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Governor Christie Signs Bill Increasing New Jersey's Solar Renewable Portfolio Standard Requirements

July 2012

On July 23, 2012 Governor Christie signed S1925 into law in an effort to stabilize New Jersey's solar energy market.  The new law, among other things, couples an acceleration of the Renewable Portfolio Standard (“RPS”) for solar energy with a reduction of the Solar Alternative Compliance Payment (“SACP”).  These efforts are aimed at strengthening the solar market in New Jersey and securing the state’s place as a national solar energy leader.  S1925 is a substantial and comprehensive restructuring of New Jersey's solar energy program.  If you are currently involved in a solar energy project, or are contemplating becoming involved in a solar energy project, it is important that you understand the effect this new law will have on your project.

The key provisions of the new law are:

  • The amount of Solar Renewable Energy Certificates (“SRECs”) required to be purchased by electric power suppliers pursuant to New Jersey’s RPS will no longer be a fixed number but rather will be a percentage of the total kilowatt-hours (“kWhs”) sold in the state during the applicable energy year. On June 1, 2013 (the beginning of Energy Year 2014) the RPS will increase from 772,000 kWhs to 2.05% of the total kWhs sold in New Jersey during such period. Although the final number of kWhs will not be known until the conclusion of Energy Year 2014 (May 31, 2014), using energy consumption estimates provided by the Center for Energy, Economic and Environmental Policy the requirement will be approximately 1,600,000 kWhs. The RPS requirements for Energy Year 2015 and beyond are as follows:

Energy Year 2015 - 2.45%
Energy Year 2016 - 2.75%
Energy Year 2017 - 3.00%
Energy Year 2018 - 3.20%
Energy Year 2019 - 3.29%
Energy Year 2020 - 3.38%
Energy Year 2021 - 3.47%
Energy Year 2022 - 3.56%
Energy Year 2023 - 3.65%
Energy Year 2024 - 3.74%
Energy Year 2025 - 3.83%
Energy Year 2026 - 3.92%
Energy Year 2027 - 4.01%
Energy Year 2028 and beyond – 4.1%

  • The SACP schedule has been adjusted downward. The penalty for Energy Year 2014 will drop from $625 to $339. The remainder of the revised SACP schedule is as follows:

Energy Year 2015 - $331
Energy Year 2016 - $323
Energy Year 2017 - $314
Energy Year 2018 - $308
Energy Year 2019 - $300
Energy Year 2020 - $293
Energy Year 2021 - $286
Energy Year 2022 - $279
Energy Year 2023 - $272
Energy Year 2024 - $266
Energy Year 2025 - $260
Energy Year 2026 - $253
Energy Year 2027 - $250
Energy Year 2028 - $239

  • The Board of Public Utilities (“BPU”) is directed to establish an aggregate (virtual) net metering program for state, county and municipal entities, as well as school districts. Aggregate net metering will allow a single customer with a solar facility on property owned by such customer to serve multiple properties with one solar facility. All of the properties must be located within the customer’s territorial jurisdiction except that all eligible properties of a state entity must be located within five miles of one another. All eligible properties must be served by the same electric public utility and the electricity consumed on properties other than the property upon which the solar facility is installed is subject to transmission charges pursuant to the electric public utility tariff.
  • The shelf life of an SREC has been increased to the Energy Year in which it is generated plus the following four Energy Years.
  • Projects that are not (i) net metered, (ii) an on-site generation facility, (iii) qualified for net metering aggregation, or (iv) certified as being located on a Brownfield, closed landfill or an area of historic fill (collectively “Restricted Projects”) for Energy Years 2014, 2015 and 2016 require BPU approval prior to generating SRECs. Restricted Projects for Energy Years 2014, 2015 and 2016 are limited to 80 megawatts (“MWs”) per year in the aggregate. No Restricted Project in excess of 10MW will be approved for the generation of SRECs. All applications to the BPU must be accompanied by a check in the amount of $40,000 per MW, with said payment to be reimbursed upon rejection of the application or, if the application is approved, upon commercial operation of the solar facility. The payment will be forfeited to the state if an approved solar facility does not achieve commercial operation within two years of application approval.
  • Projects that are neither net metered nor an on-site generation facility, or are not a Restricted Project approved for SREC generation during Energy Years 2014, 2015 and 2016, will generate SRECs only upon approval of the BPU after notice to the public and opportunity for public comment. The BPU shall approve the project for SREC generation if:

i) The SRECs to be produced by the facility do not have a detrimental impact on the SREC market or the development of solar power in New Jersey;
ii) The approval of the project would not significantly impact the preservation of open space in New Jersey;
iii) The impact of the designation on electric rates and economic development is beneficial; and
iv) There will be no impingement on the ability of an electric public utility to maintain its property and equipment in such a condition as to enable it to provide safe, adequate and proper service to its customers.

  • Projects that are not net metered nor an on-site generation facility and that are located on land that has been assessed pursuant to the Farmland Assessment Act of 1964 at any time within the 10 year period prior to the effectiveness of the new law (collectively “Farmland Projects”) shall only be eligible to generate SRECs if (i) they are approved Restricted Projects, or (ii) (a) PJM issued a System Impact Study for the project on or before June 30, 2011, (b) the project developer files a notice with the BPU within 60 days of the effective date of the new law, and (c) the project has been approved for the generation of SRECs by the BPU.
  • The BPU is directed to establish a registration program that will require all owners of solar facilities connected to the distribution system to make periodic milestone filings with the BPU in a manner and at such times as determined by the BPU to provide full disclosure and transparency regarding the overall level of development and construction activities.
  • The issuance of SRECs for all solar projects with a capacity of 1 MW or greater shall be deemed projects with “Board of Public Utilities financial assistance” and, as such, shall be subject to prevailing wage requirements.
  • The BPU is directed to complete a proceeding to consider whether to establish a program to provide owners of net metered solar projects of 3 MWs or greater a financial incentive designated to supplement the SRECs generated by the project. Such program may include the issuance of one SREC for every 750 kWhs of electricity generated (as opposed to the current 1,000 kWhs).
  • The BPU is directed, in consultation with the Department of Environmental Protection and the New Jersey Economic Development Authority to complete a proceeding to establish a program to provide SRECs to owners of solar energy projects certified as being located on a Brownfield, a closed landfill or an area of historic fill, and to establish a financial incentive that is designed to supplement the SRECs generated by such projects.

For more information, please contact a member of Wolff & Samson's Renewable Energy and Sustainability Group:
Stephen A. Kisker  | (973) 530-2074  |
Robert H. Crespi 
|  (973) 530-2060  |
John G. Valeri Jr. 
|  (973) 530-2030  |
Michelle A. Schaap 
| (973) 530-2026  |