Making, breaking, and (partially) remaking markets: State regulation and photovoltaic electricity in New Jersey

This paper describes the development of the U.S. state of New Jersey’s policy to accelerate the growth of photovoltaic electricity generating capacity over the past ten years. It provides insights that may be of use to scholars and policy-makers who seek to understand how markets for photovoltaics and other renewable energy technologies may be created and sustained, and it adds to the growing set of detailed historical case studies on these issues. Aggressive state policy measures have put New Jersey second to California among the U.S. states in installed photovoltaic capacity. That growth was achieved in a series of stages. New Jersey initially experienced a boom and bust as generous up-front rebates catalyzed rapid growth in demand and exhausted the program’s budget. A shift in 2007 to a policy that emphasized Solar Renewable Energy Certificates failed to sustain the growth in capacity. In response, the state began to require regulated transmission and distribution utilities to provide up-front financing for photovoltaic systems. This approach has restarted the momentum of the market, but it shifts the policy’s costs into the future, while empowering a new set of players with uncertain interests over the long term.