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New Jersey

New Jersey

Incentives/Policies for Renewables & Efficiency

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Solar Renewable Energy Certificates (SRECs)   

Last DSIRE Review: 08/16/2012
Program Overview:
State: New Jersey
Incentive Type: Performance-Based Incentive
Eligible Renewable/Other Technologies: Photovoltaics
Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Local Government, State Government, Tribal Government, Fed. Government, Agricultural, Institutional
Amount:Varies; average prices ranged from $225 - $390 per MWh during 2012 with significant variations for individual trades
Maximum Incentive:2012-2013 compliance year: ~$641 per MWh (~$0.641 per kWh)
Terms:Systems must be registered with NJ Board of Public Utilities; facilities qualify to generate SRECs for 15 years after the date of interconnection
Eligible System Size:No specific limits, but system must be connected to distribution system; behind-the-meter systems must be sized so that annual output does not exceed annual on-site load
Equipment Requirements:Systems must be new and have five-year all-inclusive warranty; PV modules must listed by UL (or another nationally recognized testing laboratory) and inverters must be UL-1741 and IEEE 929 compliant; systems must be equipped with visual indicators and/or controls, have a monitoring capability that is readily accessible to the owner, and be equipped with an energy production meter that meets ANSI C.12 standards
Installation Requirements:Systems must be grid-connected to the "distribution system" in New Jersey. Systems not installed behind the meter of an electric customer (i.e., grid-supply systems) require approval from the BPU.
Start Date:03/01/2004
Web Site: http://www.njcep.com/srec
Authority 1:
Date Effective:
N.J. Stat. ยง 48:3-51 et seq.
1999 (subsequently amended)
Authority 2:
Date Effective:
N.J.A.C. 14:8-1 & 14:8-2
03/01/2004 (subsequently amended)
Authority 3:
Date Enacted:
Date Effective:
NJ BPU Solar Transition Order
09/12/2007
06/01/2008
Authority 4:
Date Enacted:
NJ BPU Solar Financing Board Order
08/07/2008
Authority 5:
Date Enacted:
NJ BPU Solar Financing Review Order
05/23/2012
Authority 6:
Date Enacted:
Date Effective:
S.B. 1925
07/23/2012
07/23/2012
Summary:

Note: In July 2012 New Jersey enacted S.B. 1925 substantially revising it's solar carve-out. The summary below incorporates information on the changes made to the solar carve-out and while it contains information on many of the most important changes made by the law, it is not exhaustive and lacks some details. Extensive rule making activity will be necessary to implement the various provisions contained in S.B. 1925. It is also worth noting that in May 2012 the administrative regulations governing the solar carve-out were amended to introduce more detailed project registration requirements and to require metering for all systems.

In May 2012 the New Jersey Board of Public Utilities (BPU) issued an order (see May 23, 2012 BPU Order above) providing for an extension of utility solar programs and allowing utilities a choice on whether to participate or not participate. All four of New Jersey's investor-owned utilities, including PSE&G, have signaled their intent to participate in extended programs. Any further programs will need to be approved by the BPU in order to proceed.

New Jersey's renewable portfolio standard (RPS) -- one of the most aggressive in the United States -- requires each electricity supplier/provider serving retail customers in the state to include in the electricity it sells at least 20.38% qualifying renewables by 2021 and 4.1% solar-electricity by 2028. The solar carve-out has been the subject of numerous revisions since it was first adopted. The solar carve-out was established in 2006 by the New Jersey Board of Public Utilities (BPU) and set at 2.12% by 2021. It was subsequently revised by A.B. 3520 January 2010 to have an ultimate goal of 5,316 gigawatt-hours (GWh) of solar generation in 2026, and yet again in July 2012 by S.B. 1925 to set the ultimate target at 4.1% of retail sales by 2028 with interim annual requirements.

Solar Renewable Energy Certificates (SRECs) represent the renewable attributes of solar generation, bundled in minimum denominations of one megawatt-hour (MWh) of production. New Jersey’s SREC program provides a means for SRECs to be created and verified, and allows electric suppliers to buy and retire these certificates in order to meet their solar RPS requirements. All electric suppliers must use the SREC program to demonstrate compliance with the RPS. New Jersey’s on-line marketplace for trading SRECs, launched in June 2004, is the first such operation in the world. The price of SRECs is determined primarily by their market availability and the price of the Solar Alternative Compliance Payment (SACP) for the state RPS. The SACP is effectively a ceiling on the value of SRECs because it is the per MWh payment that electricity suppliers must make if they fail to obtain enough SRECs to cover their RPS obligation.

SRECs accrue from participating solar-electric facilities beginning March 1, 2004. Generators must register with the BPU through the SREC Registration Program (see program web site above) in order to participate. Ambiguous wording in the administrative rules initially appeared to limit the creation of SRECs for compliance with the state RPS to net-metered systems located on a customer-generator's premises. In January 2008, S.B. 2936 specifically extended the right to generate RPS-eligible SRECs to non-net metered systems and in May 2008 the BPU adopted temporary amendments consistent with the change (subsequently replaced by permanent amendments). Projects must be "connected to the distribution system" serving New Jersey in order to qualify for SREC generation. In July 2012, S.B. 1925 supplied a specific definition for this designation, as detailed below.

With respect to solar-electric systems, S.B. 1925 defines the term to include: (1) net metered facilities, (2) facilities that meet the definition of "on-site generation"; (3) facilities eligible for aggregated net metering; (4) facilities owned or operated by a public utility approved by the BPU; (5) facilities connected to the distribution system at 69 kilovolts (kV) or less and approved by the BPU; and (6) facilities certified by the BPU and DEP as being located on a brownfield, an area of historic fill, or a closed landfill. The definition does not include any facility connected to the grid at a voltage of higher than 69 kV, unless the facility is a net metering facility.

Under (5) above, from EY 2014 - 2016, the BPU is generally only permitted to approve 80 MW of capacity in aggregate each year, and is not permitted to approve any single project with a capacity in excess of 10 MW. The law outlines a variety of parameters for BPU approval of grid-supply systems both before and after EY 2016. It also contains a slightly different path to approval for new grid-supply projects on agricultural land for which a PJM issued a System Impact Study on or before June 30, 2011. Finally, the law requires the BPU to consider establishing a program to provide additional support for net metered solar facilities of three MW or larger, including those owned by a public utility. If the BPU established such a program, it would be permitted to issue an SREC to qualifying facilities for no less than 750 kWh of energy production. Stated another way, the BPU would be permitted to create up to a 133% multiplier (i.e., 1 MWh = 1.33 SRECs).

Solar facilities have a 15-year "qualification life", meaning that they are eligible to generate SRECs for 15 years after they are connected to the grid. The qualification life ends on the first May 31 (the end of the RPS compliance year) that is at least 15 years after the interconnection date. If a generator has accumulated a fraction of an MWh by the end of a reporting year (May 31), the fraction may be carried over and combined with energy generated in one or more subsequent reporting years in order to make a full MWh that is eligible for sale.

SRECs generated prior to June 1, 2009 could only be used for compliance during the compliance year in which they were generated. Effective June 1, 2009 SRECs had a trading lifetime of two years, meaning that an SREC could be used for by an electric supplier for RPS compliance during the year it is issued or during the next compliance year. This lifetime was extended to three years -- the year of generation plus the following two compliance years -- by A.B. 3520 (2010), effective in July 2010. It has now been further extended to 5 years -- the year of generation plus the following four compliance years -- by S.B. 1925 effective July 23, 2012.

Prior to 2008 the SACP was set at $300 per MWh. This was amended in 2007, and an eight-year schedule was established by the BPU for Energy Year (EY) 2009 - 2016. In 2012 S.B. 1925 established a 15-year schedule for EY 2014 - 2028. Past and current SACP levels are as follows:

Energy Year SACP($/MWh)
2008-2009 $711
2009-2010 $693
2010-2011 $675
2011-2012 $658
2012-2013 $641
2013-2014 $339
2014-2015 $331
2015-2016 $323
2016-2017 $315
2017-2018 $308
2018-2019 $300
2019-2020 $293
2020-2021 $286
2021-2022 $279
2022-2023 $272
2023-2024 $266
2024-2025 $260
2025-2026 $253
2026-2027 $250
2027-2028 $239


SREC prices vary according to supply and demand in the market. During the latter half of 2011 and beginning of 2012, excess supply has driven down prices significantly.  Pricing information for SRECs originating within New Jersey is available from the PJM Generation Attribute Tracking System (GATS) through the Public Reports section of the web site.

SREC-based Financing Programs (programs currently closed, pending BPU approval of extended programs)

In April 2008, Public Service Electric and Gas (PSE&G) received approval from the BPU to offer a loan program to help its customers finance PV systems. The PSE&G Solar Loan Program allows customers to take a loan from the utility for up to 40-60% of the cost of the PV system. Customers may then repay the loan using SRECs produced by their system at a basement price initially set at $475 per SREC. The initial $105 million program was scheduled to last two years. An extension of the program, Solar Loan II, was approved by the BPU in December 2009 to provide additional financing amounting to $143 million through 2011 under similar though not identical terms. Click here for further information on this program.

In July 2008 the BPU issued an order requiring the state's other electric distribution utilities (Jersey Central Power and Light, Atlantic City Electric, and Rockland Electric) to submit plans for purchasing SRECs from solar facilities through long-term contracts. The order contains several mandatory design requirements, including: (1) contract terms of 10-15 years; (2) separate market segments for projects of 50 kW or less and those between 50 and 500 kW (the upper limit); and, (3) an initial 3-year program period ending with the May 31, 2012 compliance year. The upper limit was subsequently raised to 2 MW in December 2010. So called "legacy" projects that received rebates through 2008 under the CORE program are not eligible for long-term contracts.

PSE&G is permitted to continue to offer its Solar Loan Program through its close. Atlantic City Electric and New Jersey Central Power and Light issued their first request for bids on July 30, 2009 and Rockland Electric began participating in the second solicitation issued October 1, 2009. Click here for further details on the individual utility programs and an FAQ on how the programs operate.


 
Contact:
  New Jersey Clean Energy Program - SREC Registration Program
c/o Conservation Services Group
75 Lincoln Highway, Suite 100
Iselen, NJ 08830
Phone: (866) 657-6278
E-Mail: njreinfo@csgrp.com
Web Site: http://www.njcleanenergy.com/
NCSU - home
Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.