Why Solar Installations are Proliferating in the Garden State

By Brad Berton

While mankind has traveled to the moon and sent probes destined to depart our solar system, it has suffered plenty of disappointment endeavoring to convert solar energy into electricity or some other clean, cost-effective power source. Conversion efficiency has not advanced anywhere near as dramatically as we have seen with other game-changing technologies, and consequently applications have rarely penciled out economically, absent major public subsidies.

But the discouraging pace of solar development might seem like an alien fable to anyone exploring one particular speck of our planet. That would be the state of New Jersey, where various developers have launched a meteor shower of solar photovoltaic installations atop and beside a vast array of commercial buildings, not to mention parking lots.

These achievements include what are billed as the North American continent’s two largest rooftop solar arrays—not to mention some of the largest ground-mounted solar installations planted on our planet. And those are just for starters. All around the Garden State, cutting-edge new PV installations are crowning shopping malls, distribution centers, corporate campuses, multi-tenant office complexes and more.

“And all of this in one of the worst economic environments we’ve ever seen,” observed Jamie Hahn, managing director at hyperactive solar power specialist Solis Partners. Hahn’s firm is working with several New Jersey commercial property owners that control portfolios ranging from 2 million to 15 million square feet of floor space—or more important, roof acreage.

Solis has recently completed or is working on PV installations for the likes of apparel maker Phillips-Van Heusen in Bridgewater; contract manufacturer P&R Fasteners in Franklin Township; beverage distributor Shore Point Distributing in Freehold; packaging manufacturer LPS Industries in Moonachie; property developer Federal Business Centers in Edison—even big New Jersey utility Public Service Electric & Gas Co.’s regional headquarters in Franklin Township.

Several factors combined to create what Hahn refers to as something of a “perfect storm” driving PV installation activity in the state during much of 2011’s first half. In addition to New Jersey’s considerable commitment to clean energy, these include the state’s relatively high electricity rates, declining solar panel costs, ongoing technological innovations and a couple of short-term federal stimulus programs.

Nor does it hurt that New Jersey boasts more flat commercial rooftops per square mile than any other state. Meanwhile, PV arrays’ aesthetic elements are evolving to become more universally appealing.

But as Hahn and other experts are quick to point out, one particular high-impact statewide incentive program may well be the biggest single factor behind the PV installation binge: SREC, or the Solar Renewable Energy Certificates that “dirty” (coal-powered) household energy suppliers in New Jersey and a handful of other states buy from qualifying solar-energy producers to reduce penalties for the pollutants.

New Jersey’s version mandates that these utilities purchase SRECs to satisfy the state’s aggressive so-called renewable portfolio standard (RPS) requirement that a specified amount of the energy they collectively supply will be generated through solar set-ups by 2026. The state’s SREC program has been a particular boon to solar PV installations of late as utilities have competed heavily for the certificates, driving prices to new highs and in turn helping more solar PV installations pencil out.

Installed capacity of PV systems in the state has increased roughly fiftyfold over the past decade, frequently doubling and even tripling in recent years.

According to an SRECTrade report, New Jersey as of July had 50 installations that produce at least one megawatt—for a combined 113.4 megawatts. Five other states have SREC programs, mostly in the Northeast and Mid-Atlantic and including Pennsylvania, Massachusetts, Maryland, Delaware and Ohio, along with Washington, D.C. Together, they produce a total of 31 one-megawatt-plus installations, for a collective capacity of barely 70 megawatts.

Indeed, the SREC program generally is about the strongest incentive going these days across the country, and New Jersey’s is probably the “best crafted” among them, agreed David Gralnik, senior vice president with Jones Lang LaSalle Inc.’s Renewable Energy & Sustainability Services division.

“The real drivers of solar development are the state incentives,” Gralnik continued. “Where they’re producing the most PV systems isn’t a function of how much sun you get.”

Property owners in environmentally minded California are frequently leasing roofs to solar developers, which sell the juice to the transmission grid rather than forging long-term power purchase agreements, or PPAs, with lessors and occupants, Gralnik added. Jones Lang LaSalle also identifies three other states in the sunny Southwest—Nevada, Arizona and New Mexico—as boasting particularly strong solar development incentives.

That roster seems likely to expand as
statehouse leaders aim to capture some of the growing worldwide demand for solar-generated electricity. Cleantech market intelligence firm Pike Research is projecting that worldwide demand for solar panels, shingles and modules will surge to almost 2.4 gigawatts by 2016, compared to just 215 megawatts in 2009. The firm cited falling system costs, more efficient c-Si and flexible thin-film technologies, improved methods of rooftop installation and more attractive aesthetics of the PV materials being integrated and applied to rooftops.

“The cost per watt (for building-integrated PV systems) is declining quickly, and this trend will accelerate demand for building-integrated and building-applied solar products,” stressed Pike senior analyst Peter Asmus.

And harvesting is not that difficult. More than haof lf the world’s current solar electricity generation is now taking place in Germany, which gets about as much sun as the rainy Puget Sound region, Hahn pointed out. “If the Germans can make it work, you have to think it can work just about anywhere in the U.S.,” he observed.

Numerous considerations determine whether a roof can effectively support any kind of solar PV installation over the typical 25-year warranty arrangement, as well as whether roof-penetrating installation hardware is required and which type of system is most appropriate. These include age, warranty, material, color, directional orientation, wind patterns and geographic latitude.

“The roof dictates the deal; it tells you what the right solution is,” Gralnik stressed.

So-called carport systems are also becoming increasingly popular as costs of solar panels as well as modular structures covering parking lots come down, Gralnik noted. Property owners also see them as an aesthetically pleasing means of demonstrating sustainable practices.

For instance, JLL client Deutsche Bank, at its 83,000-square-foot Piscataway property, combined a roof application with new carports on two sides of the structure. “It’s an effective way to optimize use of the site,” Gralnik noted, “and it makes a dramatic visual statement”—not to mention the more than $50,000 in annual utility savings.

New Jersey is likewise seeing some sizable ground-based systems adjacent to commercial structures. For example, a subsidiary of solar-minded Hartz Mountain Industries recently launched one of the state’s largest: an 8.5-megawatt solar array in Hamilton featuring more than 30,000 panels.

“I’d say it’s now pretty well established that we have a real solar industry here in New Jersey,” Hahn observed.