New Jersey is an absolute leader of solar energy generation in the United States. For the last decade, they have been revising and increasing their solar goals and incentives, maintaining their position as the state with the second largest installed solar capacity. In 2010, New Jersey installed over 137 MW of solar systems which was almost a 140% increase over the 57.3 megawatts installed in 2009 and 517% increase over the 22.5 megawatts of installed New Jersey solar in 2008, ranking it second in the U.S. behind California. That’s enough to power approximately 50,000 homes with sustainable, clean energy. New Jersey also became the second state to install over 100 megawatts of solar power in a single year. While New Jersey has exhausted its cash rebate program, they are now focused on consistent market growth and private investment through system financing and Solar Renewable Energy Credits (SRECs) discussed here. Given the number of systems installed last year, it certainly looks like its working.
One of the reasons solar in New Jersey has been so successful is that it has one of the most aggressive Renewable Portfolio Standards (RPS) in the United States. A RPS dictates the schedule of the annual increases in the percentage of retail electricity that must come from renewable energy sources each year. The ultimate goal requires electricity suppliers to provide 22.5% of their retail electricity load from renewable energy sources by 2021. Part of this requirement must be from solar power systems. In 2010, this requirement was updated from a percentage based goal to an ultimate goal of 5,316 gigawatts of solar energy by 2026 (New Jersey currently uses over approximately 82,000 gigawatts of energy a year).
As a result, SREC’s must be purchased by electricity suppliers to meet the state targets or else they face a fine known as a Solar Alternative Compliance Payment (SACP) that was $0.691/kWh in 2010. In the 2011 energy year, 306,000 SRECs (or MWhs of solar electricity) must be purchased by electricity suppliers in the state in order to meet the NJ solar requirement. That requirement grows to over 5 million in 2026.