NJ SREC program uncertainty - is it too risky to sign up now?

[petesamprs]

I've had a contract signed for solar for a couple months. Permits have been submitted and I'm expecting to have the system installed by year end.

There is a lot of uncertainty on the future of the SREC program in NJ given recent legislation that planned for it being transitioned to another program in the near term.

What I can't get an answer to is what happens if someone gets solar now, before the transition program is defined or approved. Do you get grandfathered into the existing program (10yrs @ 1000KWh per SREC)? How do I make a decision now with the uncertainty, since the IRR math in NJ only works if you can rely on SRECs.

thanks

[JSchnee21]

Hi @petesamprs,

Welcome! Lots of folks on this board from NJ. Many/most of us installed in 2017 or later. A few of us, myself included, were fortunate to lock in 15 years of SREC's, but we have two or three newer folks with only 10.

But, what the value of those SREC's will be going out 5 or 10 years is anybody's guess. Many have said the sky is falling for the past several years. But in the mean time I've banked over $5K.

I agree NJ is tough b/c our PoCo generation rates are quite low. Mine have gone down almost every year I've lived in Jersey (13 years no). So 7-10 cents per kWh is generally the norm. But if you're interested in solar, install this year or next to maximize your Federal deduction is definitely the best bet.

The good news is that solar equipment costs have never been lower. Definitely run the financials with and without SREC's (for example take your projected MWh production estimates per year, and then multiply by $0/SREC, $100/SREC, and $200/SREC and see how it looks. But I agree, if you can't break even in 8-10yrs without SREC's, solar may not be worth doing (for financial reasons).

Many of us in NJ have used and recommend Green Power Energy (myself included). Be sure to give them a chance to bid.

Take a look at your annual electrical usage, as well as the orientation (South, East/West, etc.) and inclination of your roof(ves). Are there any trees or other structures which shade you're roof? Generally, depending on the size and shape of your roof, most folks can only fit arrays on the order of 8 to 12 kW. Mine is 12.2kW (37 330W panels). Do you have PSE&G or JCP&L?

As a very rough rule of thumb, turnkey solutions are usually on the order of $2.75 to $3.25 per kW. Most likely your system would be installed in 2020 for which you can take a 26% Federal deduction on the cost of the Solar. You can also include the roof and energy storage if you do it at the same time. How old is your roof?

Of course ask yourself why you want solar? Are there other/better ways to reduce your electrical usage? For most folks HVAC, hot water heaters, and pool pumps/heaters are the main culprits. Start there first. But if you have an old fridge or freezer in the garage or basement, or attic exhaust fan, take a hard look at these as well. Be sure to have a home energy audit and make sure your home is sealed and well insulated. Consider replacing windows and doors if they are more than 10-15 years old. Of course EV's use a lot of electric -- but it is still cheaper than gas overall.

Finally, Solar only makes sense if you plan to live in your house at least long enough to break even -- which will be at least 7-10 years. While some recent reports are starting to suggest modest increases (4%?) in home values from installing solar. The general consensus on this board is don't expect solar to improve you're resale value. In certain markets it might, a little, but in general many buyers are afraid of inheriting someone else's mess (solar lease, leaky roof, fire hazard, dilapidated system) so, like an in ground pool, some buyers will walk away.

Good luck!
Jonathan

[petesamprs]

I agree NJ is tough b/c our PoCo generation rates are quite low. Mine have gone down almost every year I've lived in Jersey (13 years no). So 7-10 cents per kWh is generally the norm. But if you're interested in solar, install this year or next to maximize your Federal deduction is definitely the best bet.

Should I be looking at the savings for just the generation rate (~$0.08/KWH), or the total cost including distribution and transmission ($~0.18/Kwh)? I thought I would save the entire amount if I went solar, not just the generation component.

[petesamprs]

Also it's not just the price of SRECs that I am worried about - i already knew that was going to be an uncertainty going forward. What i'm concerned about is that the program itself changes (e.g., reduced to <10 years, more KWH required per SREC, or a haircut to the SREC rate), and they back-date it such that even if I install this year under the current program, I would actual not get the current program.

[ButchDeal]

Should I be looking at the savings for just the generation rate (~$0.08/KWH), or the total cost including distribution and transmission ($~0.18/Kwh)? I thought I would save the entire amount if I went solar, not just the generation component.

You will be saving on generation as well as distribution and transmission by using less grid power...

[ButchDeal]

Also it's not just the price of SRECs that I am worried about - i already knew that was going to be an uncertainty going forward. What i'm concerned about is that the program itself changes (e.g., reduced to <10 years, more KWH required per SREC, or a haircut to the SREC rate), and they back-date it such that even if I install this year under the current program, I would actual not get the current program.

SRECs are internationally defined as 1MWh offset so they will not be changing that.
most would consider SREC sales a bonus

[petesamprs]

SRECs are hardly a bonus. Assuming 10 yrs of SRECs and a hopefully reasonable 20% discount to the current SACP schedule, my NPV breakeven (@ 5% discount rate) is 4-5 years with SRECs and 10-11 years without. Without SRECs the math doesn't work since avg home ownership is ~7 yrs.

[JSchnee21]

Yes, Butch is exactly right. The PV production net-metering credits from your PoCo offsets a certain percentage of your total electrical consumption. Saving you the total cost of buying, transmitting, and distributing these kWh from your PoCo. So if your total cost is $0.18 per kWh, each kWh your solar array produces would save you $0.18. What I was trying to allude to was that generation costs in NJ are much less than other states like NY, MA, DC, and especially California due to their abusive TOU scheme. As such the total cost per kWh is probably one of the lowest (if not the lowest) of any state with a sizeable residential solar market.

In my case, my array has produced 11.18 MWh this year and my consumption has been 11.97 MWh. So my PV array has offset 93.4% of my consumption. So my total electric bill would be whatever my rate per kWh is (no idea, let's say $0.15) times 790 kWh plus a small customer fee. I've been running a credit on my bill for nearly two years,

Nothing is certain in life, but I would think that it is very rare/unlikely that future changes to the NJ SREC program would retroactively modify the terms of folks that have applied and been accepted to the program under its current form. Changing terms retroactively opens folks up to lawsuits.

The only real risk I see (but again this is just my opinion as an average Joe) is that SREC pricing may collapse at some point. But there have been lots of ups and downs in the NJ SREC market over the past 10 years. If the bottom really falls out, as long as there are Democrats in charge, I expect they'll do something to prop it up -- like increasing percent renewable targets.

But again, as Butch said, you should consider the SREC's as a Bonus. If the project really doesn't make sense without them, then it may not make sense. In today's market, you should try and focus on a solar solution which is as cost effective as possible (lowest installed cost per Watt -- from a reputable installer, with mid-tier commodity panels).

You'll need either SolarEdge or Enphase for rapid shutdown. Most/all of the NJ folks, myself included have SolarEdge. Most mid-tier panels are all very similar. Jinko, Trina, Hanwha, LG Neon2, are all a good balance between value, performance, and reliability. Premium panels (LG Neon R, Panasonic, SunPower) do have a couple perks (aesthetic benefits, higher efficiency (more kW/square Meter if you have a small roof), but will significantly increase project cost and extend you break even timelines. Other purported benefits (more harvest, better warranties, more reliable) haven't been proven.

[petesamprs]

Thanks for that information. The transition of the SREC program is already in the works, and the big uncertainty is when the "effective date" is and what the SREC "factor" will be for residential programs. The latest proposal has residential solar systems receiving far less SREC value (25% of normal SREC price) than large commercial systems: See here: https://nj.gov/bpu/pdf/publicnotice/...%209-13-19.pdf

Based on the language, it seems the window of uncertainty is whether or not your solar was turned on before the 5.1% solar threshold in NJ is reached, even if you are conditionally registered in the SREC program. So for those of us in the installation stage currently, we could find by the time we are up and running NJ passes the 5.1% threshold and we are deemed not eligible for the existing program.

For what its worth, I'm using a local/reputable installer (GPE). 15MW system, panasonic panels w/ optimizers, solaredge inverter, @ $2.87/watt.

[J.P.M.]

For what its worth, I'm using a local/reputable installer (GPE). 15MW system, panasonic panels w/ optimizers, solaredge inverter, @ $2.87/watt.

15 MW = 15,000 kW = 15,000,000 W.

You sure about that size ?

[petesamprs]

15Kw

[JSchnee21]

$2.87 is a great price. And GPE is a great installer! Definitely consider the SolarEdge consumption monitoring add on, and be sure to run Ethernet to your inverter.

Many of us use PV Output to log, analyze, and graph our inverter and consumption data. PV Output can sweep up all of the data from the SolarEdge web portal using a private API key.

For example -- my system

https://pvoutput.org/list.jsp?id=58372&sid=52103

[J.P.M.]

15Kw

15 kW. When a unit is named after a person, the letter abbreviation for that unit is capitalized while the unit is not .

[petesamprs]

$2.87 is a great price. And GPE is a great installer! Definitely consider the SolarEdge consumption monitoring add on, and be sure to run Ethernet to your inverter.

Many of us use PV Output to log, analyze, and graph our inverter and consumption data. PV Output can sweep up all of the data from the SolarEdge web portal using a private API key.

For example -- my system
https://pvoutput.org/list.jsp?id=58372&sid=52103

Thanks I'll look into that for my inverter. Unfortunately my cable modem/router is 2 floor away from where my inverter will be, so not sure I'll be able to hardwire that easily. May nee to rely on cellular...

[JSchnee21]

Cellular sucks. Update frequency and content is much lower. Though I think Butch said they recently improved this some. You'd do better to use an Ethernet to Wifi bridge or Ethernet to MOCA (Coax) bridge. SE also offers a Zigbee to Ethernet bridge. This works for some folks, but is prone to interference for others. At the end of the day, Ethernet is usually the easiest and most reliable solution.

Ethernet is generally good up to 100 meters. So if you could go up to your attic / roof, you could then come back down the side of your house. Or if all else fails, put a switch in your attic.

Theoretically, SE is supposed to be coming out with Wifi capability (separate from the SetApp capability). But SE has always been very reluctant to deploy Wifi in the US market despite historically offering in Europe and other locations.

If you have FIOS, MOCA is a great way to go. Not sure if Comcast also supports MOCA.