Utility files plan to spur investment in solar energy
NEWARK, New Jersey, US, May 2, 2007. An electric utility in New Jersey wants to invest US$100 million over the next two years to finance installation of solar systems.
Public Service Electric & Gas says the initiative will spur investment in solar power and help to meet the aggressive renewable energy goals in the state's Energy Master Plan proposal. The program was included in a regulatory filing with the Board of Public Utilities and, if approved by regulators, would provide incentives for solar panels on residential, commercial and municipal buildings while reducing the overall cost of developing, installing and financing solar energy systems.
PSE&G wants the initiative to begin this year and support 30 MW of PV power in the next two years, fulfilling 50% of the RPS requirements in service area for 2009 and 2010. The green power would serve 24,000 homes and, in terms of CO2 emissions, is the equivalent of removing 3,700 cars from the road.
It is the first of a number of new plans to be detailed by the utility this year as part of a long-term, comprehensive strategy to combat climate change.
“Climate change is a reality that needs to be addressed now,” says Ralph Izzo of Public Service Enterprise Group, PSE&G's parent company. “We need fresh thinking if we are to begin to tackle this challenge and reverse the trend.”
“We are prepared to invest a substantial amount of capital, and we have developed an innovative regulatory approach to provide new avenues and incentives for investment in renewable energy,” he adds. “This initiative will help address our future energy needs with renewable resources in a way that reduces CO2 emissions.”
“This represents the beginning of a new relationship between the renewable community and utilities,” explains Thomas Leyden of the Mid-Atlantic Solar Energy Industries Association. “One of the biggest barriers faced by solar enthusiasts is the lack of financing. While these systems are a great investment, they require significant up-front capital.”
“PSE&G is a well-known, trusted company with a large and diverse customer base,” he adds. “Their willingness to promote the value and availability of solar, coupled with their ability to provide long- term financing, means that there will be greater penetration in the market. This is a recipe for success.”
The solar initiative addresses the aggressive goals put forth by the state through the EMP process and by the BPU through the renewable portfolio standard, both of which call for the ability to meet 20% of the state's energy needs with renewables by the year 2020. Solar is a Class I renewable resource.
PSE&G would provide loans to developers to cover 40% to 50% of the cost of a solar installation project, and would be repaid principal plus interest over 15 years, which is a considerably longer investment timeframe than traditional lenders are willing to provide for solar installations. The remaining project cost would be funded by a host customer or equity partner, such as a bank or investor, to be eligible to collect the federal investment tax credit. Utilities currently are prohibited from collecting this tax incentive.
The utility would be repaid in the form of credits called Solar Renewable Energy Certificates (SREC) which is a tradable product that represents the clean energy benefits of electricity generated from solar. PSE&G would earn a return to compensate for its full cost of capital, plus an incentive for spurring the development of the solar market. The solar panels would be owned by the developer or the host customer.
Power customers would continue to pay for solar incentives through the Societal Benefit Charge on their monthly bill but, if approved as filed, they would not pay any more under the solar initiative since the program will be paid for through funding that is currently earmarked for renewable energy programs.
“PSE&G has launched this program to make it attractive and easy for business owners to seriously consider solar energy,” says Joan Verplanck of the New Jersey Chamber of Commerce. “By putting in place the financial mechanism for companies to pay for this technology over an extended period of time, PSE&G is making what was once an option only for large companies with significant financial resources into an affordable option for companies large and small.”
Renewable Energy Focus © Copyright 2008, Elsevier Ltd, All rights reserved.