Public Service Electric and Gas (PSE&G), a New Jersey utility, announced a $100 million initiative to spur 30MW of solar installations in the state over the coming two years.
Under the plan, PSE&G will invest approximately $100 million over the next two years to help finance the installation of solar systems on homes, businesses and municipal buildings throughout its service area. The funding will provide a source of stable, secure capital to spur additional investment in solar energy.
If approved by regulators, the initiative could begin by the end of this year and support 30 megawatts of solar power in the following two years, fulfilling about 50% of the RPS requirements in PSE&G’s service area for the years 2009 and 2010.
The company says the initiative is designed to spur investment in solar power in New Jersey and help meet the aggressive renewable energy goals – 20% of the state’s energy needs supplied by renewables by 2020 – in the state’s Energy Master Plan. It is the first of a number of new plans to be detailed by the company this year as part of a long-term, comprehensive strategy to combat climate change. “This is an historic and groundbreaking initiative, and we couldn’t be more supportive,” said Thomas Leyden, president of the Mid-Atlantic Solar Energy Industries Association (MSEIA). “This represents the beginning of a new relationship between the renewable community and utilities.”
“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,” Leyden said. “PSE&G is a well-known, trusted company with a large and diverse customer base. 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.”
PSE&G’s solar initiative would be open to all of its customers, including low-income, residential, commercial, industrial and municipal/governmental.
In brief, here’s how it would work:
PSE&G would provide loans to developers to cover approximately 40-50% of the cost of a solar installation project. The loan would look a lot like a mortgage. The utility would be repaid the principal plus interest over 15 years, 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 are currently prohibited from collecting this tax incentive.)
PSE&G would be repaid in the form of credits called Solar Renewable Energy Certificates or SRECs, which have value in the energy marketplace. An SREC is a New Jersey tradable product that represents the clean energy benefits of electricity generated from a solar system. PSE&G would earn a return to compensate the company 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.
PSEG was the first utility in the nation to sign onto a pre-Kyoto voluntary Greenhouse Gas emission reduction accord with the Clinton Administration to stabilize GHG emissions to 1990 levels by 2000. It voluntarily committed to reducing its carbon dioxide emission rate by 18%, to 2000 levels, by the year 2008. It has been a vocal advocate for mandatory and meaningful GHG emission reductions on a national basis, supporting national legislation that would reduce electric power sector emissions to 1990 levels by 2030.
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