New Jersey, one of the nation’s largest and fastest growing solar markets, recently released the 2011 Energy Master Plan (EMP).   The 2011 Energy Master Plan (EMP) is a 10-year non-binding proposal that lays out the energy agenda and guides legislators on energy policy decisions. The plan calls to reduce the 2016 Solar Alternative Compliance Payment (SACP) by 20 percent and then by 2.54 percent each year thereafter. Additionally, the EMP suggests lowering the Renewable Portfolio Standard (RPS) target to 22.5 percent of energy generated from renewable sources, down from 30 percent. The SACP is a fee imposed on electricity providers if they fail to meet their solar requirement established in the RPS.

Governor Christie claims that the previous ten-year energy master plan was unrealistic and that a more obtainable set of standards based on the current situation is needed. Christie is concerned about what the RPS, particularly the solar carve out is doing to electricity costs for the average New Jersey customer.  Therefore, in this Master Energy Plan, Christie wants a cost-benefit analysis of the Solar Renewable Energy Credit (SREC) market in New Jersey created by the solar carve out.  To this end, his EMP proposes reducing the SACP as discussed above. Governor Christie has maintained that the projected plan is not intended to lessen the role of wind and solar energy in New Jersey but rather to set a more realistic target for the next ten years.

Opponents of the plan claim that the previous RPS goal of 30 percent is realistic and contributed to the vast solar development in New Jersey.  The solar carve out and SACP created one of the more robust SREC markets in the country.  An SREC, or solar renewable energy credit, is a tradable credit that represents all the clean energy benefits of electricity generated from a solar electric system.  Energy suppliers must procure a certain amount of solar-generated electricity, either through building their own systems or purchasing these SRECs, and so these SRECs became valuable.  NJ system owners were able to sell SRECs and decrease their payback period on solar systems significantly.

With the increasing deployment of solar energy and continually decreasing costs in the solar industry, critics of Governor Christie‘s Energy Master Plan claim now is not the time to reduce solar goals. Although the EMP itself does not impact the current NJ RPS (actual legislation would be needed for that), the proposed EMP could undermine the state’s exceptional leadership in renewable energy development and may lead to doubts on the continuing success of New Jersey’s solar market. The New Jersey Board of Public Utilities (BPU), the lead implementing agency, will hold three public hearings in July and August before Christie issues his final plan.