New Jersey signs off on new solar incentives

New Jersey regulators today approved the first phase of a long-anticipated successor to the state's solar renewable energy certificate (SREC) program while closing the interim incentive system in place since last year.

The five-member state Board of Public Utilities (BPU) unanimously approved a fixed-price incentive system for small-scale solar projects as the first leg of the successor program. Registration will open immediately following the closure of the transition program, which the board set for 27 August.

The first part of the new program will use "capacity blocks" to build out a variety of project subsets. For 2022, the board will open 150MW for residential net-metered projects, 150MW for non-residential net-metered projects as large as 5MW, 150MW for community solar projects and 75MW for "subsection t" projects, those located on brownfields or landfills.

Price levels for the new "SREC-II" incentives will vary according to project type, with residential net-metered projects drawing values of $90/MWh and subsection t projects receiving $100/MWh. Compensation for non-residential net-metered projects will vary between $80-$100/MWh, depending on factors such as size and location. Community solar projects will fetch $70/MWh, unless they serve low- or moderate-income areas, in which case they will receive $90/MWh.

And projects installed at public facilities will receive an additional $20/MWh above their baseline compensation.

Values for the 15-year incentives will be set on a three-year basis to balance the need for stability among developers, while leaving the door open for adjustments based on evolving project costs. BPU will check in sooner, after one year, at the start of the program.

BPU also directed its staff to work with a consultant to flesh out the second part of the successor program, which will use competitive solicitations to award SREC-II credits to utility-scale projects and net-metered projects larger than 5MW. Governor Phil Murphy (D) recently signed a law to support adding an average of 300MW/yr of new solar through the competitive solicitations over a five-year period.

The first solicitation is expected next year.

BPU president Joseph Fiordaliso said the agency is counting on solar, alongside offshore wind, energy efficiency and widespread electrification, to meet governor Phil Murphy's (D) goal of 100pc clean energy by 2050.

"The solar industry is an important part of our economy, and we, as a board over the past two-plus decades, regardless of who has sat up here, have promoted and supported the solar industry," Fiordaliso said. "And that's one of the reasons it is where it is today."

At the same time, Fiordaliso bristled at criticism of the board's transition away from the legacy SREC program.

"It upsets me a little bit when I hear people say, 'You are going to destroy solar.' No, we are not. All we continue to do is make that foundation stronger so that those building blocks in this industry can continue to be put on that foundation," the BPU president said.

Some players in the solar industry have critiqued the state's diminishing incentive values. Argus yesterday assessed New Jersey vintage 2021 and 2022 SRECs for the legacy program at $237.50/MWh and $233.50/MWh, respectively, while transition RECs are fixed at baseline price of $152/MWh.

But that sentiment is not universal among industry advocates, with trade group Solar Energy Industries Association applauding the steps taken today by BPU.

"The revised incentive levels provide a framework for the solar industry to continue to create jobs and private investment in New Jersey while balancing ratepayer impacts," SEIA mid-Atlantic senior manager of state affairs Scott Elias said.

By Patrick Zemanek