The New Jersey Office of Clean Energy (NJ OCE) recently released installed solar capacity figures as of August 31, 2011. After the first three months into Energy Year (EY) 2012, the state has averaged a rate just over 30 MW/month, bringing the total installed capacity to more than 430 MW, up from 339.6 MW at the end of EY2011. In order to meet the state’s fixed production requirement of 442,000 SRECs this year, approximately 370 MW needs to be online throughout the entire compliance period.
The 2012 spot market traded up to $200+/SREC in recent periods with the October auction clearing at $205. The estimated average installed capacity needed to meet the EY2013 requirement is approximately 500 MW. To reach this target by the beginning of EY2013, the state would have to install an additional 70 MW, or an average of 7.8 MW/month for the remainder of EY2012. This calculation takes into consideration the capacity needed to generate enough EY2013 vintage SRECs, which could be reduced based on EY2012 vintage SRECs used to meet the EY2013 compliance obligation.
The surge in installed capacity is partially due to the anticipated expiration of the federal 1603 grant, an upfront cash payment for commercial projects of up to 30% of system costs, at the end of the calendar year. As more projects aim to take advantage of the grant before it expires, the total installed capacity will continue to approach the EY2013 target.
Upon their return from recess, state legislators will consider an amendment to the RPS to pull 2014 and future year requirements forward one year in attempt to prevent a prolonged oversupply in the SREC market. The chart below demonstrates monthly installed capacity and corresponding increases since December 2010.
Note: This analysis is based on capacity as of the dates noted and does not take into consideration the impact of EY2012 vintage SRECs used to meet the EY2013 requirement.