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New Jersey BPU Proposes to Slash Incentive for Commercial Solar Projects

New Jersey Commercial Projects for Solar Energy Farm Landowner Landlord Lease

Last week, the New Jersey Board of Public Utilities (BPU) issued a New Jersey Solar Successor Program Straw Proposal. The proposal outlines recommendations for a long-term replacement program for New Jersey’s existing Transition Incentive Program for solar projects in the state, which has been in place since 2019 and begins the stakeholder process for a permanent Community Solar Energy Program.

New Jersey Solar Successor Program Straw Proposal

The successor proposal was developed after two years of experience with the Transition Incentive Program, as well as numerous stakeholder discussions and reports. There are key carry-over features from the Transition Incentive Program for behind-the-meter projects of 2 megawatts or less and community solar projects. These features include fixed incentive payments for a fixed, guaranteed term based upon megawatt hours of solar electricity produced (now known as Transition Renewable Energy Certificates, or TRECs), and a variable incentive based on mount type and other project features.

One key aspect of the proposal calls into question the future of projects mounted on non-residential rooftops and on canopies over parking lots, walkways, and the like. The current incentive for these projects is $152.00 per megawatt-hour, the equivalent of $.152 per kilowatt-hour. The BPU has proposed slashing this incentive to $85.00. Incentives for residential projects, which are currently set at $91.20 per megawatt-hour, would be modestly reduced to this same level of $85.00. Incentives for community solar projects, currently at $129.50, would be reduced to $90.00 or $70.00, depending on whether the project is intended to serve just low and moderate income (“LMI”) customers, or all customers.

These incentives would be available only for projects with a capacity of 2 megawatts or less. Larger projects, including all those designed to supply power to the grid as opposed to on-site “behind the meter” hosts, would become subject to a new, annual competitive solicitation model. While details are yet to be finalized, it appears that there will be only a single window per year for these larger projects to qualify for incentives.

Transition Incentive Program vs. Community Solar Energy Program

Here is a more complete comparison of existing and new incentives:

Type of Project Existing Incentive per MWH Proposed Incentive per MWH
Contaminated or brownfield sites (a/k/a subsection (t)) 152.00 Competitive procurement
Grid supply rooftop (a/k/a subsection (r)) 152.00 Competitive procurement
Net-metered non-residential rooftop and canopy (2 MW or less) 152.00 85.00
Net-metered non-residential rooftop and canopy (more than 2 MW) 152.00 Competitive procurement
Community Solar 129.50 90.00 if Low and Moderate Income. 70.00 otherwise
Grid supply ground-mounted 91.20 Competitive procurement
Net-metered residential ground-mounted 91.20 85.00
Net-metered residential rooftop and canopy 91.20 85.00
Net-metered non-residential ground mounted (2 MW or less) 91.20 85.00
Net-metered non-residential ground mounted (more than 2 MW) 91.20 Competitive procurement
Floating solar panels 91.20 Deferred

Commercial Solar Projects

Projects that enter the BPU’s pipeline before these new incentives are finalized will be eligible for support under the existing TREC program. Accordingly, commercial enterprises that are contemplating being a host to a rooftop or canopy-mounted solar project for their own on-site consumption would be well-advised to move quickly.

Four virtual stakeholder workshops will be held in the upcoming weeks, and written comments are due by May 13, 2021. More details about the workshops and the full proposal can be found on the BPU’s website.

If you have any questions about the existing Transition Incentive Program, the newly proposed successor program, or related public utilities or solar energy matters, please feel free to contact us at jlaskey@norris-law.com or lmiller@norris-law.com.