County rethinks solar panel effort

Passaic County has gone back to the drawing board on an innovative solar project that has been touted by consultants as a money saver but could leave taxpayers paying debt for decades.

Under the original proposal, the county's Improvement Authority — its chief financing arm — would sell as much as $30 million in bonds to pay for construction of solar panels on public buildings in towns and cities. But after the county put forward projections that showed the project could cost $18.4 million more than the revenue it would generate, the Nov. 10 bid deadline came and went without a single bid submitted.

The authority said a new request for proposals to developers could be different, though the "mechanics" will be the same.

"PCIA [Passaic County Improvement Authority] is reaching out to potential interested solar developers to determine how to move forward with the RFP [request for proposals] process," a county spokesman said.

Passaic is among six New Jersey counties that have considered a plan that uses governmental bonds — and the county's favorable credit ratings — to finance solar-power installations. Three of those counties have already committed more than $100 million to the model, which promises lower energy costs.

But achieving that goal comes with higher risk and could leave Passaic taxpayers responsible for as much as $8.7 million under one of the original scenarios sent to developers. The project's consultants stressed that the projections were a guide upon which potential developers could base their bids and were not intended to be forecasts.

They also pointed to safeguards that would protect the county from loss but conceded there is some risk.

The freeholders were scheduled to vote Nov. 29 whether to proceed with the project but deferred action.

"You're right, there is a difference between the sums of those two things," Steven Gabel, the project's energy consultant, said when asked about the projected revenue falling short of the yearly bond repayments. "The way this is modeled, there are a number of moving parts designed to congeal and come together to protect the county's financial situation."

Among those moving parts is a heavy dependence on Solar Renewable Energy Certificates, which are sold to utilities on a market that has shown itself to be unstable. Utilities buy the credits to fill the gap between how much renewable energy they produce and what the state requires them to generate. A boom in solar projects has created a surplus in SRECs, causing their value to plummet to $160 in August from $650 in May. The price has been about $280 in recent weeks.