New Jersey ranks second in the nation in solar power generation behind California. Part of that success is because school districts accepted promises of state subsidies, rebates, lower utility bills, and revenue from selling Solar Renewable Energy Credits to power companies.

State law requires power companies to buy the SRECs or pay a penalty as part of the state plan to expand renewable energy sources.

But now solar power is losing some of its luster. First the state eliminated the rebate program. Now SREC prices are dropping, and state school debt service aid is uncertain. School districts are still interested in the energy savings but are worried about marketing a bond referendum to taxpayers if they have to pay more of the cost.

SRECs that last year sold for as much as $660 per credit were priced at $176 on Aug. 10, as posted on the Flett Exchange, an environmental brokerage firm where SRECs are bought and sold.

Woodbine Elementary School officials, for instance, had hoped to save $50,000 annually on the school’s electric bill. But the SRECs the school earns for generating solar power remain unsold because the price has plummeted in the energy year that began June 1.

“We were advised to wait (to sell) until later in the year to see what happens,” Woodbine school Business Administrator Alan Parmalee said. “We are counting on some of that revenue to help pay for the system.”

Between 2009 and 2010, the Galloway Township School District saved $433,982 in energy costs and earned more than $300,000 from the sale of SRECs from the solar panels on the middle school, Galloway school Business Administrator Vickie Tomasco said.

“When we did the project on the middle school there were grants to help pay for it and we got strong voter support,” Galloway Township school Superintendent Annette Giaquinto said. “Now there are more concerns about the cost.”

Margate installed solar panels at no cost to taxpayers in 2005, making it one of the first school districts in the state to do so. The district made an extra $127,000 in 2007 by selling its SREC credits, which caught the attention of other school officials.

Currently, 183 public and private schools and 11 colleges across the state have solar installation, data provided by the Board of Public Utilities show.

Other local districts with solar installations include Egg Harbor Township, Stafford Township, Northfield, Hamilton Township, Greater Egg Harbor Regional, Little Egg Harbor Township and Mainland Regional.

Hamilton Township’s state grant and debt service aid paid for its solar installation, so any money they get from SRECs is extra revenue, district Business Administrator Martha Jamison said.

“We got in the last round of grants,” she said. “We were told that SREC prices would likely start to drop as more projects came online.”

Egg Harbor Township earned $948,000 in combined SREC revenue/energy savings in 2010 despite all systems not being online all year. The SRECs sold for between $655 and $680, higher than the conservatively anticipated $550, Egg Harbor Township school Business Administrator Kateryna Bechtel said in an email. Those funds were used in the 2011-12 budget.

Michael Flett, president of the Flett Exchange, said solar’s success has actually caused the price drop. In July the BPU announced the state set a record in June with 520 new solar installations. Statewide, 10,086 projects now generate 380 megawatts of capacity, and the BPU press release even credits the SRECs for generating the interest. But almost immediately SREC prices began to drop.

That was good news for the state’s residents who subsidize the SREC cost through their utility bills, but not for schools.

A bill introduced in the state Legislature and already approved by the Senate would increase the solar generation requirement utilities must purchase, which could stabilize the SREC prices, but it’s a volatile market, Flett said.

“If nothing is done, it could stop development because private companies will have a hard time getting financing,” Flett said. “The proposed bill would suck up the extra supply, and the price is based on supply and demand. The power companies won’t buy more than they have to.”

The BPU would like to see SREC prices drop because that would control utility costs for homeowners and businesses.

“The SRECs are costing ratepayers money and we’re trying to save them money,” BPU spokesman J. Gregory Reinert said. “The market price does fluctuate daily, but that’s an incentive to do a longterm SREC contract, and that’s what we are pushing.”

Longterm contracts pay less per SREC but guarantee a stable revenue source. Lacey Township, which has solar panels on all six schools, has a three-year contract with PSE&G that will generate more than $3 million in revenue while saving the district 35 percent in energy costs.

School district officials could also find a private company willing to install the system at their own cost, then charge the district for the power used through what is called a Power Purchase Agreement or PPA. Richard Stockton College used a $3.4 million grant and a PPA for its solar carport project.

Contact Diane D’Amico:

609-272-7241