NJ, PA solar provides 2:1 ROI
New research finds that solar power delivered to the grid in New Jersey and Pennsylvania exceeds its cost by a significant margin.
The research, released by Mid-Atlantic Solar Energy Industries Association and the Pennsylvania Solar Energy Industries Association and conducted by consulting firm Clean Power Research, assessed the value of modest solar penetration (15 percent of utility peak load) at six locations throughout New Jersey and Pennsylvania. It found that solar power delivers a total levelized value ranging from $256 to $318 per megawatt hour or 25.6 cents to 31.8 cents per kilowatt hour. This includes a premium value in the range of $150 to $200 per MWh (15 cents to 20 cents per kWh), above the value of the solar electricity generated.
"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.
Energy providers in New Jersey and Pennsylvania are required to buy certain amounts of solar power each year. They pay a premium for that solar power in the form of Solar Renewable Energy Certificates and pass this premium cost on to ratepayers. The SRECs in New Jersey currently cost about $60/MWh (6 cents per kWh), and in Pennsylvania they cost about $20/MWh (2 cents per kWh).
"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," Wilson said. "Solar power has proven it can deliver value that exceeds its cost by 50 percent to over 100 percent. This net positive benefit will only increase as solar technology continues to drop in cost."
The research provides justification for the expansion of investments in solar energy programs and policies from an economic standpoint in these two states.
According to Richard Perez, one of the authors of the study, "This report…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," said Richard Perez, one of the study's authors. "Solar energy has inherent advantages stemming from such economic drivers."
- see the report
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