Biggest New Jersey utility to install 120 MW of solar

New Jersey utility Public Service Electric & Gas announced plans today to spend $773 million on 120 megawatts of solar photovoltaics.

It's one of the first major projects by a U.S. utility to take advantage of the newest federal incentives for solar that went into effect Jan. 1. Under the new law, utilities can for the first time receive the 30 percent investment tax credit on the total project cost—a perk previously restricted to commercial and residential customers.

Some solar advocacy groups have questioned whether utilities will now squeeze out private companies looking to sell into the markets (see Solar takes stock after tax-credit battle). But the Solar Electric Power Association applauded PSE&G today, saying it was one of many utility projects it expects to be rolled out this year.

"Utility access to the federal solar investment tax credit will significantly change the pace for solar electricity adoption by the traditional utility power sector," said SEPA Executive Director Julia Hamm in a release. She cited the many available business models to encourage solar development, including third-party owned and operated solar farms, small distributed solar plants on customers' rooftops and utility-owned solar plants.

Already, Charlotte, N.C.-based Duke Energy (NYSE:DUK) and Southern California Edison, a unit of Rosemead, Calif.'s Edison International (NYSE:EIX) have announced plans to pay rent to customers to place solar panels on private rooftops and land (see Duke Energy seeks $100M in solar equipment). However, the status of Duke Energy's plans is now in question as it fights the utility commission about funding (see Utility commission rejects Duke Energy's funding plan for solar project).

PSE&G said it plans to put panels on affordable housing, government buildings, underutilized land owned by the utility or government, and up to 200,000 utility poles. SEPA called the utility pole plans innovative, as the group knows of no other utility to try that approach.

The Solar 4 All Program must get the approval of the New Jersey Board of Public Utilities, which has 6 months to take action. PSE&G plans to start installation in 2009, with the entire capacity installed within five years.

PSE&G said the solar program, if approved, would provide 7 percent of New Jersey's electricity demand, helping the utility reach the state's Renewable Portfolio Standard requirements. The utility services three-fourths of the state's residents and is a subsidiary of Public Service Enterprise Group (NYSE: PEG). Shares were down nearly 4 percent at the close of trading today.

The utility anticipates the project to cost $6.44 per installed watt of solar capacity. PSE&G expects to recoup its investment in 15 to 20 years.

The impact on rates is expected to be minimal because of the Solar Renewable Energy Certificates and federal tax credits. PSE&G said an average customer's bill will increase 10 cents a month for the first year, increasing to 35 cents a month by 2013.

PSE&G plans to use a bidding process to select companies to design and manufacture the solar units. The plans include:

• $264 million, or 40 MW, for solar devices on 200,000 utility poles and street lights.
• $273 million, or 43 MW, for solar systems on the rooftops of public schools, municipal buildings and county-owned buildings.
• $221 million, or 35 MW, for ground- or roof-mounted solar systems on utility-owned property, including 10 MW for brownfields and property that's undeveloped or owned by non-profits.
• And $15 million, or 2 MW, for solar systems for affordable housing communities.

Cleantech developments making news in the past 24 hours

• AES raises $1.58B with China Investment

View the last week of cleantech developments here | Subscribe to full feed