New Jersey has injected new life into its renewable energy programs with the passage of a bill that dramatically raises New Jersey’s renewable portfolio standards (RPS), revamps its solar renewable energy certificate (SREC) program, kick-starts development in energy storage and community solar, and re-establishes a directive to develop a program for offshore wind credits (ORECs). The new law increases the RPS to 50% by 2030, while Governor Murphy’s Executive Order 28 requires the state’s 2019 Energy Master Plan to chart the course to 100% “clean energy” (i.e., renewables and nuclear) by 2050. With these two steps, New Jersey’s renewables sector should be primed to flourish, pushing solar development forward and setting the stage to harvest untapped resources such as offshore wind. These developments not only could be beneficial to renewable energy developers, but could also present opportunities for motivated businesses and other consumers to make the transition to renewable resources.
Nuclear energy will be part of Governor Murphy’s 2050 100% “clean energy” target. A nuclear bill that was also signed by Governor Murphy recognizes that “clean energy” includes nuclear energy as a zero carbon-emitting resource. The nuclear bill is intended to forestall premature closure of the state’s nuclear fleet, which generates nearly 40% of New Jersey’s electric energy output.
The new clean energy law, which became effective immediately, also caps the costs to customers that may result from the 50% RPS requirement, limiting costs placed on customers to no greater than 9% of total energy costs for years 2019 through 2021, and 7% thereafter. To ensure these caps are not exceeded, the New Jersey Board of Public Utilities (BPU) is empowered to take any steps necessary, such as reducing the RPS requirement. Importantly, costs associated with ORECs are excluded from these caps, and the law adopts an increased goal of 3500 MW for offshore wind generation.
New Jersey’s solar carve-out has also been revised, increasing the solar RPS from 3.46% to 5.1% in 2021, and doubling the statewide net metering threshold to 5.8%, at which point suppliers may seek BPU approval to deny new customers the benefit of net metering. The SREC program will be completely reformulated—a move widely viewed as necessary—as SREC prices have experienced extreme volatility.
Under the new law, the SREC program will close to new applicants once the 5.1% RPS has been met. Then, on June 21, 2021—if not sooner—the program will close for good. In the interim, the solar alternative compliance payment fee has also been reduced, effectively lowering the ceiling on SREC prices. New projects over 25 kW will also have to satisfy an escrow requirement that will be held during the pendency of an application and, if accepted, until commercial operation. Further, projects will only receive a maximum 10 years of SRECs, down from 15 years. As for what will follow SRECs, the BPU is tasked with designing both an orderly transition from, as well as a successor to, the SREC program, and will engage in a collaborative process with various stakeholders in crafting a replacement program that will seek to provide both stability and revenues to the solar market in the near future.
Two novel additions to New Jersey’s renewable energy programs include (1) the development of a community solar pilot program and (2) energy storage mandates. Community solar provides an opportunity for multiple individuals or entities to subscribe to a single solar facility, while retaining the ability to qualify for net-metering benefits through what is known as “virtual” net-metering, or as described in the bill, “remote” net-metering—a qualifier which can be attributed to the separate physical location of the solar facility away from the subscriber. These projects allow for those who rent or lease their properties, or those for whom a solar installation is not feasible, to participate in solar development more directly than purchasing SRECs to cover their usage. There may also be substantial opportunities for large customers, such as businesses, that can serve as an “anchor” for a community solar project by entering long-term agreements for large shares of the energy produced, and by the same token, making these projects economically feasible for the solar developers. Similarly, these changes create opportunities for real estate developers to integrate solar and storage into their plans (whether on-site or off-site) to provide them with a competitive advantage in attracting businesses seeking potential energy savings as well as a “green” and community-oriented public profile. Finally, the bill suggests continued support for this community solar effort by requiring the state to turn the pilot program into a full-scale program within three years.
As for energy storage, the bill sets mandates of 600 MW by 2021, and 2000 MW by 2030, and requires studies on mechanisms to support deployment of storage and the benefits of storage to ratepayers. The Executive Order requires the 2019 Master Plan to include recommendations to meet those targets and seeks to position New Jersey as a leader in clean energy storage.
The BPU will play an integral role in implementing both resources, as it is responsible for setting the parameters of the community solar pilot program and must conduct a study as to how best to implement the energy storage mandates according to the timeframe set forth in the bill. This endeavor will require collaboration from stakeholders, and the resulting recommendations will also become part of the revised Energy Master Plan that will be completed in 2019.
Governor Murphy’s 100% clean energy goals, coupled with the immediate impact of the clean energy bill that he recently signed into law, will have profound impacts on the renewable energy sector in New Jersey. There is likely to be activity in the coming years, and the BPU’s near-term work is expected to provide critical insight into any additional incentives that may be offered as a means to achieve these lofty targets. Businesses interested in transitioning to a renewable energy footprint should be encouraged to investigate these opportunities.
While opponents of nuclear power have criticized the bill’s treatment of nuclear generators, the solar industry is generally positive about the bill. The bill is expected to stabilize and expand the renewable market and simultaneously preserve solar industry jobs, providing a boon to an industry that once earned New Jersey the title as having the most solar capacity of any East Coast state.