate Bill S2371
The goal of Bill S2371 is to increase the demand for SRECs in order to stabilize their price – a price that has decreased in past months due to fears of the expected oversupply. With the proposed increase in renewable energy requirements and the consequential increase in renewable energy credits, it is hoped that the SREC market will be able to transition to a balanced supply-demand scenario.
New Jersey had previously established a schedule for the amount of SRECs power companies would be required to purchase for each energy year through 2026. Bill S2371 proposes to remove the requirements previously established for energy year 2013 and instead use the requirements established for energy year 2014. This would result in the requirements for energy year 2013 increasing from 596,000 to 772,000. The balance of the established schedule would remain the same, just moved ahead one year. This would allow the solar industry to continue to grow at a controlled rate through 2025.
Next Steps for Senate Bill S2371
Bill S2371 was passed by the Senate, received in the Assembly, and referred to the Assembly Telecommunications and Utilities Committee on June 29, 2011. It is anticipated that Governor Christie’s administration will not accept Bill S2371 as is, but will agree to a compromise that addresses the cost of solar for ratepayers. Cohen Seglias will continue to monitor the development of Bill S2371.