The collapse of NJ SREC prices resulting from a market oversupply in the last six months has called for legislative or administrative action. Theoretically the RPS is a self-correcting mechanism where low prices lead to a slowdown in build rate while the annual Renewable Portfolio Standard (RPS) increases to catch up to any oversupply. In practice, SREC price signals are impacted by other outside incentive programs like the Treasury cash grant which can lead to dramatic overshoots like we currently see in NJ and PA. Also, the RPS adjusts only on an annual time frame, so while it should eventually self-correct, it may take several years even if almost all new solar development stops. While a few of the large, well-capitalized commercial and utility scale solar companies can afford to stop installation while the market mechanism corrects itself, most of the hundreds of smaller pure play solar installers will either have to leave the state or close. As a result, they, and the thousands of existing solar PV system owners in the state, are pushing for changes to the RPS program to ensure the continued vitality of the industry and the SREC revenue streams they are counting on to pay for their installations.
Jim Young
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