Report: Solar Power Delivers High Value In New Jersey, Pennsylvania

Posted by SI Staff on November 05, 2012 No Comments
Categories : New & Noteworthy

Solar power in New Jersey and Pennsylvania delivers value to the electric grid that exceeds its cost by a large margin, according to a new study conducted by consulting firm Clean Power Research.

According to the Mid-Atlantic Solar Energy Industries Association (MSEIA) and the Pennsylvania Solar Energy Industries Association (PASEIA), which released the study, solar is a bargain for electric ratepayers.

Energy providers in New Jersey and Pennsylvania are required to buy certain amounts of solar power each year through solar renewable energy certificates (SRECs) and pass this premium cost on to ratepayers. The study found that solar power delivers a total levelized value ranging from $256 to $318 per MWh ($0.256/kWh to $0.318/kWh). However, this includes a premium value in the range of $150/MWh to $200/ MWh ($0.15/kWh to $0.20 /kWh), above the value of the solar electricity generated.

SRECs currently cost about $60/MWh ($0.06/kWh) in New Jersey and $20/MWh ($0.02/kWh) in Pennsylvania. ‘This indicates that electric ratepayers in the region are getting more than a two-to-one return on their investment in solar energy,’ says Dennis Wilson, president of MSEIA. ‘Although the current SREC prices are unsustainably low, our analysis indicates that SRECs can increase in price, deliver net benefits and still support strong solar growth.Â

‘Solar power has proven it can deliver value that exceeds its cost by 50 percent to over 100 percent,’ Wilson continues. ‘This net positive benefit will only increase as solar technology continues to drop in cost.’

New Jersey, the nation's second-largest solar market with 900 MW of solar capacity, is the first state to generate more than 1% of its annual electricity from solar energy, the report adds. Its annual solar share is now approaching 1.15%, with contributions during peak demand periods several times higher. Once one of the nation's fastest growing solar markets, Pennsylvania has since fallen to eighth place in installed capacity. Increasing the state's near-term solar commitment would put Pennsylvania solar growth back on track.

‘This report broke new ground in that it incorporated a wealth of utility power cost data, enabling detailed analysis of economic drivers such as the merit order effect, according to which power can have different values depending on when it is generated,’ adds Richard Perez, one of the authors of the study. ‘Solar energy has inherent advantages stemming from such economic drivers.’

The report assessed the value of modest solar penetration (15% of utility peak load) at six locations: Pittsburgh, Harrisburg, Scranton, Philadelphia, Newark, Atlantic City and Jamesburg. Research concluded that by offsetting the need for conventional power, distributed solar power delivers measurable benefits, including the following:

– Lower conventional electricity market prices due to reduced peak demand;
– Valuable price hedge from using a free, renewable fuel rather than variably-priced fossil fuels;
– Avoided costs of new transmission and distribution infrastructure to manage electricity delivery from centralized power plants;
– Reduced need to build, operate and maintain natural gas generating plants;
– Reduced outages due to a more reliable, distributed electric power system;
– Reduced future costs of mitigating the environmental impacts of coal, natural gas, nuclear power and other generation; and
– Enhanced tax revenues associated with local job creation, which is higher for solar than conventional power generation.

The full report is available here.

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