New Jersey installed nearly 4GW of solar in 2021, why is there cause for concern?

New Jersey added 3.8GW of new solar capacity in 2021, as outlined in the newest edition of DG+’s New Jersey Solar Market Report, yet the report also outlines that this high-water mark might not be a lasting one, and that the state’s market could take a downturn soon.

In Q4 2021,  the report outlines that commercial sector installation capacity dwarfed residential installation capacity by a ratio of 3 to 1, with solar development especially concentrated in Public Service Enterprise Group territory. For the calendar year 2021, New Jersey’s largest residential solar developers were Vivint Solar (acquired by Sunrun), Trinity Solar, and Vision Solar. In the commercial sector, EnterSolar led the pack, followed by Distributed Solar Operations and Smart Citizens LLC. Community solar development was led by Solar Landscape, Altus Power, and CEP Renewables.

From Q3 to Q4, the state saw a massive spike of new solar projects turn into a significant dropoff in installed capacity, igniting concerns of a potential, long-term downward trend.

One of the chief reasons cited for this potential downturn is a familiar foe: interconnection backlogs. All of New Jersey falls under PJM Interconnection, and PJM recently proposed a two-year pause on reviewing interconnection requests for its eastern US regional transmission network, as the operator looks to work through its more than 1,200 energy project backlog, with most of these projects being solar and many being in New Jersey.

In a recent survey, nearly 90% of renewable developers surveyed by LevelTen said that interconnection timelines and costs represented the biggest barrier to achieving 40% solar by 2035, a goal of the U.S. Department of Energy. New Jersey itself has a goal of achieving 37% solar power across the state by 2050.

The news is not all doom and gloom, however, and a series of legislation and renewable programs passed and enacted in 2021 are providing hope that the Q4 2021 downturn will just prove to be a blip on the course to greater renewable adoption.

The study firstly cites the state’s A3352, signed into law by Gov. Phil Murphy on November 9, which requires all new warehouses in the state to be built as solar-ready buildings. The law defines a warehouse as any building 100,000 square feet or larger primarily is used to store goods for resale, and now new warehouses built on or after July 1, 2022 will need to be optimized for solar.

The report also points to this past fall’s decision by state regulators to transition the two-year-old pilot community solar program to permanent status. Regulators awarded 78 MW across 45 projects during the pilot program’s first year, exceeding a 75 MW goal. While the pilot required that at least 40% of all approved projects reserve at least 51% of their capacity for low- and middle-income households, all of the approved renewable energy projects met that goal.

Year two of the pilot program doubled the amount of capacity, with the 150 MW available. It carried the same carve-out for low- and middle-income customers. The program was modified as regulators looked to reduce time and costs for developers to enroll customers.