A recent study by the consulting firm Clean Power Research showed that solar power in New Jersey and Pennsylvania delivers value to the electric grid that exceeds its cost by a large margin, making it a bargain for consumers. The study found that the value solar energy delivered exceeded its cost by 50 percent to more than 100 percent. The study was conducted on behalf of the Mid-Atlantic Solar Energy Industries Association (MSEIA) and the Pennsylvania Solar Energy Industries Association (PASEIA). Both organizations are solar-power advocates.
New Jersey and Pennsylvania are major solar markets in terms of the amount of installed solar capacity. New Jersey, the nation’s second-largest solar market with 900 megawatts (MW) of solar capacity is the first state to generate more than 1 percent of its annual electricity from solar. Pennsylvania ranks eighth in installed capacity.
Utilities in both states are mandated to buy certain amounts of solar power every year. They pay a premium for that solar power in the form of Solar Renewable Energy Certificates (SRECs) and pass the cost on to ratepayers.
The study found that solar power delivers a total levelized value, ranging from $256 to $318 per megawatt-hour (MWh). However, this includes a premium value in the range of $150 to $200 per MWh above the levelized value of the solar electricity generated. The SRECs in New Jersey currently cost about $60 per MWh and in Pennsylvania about $20 per MWh.
“This indicates that electric ratepayers in the region are getting more than a two-to-one return on their investment in solar energy,” said Dennis Wilson, president of MSEIA. “Our analysis indicates that SRECs can increase in price, deliver net benefits and still support strong solar growth. This net-positive benefit will only increase as solar technology continues to drop in cost.”
“Add together the proven public health, security and environmental benefits, and it’s clear that aggressive solar power development is a win for these states and their residents,” said Lyle Rawlings, vice president of MSEIA, New Jersey division.
The study concluded that, by offsetting the need for conventional power, distributed solar power delivers measurable benefits, such as lower conventional electricity market prices due to reduced peak demand; a valuable price hedge by 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 power system; and reduced future costs of mitigating the environmental impacts of coal, natural gas and nuclear generation.