The New Jersey Board of Public Utilities (BPU) will hold a Public Hearing on March 22, 2012 starting at 9:30 am at its Trenton Office, 44 South Clinton Avenue. The purpose of the Public Hearing is to provide an opportunity for further public comment on a BPU Staff Straw Proposal on the next steps in the transition of NJ's Solar Program including: extension of the solar renewable energy credit (SREC) financing program administered by the four electric distribution companies (EDCs) located in the state; and related changes to the Solar Renewable Portfolio Standards (RPS). Initial Comments are due, in writing, by close of business on Friday, March 16 with final comments due at the close of the Public Hearing on March 22.
The BPU directed its staff to develop options and recommendations for next steps in response to rapid expansion of its Solar Program. The Solar Program expanded from an initial goal of 90 MW of installed solar during the five year period from 2003- 2008 to installation of more than 80 MWs in a single month during January 2012. As a result of this rapid expansion, New Jersey is projected to have an excess supply of installed solar capacity through at least energy year (EY) 2014 and perhaps through EY 2016. This excess supply has resulted in a dramatic drop in SREC prices from more than $600 per SREC in the spot market during the Summer of 2011, to about $200, and with the most recent EDC Auction in February 2012 yielding a price of $170.
The Governor's 2011 Energy Master Plan for New Jersey, which was released in December 2011, set policy goals for BPU solar program including:
- support for extension of the EDC SREC Financing Program and acceleration of the solar RPS in the near term;
- promote solar on brown fields and landfills;
- no subsidies for solar on productive/preserved farmland or open space;
- lower the costs of the SREC program while maximizing the economic and environmental benefits of solar.
Within these policy goals, BPU Staff focused on extension of the EDC SREC Programs with a near term bump in the solar RPS schedule.
The Staff Straw Proposal for the EDC SREC Program would extend program for a three year period through a competitive loan and/or solicitation program. New projects selected for funding through the EDC SREC Program would be subject to the following proposed elements:
- Program Size: 120 MWs allocated proportionately among the four EDCs.
- Funding Time Frame: for year one of the EDC SREC program funding would be for 10 years. For years two and three of the program funding would be for shorter time frames.
- No Floor Price for SRECs but rather would seek the lowest costs within each market segment.
- Costs: incurred by the EDCs for administering the SREC Programs born by the solar developer or generation customer.
- Eligibility: Net Metered projects with size limited by customer on-site usage pursuant to the Net Metering Rules set forth in N.J.A.C. 14:8-4 et. seq.
- Set Asides: for residential and small commercial; grid connected landfill and brown field projects in areas that can be supported by the distribution system.
- Sale of SRECs: via centralized auction in EY 2016 timed to minimize market impact.
The Staff Straw Proposal for the RPS, which requires a Rulemaking, proposes:
- RPS Acceleration: the additional capacity of the extended EDC SREC Program to be reflected in the solar RPS Rule Amendment effective EY 2016.
- SREC Life for New Projects: SREC qualification life for new projects to be reduced from 15 years to 10 years upon effective date set per rule and with a decreasing trend thereafter through EY 2027.
- SACPs: develop a revised Solar Alternative Compliance Payment (SACP) schedule for EY 2017 to EY 2026 which reflects the lower cost of solar installation.
Reed Smith Attorneys from the Princeton, New Jersey Office will monitor the Solar Transition Action Steps under consideration by the NJ BPU. For further information please contact Jim McGuire, Henry King, Ferd Convery or Marshall McLean.