New Jersey is a hotbed for solar activity. But it’s not flares or the summer heat people are talking about. It’s that solar energy has become big business in the state.

A report released this month by the Solar Energy Industries Association (SEIA) shows that during the first quarter of 2012 New Jersey led the nation in solar installations.

For the first time, New Jersey overtook California to lead the country in installations, with 173.8 megawatts installed in the first quarter of this year. That is compared to California’s 148.4 megawatts, according to the SEIA report, which was released on June 13. The research for the report was compiled by GTM Research, based in Cambridge, MA.

Also according to the report, New Jersey hosts 312 companies operating at 320 locations, and 17 manufacturing facilities throughout the solar supply chain. The state has a total of 15,760 solar photovoltaic installations and the industry employs almost 2,300 people.

The SEIA lists the solar farm at McGraw Hill in East Windsor as a notable utility-scale project. The array, which came online last year, provides 14 megawatts of power. “The installation will offset the need for any other energy sources to run McGraw Hill’s office,” says the report. It will also eliminate about 12,600 metric tons of carbon dioxide a year — the equivalent of removing about 2,500 cars from the road.

The growth of solar wasn’t just limited to New Jersey. According to the SEIA, nationwide the solar industry had its second-best quarter ever in terms of installations, during the first quarter of 2012. The number of installations, 506 megawatts worth, was bested only by the fourth quarter of 2011, when 708 megawatts worth of solar projects were installed. Overall, it was the best first quarter ever for solar installations.

The first quarter’s activity raises the total amount of solar power across the country to 4,943 megawatts — enough to power 775,000 homes.

The SEIA believes that 2012 will be a record year — forecasting that total solar installations will exceed 3,200 megawatts, 75 percent higher than last year’s total and 15 percent higher than previous annual forecasts for 2012. The report states that the reason for the increase in forecast is attributable, in part, by the strong numbers coming from New Jersey.

“The solar industry continues to lead the United States out of difficult economic times,” says Rhone Resch, president and CEO of SEIA. “Installations have grown by 85 percent in the last year. This growth is coming from consumers who are turning to solar to reduce their energy costs.

Meanwhile, Governor Chris Christie is expected to approve legislation in July that would boost the renewable energy requirements for state power suppliers.

The change is meant to help prevent a trough in solar installations prompted by an overabundance of solar power.

Much of the industry’s rapid growth has been prompted by solar renewable energy certificates (SRECs), which give credit to solar array owners based on the green energy they produce. The system owners can then sell those credits to power suppliers, who use the credits to offset their renewable energy requirements.

The program was so successful in 2011 that the number of SRECs available in the marketplace exceeded the amount needed to meet renewable energy requirements. It sent SREC prices plummeting.

In April the price of SRECs in the New Jersey market collapsed to $88.94 per megawatt hour, compared with $655 per megawatt hour at the same time a year ago, according to Flett Exchange, an Internet-based trading site.

In reaction, the state Senate has approved a bill that would increase the renewable energy requirements, but also set a ceiling on SREC prices. A similar bill is currently making its way through the Assembly.

Based on optimism that the legislation will be approved, SREC prices climbed as high as $165 per megawatt hour at the end of May, before settling at $130 per megawatt hour in June, according to Flett.

For companies like 4Best Solar, which recently moved to Route 130 in Bordentown from North Street in Robbinsville, passage of the SREC legislation would be good news.

The company, founded three years ago, focuses on commercial and residential markets, with a core competency in designing, constructing, and administering solar systems for both markets, says Tom Rust, who is managing partner along with Rich Albano.

Rust says his company has clearly been a beneficiary of people looking to save on energy costs due to the tough economy, as well as federal and state funds.

“There’s been some turbulence in terms of (state) legislation but the way that’s going, it looks like it will make for a more confident income stream for solar power,” says Rust.

Another company that has recently expanded into a new location is Sky High Energy, which moved from an old office on Everett Drive in West Windsor to a new one in the same complex.

Bradley Farquhar, president and co-founder of Sky High, says he has seen solar’s influence expand in all the areas in which his company does business.

The company is headquartered in Arizona and has offices in Massachusetts, Missouri, and at 51 Everett Drive. Each of these areas of operation were chosen, Farquhar says, because of the main thing that has driven the growth of residential solar — state incentives.

The company was founded in 2010, partly by Farquhar, a Canadian immigrant who grew up in Nova Scotia and worked various jobs in the states until he could move here.

At the time, incentives to residents looking to install solar energy set-ups were all the rage, not to mention generous. In New Jersey, solar equipment is exempt from the state’s 7 percent sales tax and from property tax assessments. This means that residents who install solar on their homes can add value to their property without having to pay taxes associated with the improvement.

Farquhar, who had run a small residential construction company straight out of college (he graduated from St. Mary’s in Nova Scotia in 2008 with a bachelor’s in marketing and finance), saw the opportunity to marry his experience with his deep interest in renewable energy, as well as the opportunity to tap into markets that promised substantial growth through generous incentives.

Farquhar doesn’t know when the incentives will disappear, but he is sure they will, as solar’s popularity increases. He adds that Sky High is already ensconced in heavy-duty marketing. The company does a lot of cold calling and a lot of old-fashioned door-to-door canvassing to tell people about its services and that the incentives will be going away one of these days.

Sky High Energy installs solar-electric power systems for residential and commercial clients, but its main push is for residential, Farquhar says. The company also likes to straighten out the myth that solar is expensive.

One of Sky High’s biggest selling points is that it offers installation for no money out-of-pocket by homeowners. Sky High will waive the cost of the equipment in exchange for residents buying solar electricity from the company at a reduced rate. Traditional home electricity, he says can run 18 to 19 cents per kilowatt hour; solar 12 to 13 cents. Sky High also guarantees the installation for 20 years.

Sky High moved into the Princeton market last year. Farquhar says Princeton was an obvious choice because it is central to the entire state. Originally, the company operated at 45 Everett Drive.

In April it moved to 51 Everett because it needed more room to house its growing administrative and equipment storage needs. Bill Barish, president of Commercial Property Network at Emmons Drive, helped engineer the move, which added about 1,000 square feet to Sky High’s presence. It now operates in a 4,500-square-foot space.

Barish says he had been talking with the company since last year about a larger space and looked at three other properties. Ultimately Sky High chose to stay on Everett Drive, Barish says, because 51 immediately offered a bigger space as well as the opportunity to expand as Sky High grows its business. The new space provides “a little more office,” a newer HVAC system, and a better loading bay area, he says.

The Sky High deal is one of several similar Everett Drive transactions Commercial Property Network has overseen in the past four months. It also brokered deals for a division of Mistras, a data software company based at 195 Clarksville Road that needed to expand; and Exceptional Medical Transportation, a West Berlin-based ambulance service that was looking to expand in Princeton’s growing medical and hospital market.

4BestSolar LLC, 22 Route 130, Bordentown 08620-2718; 609-357-0400; fax, 609-223-2474. Tom Rust & Rich Albano, managing partners.

Sky High Energy, 51 Everett Drive, West Windsor 08550; 609-269-5037; fax, 609-269-5483.

Solar Company Moves

SolarCity, 9 Corporate Drive, Cranbury 08512. 888-765-2489; Leon Keshishian, regional director.

SolarCity, a national residential and commercial solar services company, headquartered in San Mateo, CA, opened its first New Jersey office on Corporate Drive in Cranbury in February.

In a release, SolarCity’s said its scale and purchasing power allows it to offer solar power below utility power rates, despite lower incentive levels that may be discouraging solar providers from expanding operations in the state. SolarCity was the No. 1 residential solar installer in the U.S. in 2010 and 2011 according to GTM Research, with more than double the volume of its nearest competitor, says the release.

SunPower Solar Company, 200 American Metro Boulevard, Suite 126, Hamilton 08619; 800-786-7693; Tom Werner, president & CEO.

SunPower Solar opened its east coast regional office in American Metro Center in Hamilton in April. The company, headquartered in San Jose, CA, develops solar solutions for homes, businesses, governments, commercial buildings, and utilities worldwide.

Princeton Power Systems Inc., 3175 Princeton Pike, Lawrenceville 08648; 609-955-5390; fax, 609-751-9225. Marshall Cohen, CEO.

Princeton Power Systems, manufacturer of alternative energy products, in May moved from Princeton Service Center to a new headquarters at 3175 Princeton Pike. It was the second move in a year — the company had moved from its former location in the Sarnoff Center to Princeton Service Center in early 2011.

The firm develops patented electric power conversion technology for solar, variable speed motor control, power quality, renewable, and distributed generation applications.

On June 6, PPS celebrated the completion of a 200 kilowatt solar array system at the Jane H. Booker Family Health Center in Neptune. The system was designed and installed by PPS.

In February, the company connected to a solar array that is generating power on Alcatraz Island. The project is an on-going initiative to supplement and take the place of the diesel generator currently powering the island.

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