Solar industry booming but many go bust

(Published in The Press of Atlantic City on Sunday, Jan. 3, 2010.)

As the national economy struggles, one industry is booming in New Jersey: renewable energy.

Buoyed by some of the nation’s most generous financial incentives and relatively little regulation, New Jersey’s renewable energy industry — particularly solar power — has exploded with activity. Scarcely a month passes without news emerging of some major new renewable power facility planned for southern New Jersey. PJM, the multistate organization that manages the regional energy grid, lists 52 proposed renewable energy projects due for interconnection studies, 24 of which are south of Trenton.

But the boom comes with a catch: Some new projects are proposed by companies with no background in renewable energy. Industry insiders say there’s little guarantee that the new solar power company in town knows what they’re doing, beyond how to count dollars and cents.

“There’s a joke that two guys and a spreadsheet make a solar company,” says Pamela Frank, of Flemington-based Sun Farm Network.

Like every good joke, this one has an element of truth.

Financially strapped building contractors are swapping trips to the lumber yard for a shot at installing windmills and solar panels at homes and businesses. Real estate developers and financial investors are getting into the industry, talking up major solar and wind projects despite a lack of energy industry experience.

The guy who sold you furniture last week could install your panels tomorrow.

Joe Crecca is one of the newcomers. After his company, Jasmine Building Systems of North Cape May, went bankrupt, he got into the solar panel installation business.

“I know there are other builders moving over into the renewable-energy sector for the purposes of maintaining an income,” said Crecca, of JBS Solar and Wind. “There’s a future there.”

The major attraction has been the state’s financial incentives, which New York-based Global Solar Center called “the most generous incentives for solar power in the nation.” The most notable one may be the Solar Renewable Energy Certificate, a credit-based system adjusted in 2006 to capitalize on the state Energy Master Plan’s mandate that 20 percent of the state’s energy come from renewable sources by 2020.

The use of the solar certificates has helped New Jersey grow its solar power industry in a hurry by making solar energy profitable.

Operators of solar energy sites, from large commercial facilities down to homeowners, can earn credits for every 1,000 kilowatt hours of electricity they produce. The credits can be sold to other energy companies seeking to meet their renewable energy goals.

With a solar certificate, an operator of a solar facility can earn 60 cents per kilowatt hour, said Joe Isabella, director of the Vineland Municipal Electric Utility. In the traditional wholesale energy market, a kilowatt is worth about 6 cents.

The largest residential solar installations can earn as much as $8,160 per year based on current market rates, according to Scott Hunter, administrator for the New Jersey Board of Public Utilities Renewable Energy Program.

Commercial solar installations have no such limits.

“If you remember all the speculators going to California hoping to strike gold in 1849, now you have all these speculators coming east to New Jersey to strike in New Jersey’s solar power market,” said Isabella, whose Vineland utility worked with Conectiv on a solar field in 2009.

Add to that a new 30 percent federal tax credit for renewable energy projects and New Jersey’s similar performance-based incentives for wind and biomass-based energy, and it’s clear why it is not merely the environmentally minded who are looking at the New Jersey market. Now, there’s money to be made.

That has changed the market drastically in a relatively short period of time, bringing in investors and operators from other fields. Some say there’s nothing wrong with that because many skills from construction or finance translate to the renewable power industry. It has, however, created a marketplace in which there are few guarantees that the guy installing your solar panels — or proposing a massive solar or wind energy project in your town — has much experience in renewable energy.

“It is a bit like the Wild West out there,” said Frank, vice president of business development for Sun Farm Network. “It is a ‘buyer beware’ market. And the question people need to ask is, ‘What’s your track record? Is this going to produce?’”

On that, the state government offers few guarantees.

Regulation lacking

New Jersey requires that anyone wishing to install solar power at homes obtain a home improvement contractors license, said Doyal Siddell, a spokesman for the New Jersey Board of Public Utilities. The BPU maintains a “courtesy” listing of clean-energy vendors on its Web site, which one can find by searching home improvement contractors for “solar” or “wind.” To be listed on the site, a vendor must have completed three solar installations that pass state inspection.

State officials also advise that anyone hiring a renewable-energy company get at least three quotes from different vendors, much as they would in considering any contractors. Any project benefiting from state financial incentives must be inspected, but those not tied into the incentives do not require oversight.

Beyond that, there’s not much in the way of regulation.

“The Legislature has not given us a lot of dictates to regulate the business entities,” Hunter said.

The BPU has initiated a voluntary quality-assurance program in which renewable-energy companies submit to a series of inspections in return for a stamp of approval and a streamlined inspection process for future projects.

Thus far, most complaints appear only anecdotal. A check of the 16 solar power firms in New Jersey’s southernmost counties did not find a single consumer complaint, said Jeff Lamm, a spokesman for the state Division of Consumer Protection.

The question is how that future will be regulated, as well as how consumers and investors can separate legitimate operators from pretenders in an industry where few companies have long track records.

“This is an issue that’s being confronted by all the states because this is a new industry,” Hunter said.

In Arizona, the industry has begun to police itself. The Arizona Solar Power Society has backed an initiative dubbed the Arizona Solar Watchdog Program to help future solar customers separate credible contractors from the rest. The program recommends 10 steps, including soliciting at least three customer references, asking for an engineering design and checking the contractor’s licensing. The full list can be found at

“There are a lot of companies that will go into business, and they are just scam artists,” said Robert Hoskins, a spokesman for the Arizona Solar Power Society.

At the very least, many companies have little or no history by which to judge them. That’s the case for some of the state’s biggest renewable-energy projects, which are backed by brand new companies that have never completed an installation before.

“It’s a new industry. People don’t have track records,” said Jeff Tittel, director of the Sierra Club’s New Jersey chapter.

Toms River-based Delsea Energy has worked to balance out its lack of a record with general technical know-how and by hiring people such as former state Department of Environmental Protection Commissioner Brad Campbell as consultants. The company’s principals are largely engineers and former builders, but the firm has never completed a renewable-energy project.

Now, Delsea Energy is proposing an ambitious and controversial plan to raise more than 100 wind turbines in the Delaware Bay, potentially accompanied by more wind turbines inland in nearby Downe Township.

And a Millville firm run by former Vineland electric utility employee Dennis Bracall announced plans in July for a four-site network of solar plants that would produce 100 megawatts of solar energy. To put that in perspective, the state’s largest current site, run by Conectiv and the city of Vineland, produces only 4 megawatts.

Bracall’s partnership with American Capital Energy, a Massachusetts firm that worked on solar panel installation at the Atlantic City Convention Center, added credibility to the idea.

All talk, no action

Bracall says some others may talk big and not deliver, but he doesn’t plan to be one of them. He expects work to begin in March on a 4-megawatt solar plant in Vineland, with another soon after in nearby Deerfield Township. PJM has done some of the required studies evaluating whether those projects can tie into the grid, according to PJM’s Web site.

“A lot of blowing the whistle, but not a lot of people are stepping to the plate,” Bracall said, characterizing the big talk around the industry.

Vineland’s Isabella is in a unique position to see that. As head of the state’s only municipal electric utility still producing a significant amount of its own energy, he estimates about 100 different groups have inquired about partnering with Vineland on solar development like Conectiv did on its 4-megawatt plant. Isabella plans at least one more similar-sized plant, which likely will see competing proposals next year. But in the meantime, Isabella has been sifting through a cast of pretenders and contenders.

“Some serious. Some didn’t understand the industry,” Isabella said.

“Some read about solar in the newspapers and said, ‘I can start a solar company,’ and try to jump right in,” Isabella said. “There are some responsible developers who understand the industry and are responsible.”

Michael Hidary, managing director of Global Solar Center, said the solar industry is no different from any other industry. Investors are drawn by the potential of good returns, thanks to solar certificates and New Jersey’s generally high cost of electricity, he said.

“Because the returns are so lucrative, you have a lot of people who are vying for them,” said Hidary, whose firm serves as a middle man between customers and solar companies. “Some are financed. Some are not financed. I don’t know that it’s that different from other businesses, like real estate. I think that’s a result of the credit market. As soon as things open up, you’ll see these projects come through.”

Eventually, the hype will die down, Tittel said, and credible contractors and developers will separate themselves from the rest, just like any other industry.

“In any industry, particularly when it’s a startup, you get these people coming in and acting like they’re big shots,” Tittel said. “Then nothing happens, and they fade away.”

Contact Daniel Walsh: 856-649-2074

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Each time a system generates 1,000 kilowatt hours of electricity, a customer earns a Solar Renewable Energy Certificate for his account. The customer can then sell the certificate through the state’s Solar Renewable Energy Certificate tracking system, which provides revenue over the next 15 years. The price of solar certificates fluctuates, depending on supply and demand in the market. The current average rate is $680.

Electricity suppliers are the primary buyer of solar certificates because it allows them to comply with state requirements mandating that 20 percent of New Jersey’s energy being from renewable sources by 2020. If suppliers don’t produce enough renewable energy and buy enough certificates, they must pay a Solar Alternative Compliance Payment.

Source: New Jersey Board of Public Utilities

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For more information on Solar Renewable Energy Certificates and other clean energy initiatives, see and