With oil prices skyrocketing, demand for solar power is booming. And New Jersey, which has used a rebate program to help install more solar panels than any other state but California, is getting burned by its own success.

There is a backlog of more than 700 applications for the rebates, and property owners have to wait months, even years, to get solar panels installed. The program, which is paid for by surcharges on all utility bills, has been shut down several times over the last three years because applications far outpaced rebate money. Some solar installation companies have had to lay off workers while they waited for rebate checks to be sent.

All this has convinced New Jersey regulators that it is time to wean solar energy from public subsidies altogether. The state plans to replace rebates with energy credits that can be bought and sold on the open market.

As it works out the details of the transition, New Jersey — not the place most people associate with solar innovations — finds itself at the forefront of a growing national debate about the role of government in helping stimulate this sector of the energy economy.

New York, Colorado, Maryland and several other states with incentive programs are considering whether to scale back public subsidies so solar power can compete more extensively in an open market. And they are confronting another difficult question: Is that best done by turning to a few large companies, or sticking with smaller businesses that can create more local jobs?

“Obviously, big systems get us to our goals much faster, but we want everybody to participate,” said Jeanne M. Fox, president of New Jersey’s Board of Public Utilities, which proposed the changes and is expected to give them final approval next month.

Ms. Fox said she believes it will be possible to phase out rebates, create a secure market for trading energy credits, welcome large solar system operators and still protect many — if not all — small installers.

But some of those smaller operators think the proposed transition will replace a proven success with an untested experiment from which they — the entrepreneurs who started the solar boom with the help of rebates — will be excluded.

“The state wants to build a market to suit big companies that have access to huge sources of capital,” said Bill Hoey, managing member of N.J. Solar Power L.L.C., a $10 million company. “They could just crush the mid- and small-size market.”
Full Story: http://www.nytimes.com/2008/06/25/nyregion/25solar.html?_r=3&oref=slogin&pagewanted=print&oref=slogin&oref=slogin

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