This week the NJ Pinelands Commission adopted a set of amendment to its development rules to allow solar power facilities in more locations. Previously Pinelands regulations permitted solar as a “primary use” in growth and development planning areas, though only as an “accessory use” in preservation, forest, or agricultural areas. In short this meant that you could build a large scale solar farm on vacant land in growth and development designated areas. However in preservation, forest, or agriculture areas you could only install solar as an accessory to the current use of the property, namely to provide power to a home or business located there.
The previous policy made sense, as the Pinelands Commission did not want developers clear cutting land or converting farms into solar facilities. However this rule also meant you could not have large scale solar facilities on previously developed and unused land, with old landfill being of particular interest. Galloway Township had previously reached agreement to develop a solar facility on a closed municipal landfill (that was not in Pinelands jurisdiction) for which they would receive lease payments from the solar developer. While the project ultimately stalled it proved to be a good idea for other municipalities to convert old landfills, which had few other possible uses, into solar farms. However the rules would not allow these solar facilities on old landfills within certain Pinelands planning areas.
The recent amendment to the Pinelands Comprehensive Management Plan will now allow these towns to develop solar facilities on old landfills and other similar properties within these preserved planning areas. These highly anticipated changes could help municipalities find extra sources of revenue by leasing old landfill properties to solar developers. However in many ways this change might have come a little too late to provide large economic benefits to municipalities.
In mid 2008 changes in NJ energy policy saw the prices of Solar Renewable Energy Credits (SRECs) rocket from around $200 to over $600. These SRECs are credits generated for every megawatt of power produced by solar systems, and are typically sold to energy companies who are required to have a specific amount of solar power in their generation portfolio. The high value of these SRECs is largely responsible for the boom in the solar energy business in NJ. The value of these credits, as well as other state and federal tax incentives on solar created a favorable payback and caused solar developers to build as many facilities as they could in NJ. Developers would not only build solar systems on homes and businesses that directly used the solar electricity, but also so called solar farms on vacant land. While developers would not have the benefit of a customer to sell the electricity to for these solar farms, the value of the SRECs were so high they no longer need someone to purchase the power to make it profitable. Solar developers would lease the land from private citizens, businesses, or municipalities to put up these solar farms.
With so many people trying to get in on the profitable solar bandwagon large numbers of SRECs began to flood the market and in 2011 the simple rules of supply and demand caught up to the SREC market. There were so many SRECs out there that their value dropped back down to the $200 range. While this does not make solar energy unviable, it does require projects to be planned more carefully. The days of throwing solar panels on any parcel of vacant land are gone for the time being. Matching up a solar system with an end user is important once again.
While the value of SRECs is expected to climb once again, it’s unlikely they’ll reach the highs seen a few years ago. This means the towns with old landfills and other similar properties will not get nearly as much for leasing their those properties to develop solar farms. The changes in the Pinelands Commission’s rules were much needed, as solar on old landfill is one of the best uses for the property. It is unfortunate that the rulemaking process took this long and municipalities were unable to take advantage of the solar market in NJ when it was at its peak.