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New Jersey has renewed its commitment to the continued growth of
solar energy development with the bipartisan passage of
S-1925/A-2966, which was signed into law by Governor Christie on
July 23, 2012. In a nutshell, the new law is intended to increase
demand for SRECs, which in turn will hopefully drive up the
price of the SREC and bring new stability and vitality to the
State's solar industry.
A dramatic increase in the quantity of installed solar capacity
in New Jersey over the past several years brought a flood of SRECs
into the market, driving the value of an SREC from a high of nearly
$700 to below the $100 mark. This scenario has steadily dimished
the financial return-on-investment necessary to drive new solar
construction, with many would-be solar developers wary of
commencing new projects.
The new law, which amends certain provisions of the 2010 Solar
Energy and Fair Competition Act, seeks to "fix" the SREC
problem, and as a consequence increase solar development, as
follows:
The law resets and accelerates the rate of increase of New
Jersey's solar renewable portfolio standard (RPS) requirement,
changing it from a fixed statewide gigawatt-hour requirement to a
percentage of the electricity sold in the State. The required
percentage of solar power to be included in the electric power
portfolios of New Jersey suppliers and providers will increase
incrementally from 2.050% in energy year 2014 to 4.100% in energy
year 2028. This new structure is intended to shield the value of
SRECs from wide market fluctuations and also to absorb, through
increased demand, the current over-supply of SRECs in the
marketplace. This will benefit the solar energy provider that does
not have a contractually set SREC price in place, as well as the
entrepreneur presently considering entry into the solar arena.
The law lengthens the life span of SRECs from three to five
years, and in anticipation of rising SREC prices, includes a
provision that reduces the Solar Alternative Compliance Payment
(SACP) schedule, which previously was set by the Board of Public
Utilities (BPU).
In a further effort to control the influx of SRECs into the
market, which could negatively impact supply and price, the law
provides for the BPU to serve as the "gatekeeper" of
entry by large non-net metered and non-on-site generation systems.
In order to implement this added control, the BPU will establish an
approval process requirement for such systems to qualify for SRECs.
Systems located on a brownfield or closed sanitary landfill site
are exempt from this approval process.
The law also provides for the BPU to establish a program to
provide SRECs and additional financial incentives - 'super
SRECs' - to owners of solar projects constructed on a
brownfield or closed sanitary landfill facility, as well as to
consider the establishment of additional financial incentives for
3MW or greater net metered solar projects.
The passage of S-1925/A-2966 into law is welcome news for
members of the solar development community, for property owners
seeking lower electricity costs, and for landlords who want to
obtain rental value from their building roof, provide their tenants
with less expensive electricity and make their rental properties
more competitive. Solar installation project costs have also
decreased significantly in the past couple of years, giving rise to
additional cause for optimism.
We will continue to monitor developments in New Jersey's
solar energy sector, and will keep you informed regarding future
incentives and strategies for effectively securing these
benefits.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In a recent and much anticipated decision by both natural gas producers and landowners, the Pennsylvania Supreme Court finally cleared up confusion about who owns the mineral rights to shale gas in Butler v. Powers Estate.
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Discussion With FERC Chairman Jon Wellinghoff
