New Jersey Outshines Most Others in Solar Energy

No one would mistake it for the Sunshine State.


But New Jersey—known more for its turnpike, shopping malls and industrial sprawl—has become a solar energy powerhouse, outshining sunnier states like Hawaii and Nevada. And it's largely because of incentives that make it cheaper for residents and businesses to buy and install solar power systems.

As of last year, the Garden State had 70 megawatts of grid-connected solar capacity, second only to California with 528 megawatts, according to a report by the Interstate Renewable Energy Council. Rounding out the top five were Colorado, Nevada and Arizona.

Governor Jon Corzine (D) recently announced that the state had installed its 4,000th solar system in the past summer—making it No. 1 in solar installed per square mile.

“What this shows is that state policies are more important than the amount of sun that’s available,” says Larry Sherwood, an analyst at the council. “Having good policies is really important.”

California’s success with solar energy is not surprising considering the state’s sunny weather, aggressive policies and Governor Arnold Schwarzenegger’s (R) legislative mandate to have one million solar roofs in the state by 2018.

New Jersey's plan is to get 30 percent of its energy needs from renewable energy by 2020 with 2.12 percent of it from solar alone by 2012.

Both states are throwing generous rebates and tax credits at consumers and businesses to win them over and meet these goals.

The Carbon Challenge - A CNBC Special Report - See Complete Coverage
The Carbon Challenge - A CNBC Special Report - See Complete Coverage

The savings is what got New Jerseyans Bob and Mary Keppel to install a 6-kilowatt solar system on the roof of their Cinnaminson, N.J. home this past summer.

“When we first were inclined to do something we though about solar panels,” says Bob, a partner at Cope Linder Architects in Philadelphia.

After researching for some time on how they could make their home more energy efficient, seeing the cost reductions they would get helped them to “jump on the band wagon” and go solar, he says.

The full price of the project, including installation, came to $48,000. Right away, the state sent a subsidy check for $10,500 that the Keppel’s signed over to the contractors to buy supplies. Using computer software, their contractor estimates that they will get a $11,250 federal tax credit this year. That would cut the total cost to $26,250, a 45-percent reduction.

In addition, the New Jersey Board of Public Utilities is giving out one Solar Renewable Energy Certificate, or SREC, for every 1,000 kilowatt-hours of electricity produced by a system. SRECs are traded in a market depending on the supply and demand for the certificate, and the value of one certificate varies widely. The weighted average price for one SREC in July was a little over $520.

“It’s that third component that made it easy to say yes to it,” says Mary Keppel. “It was the easiest money I’ve spent.”

Considering all three sources of funding, their contractors estimate that it should take the couple a little under five years for the solar panels to pay for themselves. “We thought it would take longer, like 10 to 12 years,” adds Bob.

Besides residents, the state’s largest utility, Public Service Enterprise Group is finding ways to generate more grid-connected solar energy.

“New Jersey has a shortage of available space,” says Paul Rosengren, a spokesperson at the utility.

While other states, like California and Nevada, have room to build massive solar power plants, PSEG had to get creative: They have begun attaching 200,000 grid-connected solar panels on top of utility and light poles.

The project, which started this year, will generate about 40 megawatts of power for the grid.

Aside from light poles, some businesses with extra space are filing it with solar power systems to help power their buildings.

Food manufacturer Mars, for example, teamed up with PSEG to build a solar farm made up of over 28,000 panels at its Hackettstown, N.J. U.S. headquarters. Here’s how the deal works: PSEG owns, operates and maintains the solar farm, while Mars buys the energy generated for its plant.

“The state encourages utilities to be creative on the finance arrangements,” says Jamie Van Nostrand, executive director of the Pace Energy and Climate Center at Pace University Law School. “They’re all sophisticated negotiations.”

For its distribution hub in Woodbridge, N.J., FedEx Ground has a similar deal. The company is allowing BP to install and operate a solar power system on its roof, while FedEx Ground buys the energy created to power its building.

“It’s less expensive than getting power from the utility,” says Paul Viccaro, managing director of facilities at FedEx Ground. FedEx has three other facilities with solar roofs, all located in California.

So why build one in New Jersey, of all places?

“It’s where the money is,” says Vicarro, “New Jersey is the right place right now for alternative energy.”