N.J. solar-energy companies face challenges

It was the early 2000s, and Steve Masapollo was about to take the leap and quit his job managing a chain of psychiatric-treatment centers and start his own solar-installation company.

The market was wide open, and the combination of state and federal incentives was an alluring package for homeowners who could afford solar's hefty up-front price tag. By early 2009, Masapollo said, his company was approaching $100 million in sales.

But almost three years later, as incentives for homeowners to go solar have diminished, he has watched the industry shift. It has gone from a small cast of homespun contractors installing modest, rooftop systems to large projects undertaken by big out-of-state solar companies and the utilities themselves.

"It's getting like the Wild West," said Masapollo, CEO of SolarWorks NJ in Washington Township. "You have these California companies come in with the lease deals, and the utilities are putting up 20 megawatts here and 20 megawatts there."

The boom-and-bust atmosphere that has overtaken New Jersey's solar industry - ranked second in the nation after California - has made for tough times for those companies that were the backbone of the state's solar revolution.

They had thrived for years in what was a niche market, propped up by state rebates and federal grants.

Then regulators created something unique at the time in the country, replacing the rebates with a market-based system in which solar customers of all sizes earned credits based on how much electricity their systems generated.

Those credits could then be sold to utilities and other polluters who were required to cut fossil-fuel emissions.

Some environmentalists feared it was too early for such a move, that the industry was still too fragile to exist without rebates. Those concerns proved unfounded.

Over the last year, New Jersey has seen its solar capacity more than double, with a pipeline of large-scale solar farms set to come online in the years ahead, according to the New Jersey Office of Clean Energy.

Assemblyman Upendra Chivukula (D., Somerset), a longtime advocate of solar technology, said he was as surprised as anyone.

"A lot of things were happening. The federal government through the stimulus program was giving out grants . . . [and] the cost of the solar panels came down," he said. "When we passed the law in 2010, we never thought there would be so much solar."

Everyone joined what one longtime proponent called a "gold rush."