New Jersey Community Solar Policy Guide for Asset Owners & Developers

1. New Jersey’s Community Solar Program

New Jersey has moved quickly to become a leader in renewable energy, particularly solar. The state set an ambitious requirement that every retail energy supplier procure 35% of the electricity it sells from renewable energy by 2025 and 50% by 2030. In 2018 New Jersey passed the Clean Energy Act which helped accelerate New Jersey to generate 5.1% of its energy from solar, mandated the creation of a fixed incentive program, and directed the New Jersey Board of Public Utilities (NJBPU) to create a pilot community solar program. The pilot program began in January of 2019 after the NJBPU crafted rules to govern it with a cap of 75 megawatts (MW) per year. Due in part to the explosion of interest and applications for projects, the second year of the program saw the cap increase to 150 MW.

The law created an interim incentive called the Transition Incentive (TI) while a permanent program was being developed, now called the Successor of Solar Incentive (SuSI). During the first two years of the program, credits (called TRECs) had a fixed price with a guaranteed rate over 20 years.

The passage of the Solar Act in 2021 directed the NJBPU to further incentivize the development of an additional 3,750 MW of solar capacity, inclusive of 150 MW of community solar annually, by 2026. This will help the state gain 10% of its electricity from solar energy alone. This directive coincided with the finalization of the SuSI program. The Administratively Determined Incentive (ADI) program is the specific incentive and registration program set up by SuSI through which new community solar projects will apply. The type of project determines the value of the new solar renewable energy credits, called SREC-IIs.

As one of the top ten states for renewable energy generation with over 4,000 MW of installed capacity and a particular focus on expanding community solar for the benefit of low-income residents, New Jersey is poised to become one of the country’s premier locations for community solar.

2. Project Specifications & Low-Income Eligibility

Project specifications

• Maximum 5 MW DC capacity
• Projects/subscribers can be located anywhere within the same utility service territory (unless they self-select to impose geographic limitations in their Pilot program application)
• Projects may not be located on preserved farmland.
• Minimum of 10 subscribers per project
• Maximum of 250 subscribers per 1 MW installed capacity
• No single subscriber can subscribe to more than 40% of a project’s total net energy
• Subscribers may not participate in more than one community solar project.
• Subscriptions cannot exceed 100% of the subscriber’s historic annual usage.
• Subscriptions are portable if the subscriber stays within the same utility service territory.
• Utilities may not develop, own or operate community solar projects.

LMI project requirements

New Jersey’s community solar program has a particular focus on bringing the lowered cost of electricity to low- to moderate-income (LMI) residents, mandating that at least 40% of the program be reserved for LMI-serving projects. In fact, every one of the 105 community solar projects approved in the first two years of the pilot program qualified as LMI projects. These criteria determine a project's LMI status:

• A minimum of 51 percent of project capacity is subscribed by LMI subscribers.
• An LMI community solar project may not accept participation by a non-LMI subscriber if doing so would cause LMI participation in the project to fall below 51 percent of project capacity.

LMI eligibility verification

Subscriber organizations are required to verify the LMI eligibility of subscribers, unless a community solar project is on government owned property, like an affordable housing complex where the tenants would be the subscribers. Acceptable proof of LMI eligibility can be one or more of the following programs:

• Low Income Home Energy Assistance Program (LIHEAP)
• Universal Service Fund
• Comfort Partners
• Lifeline Utility Assistance Program
• Payment Assistance for Gas and Electric
• Section 8 Housing Choice Voucher Program
• Supplemental Nutrition Assistance Program (SNAP)
• Lifeline program administered by the Universal Service Administrative Company
• Other LMI local, State, or Federal programs
• Location in a census block where 80% or more of the households earn less than 80% of the area median income according to the US Department of Housing and Urban Development

An alternate form of income verification may be proposed through a petition by a subscriber organization and approved by the Board.

3. Project Selection Criteria

NJBPU is still in the process of developing the final rules and regulations for the permanent program. However, it is anticipated that the program will be ready to register new projects by the autumn of 2022. The emphasis on passing benefits to LMI households weighed heavily in awarding project applications in the first two years of the program. The project selection criteria awarded more points for projects that go beyond the 51% threshold of LMI subscribers required to be considered an LMI-project.

Given that a higher incentive is offered for LMI community solar projects in the new ADI program and the fact that all successful projects to date have qualified as LMI-serving, it is likely that any successful project in the SuSI program will have a robust commitment to serving LMI subscribers.

Projects will be selected on a first come, first serve basis until the MW block for each market segment is fully subscribed or until June 1, 2023. If there is a minor deficiency (listed here) in the application for a project, the project developer will have 7 business days to address the issue before the application is rejected.

4. Credit Mechanism & Incentive

The program provides one New Jersey Solar Renewable Energy Certificate-II (NJ SREC–II) for every MW-hour (MWh) of solar electricity produced by a community solar project.

Community solar bill credit

• The calculation of the value of the bill credit shall be set at retail rate, inclusive of supply and delivery charges

New incentive structure

• The incentive program is still production-based, and earns certificates–SREC-IIs–for every MWh the project generates for 20 years
  • $90 per SREC-II for LMI projects
  • $70 per SREC-II for non-LMI projects
• An additional $20/MWh adder exists for projects with public entity customers (defined as a customer that is a State entity, school district, county, county agency, county authority, municipality, municipal agency, municipal authority, New Jersey public college, or New Jersey public university.)

Closed incentive structure

• The first two years of the community solar pilot were part of the TI program and would generate TRECs generated on a per MW-hour basis and guaranteed for 20 years.
• Each TREC has a base value of $152/MWh multiplied by its factor class. For community solar, that factor was 0.85 making each community solar generated TREC worth $129.20.

5. Market Analysis

New Jersey has a particular interest in preserving their green spaces and farmland. To limit the amount of space that solar facilities use, New Jersey has initiated a dual-use pilot program for the use of solar on agricultural land of no more than 10MW. This program would provide additional incentives on top of the SREC-II value, but the program is still in the planning phase.

New Jersey's electric utilities and their territories

• Atlantic City Electric: ~560k customers, an Exelon company
• JCP&L: ~1.1 million customers
• PSE&G: ~2.3 million customers
  • Territory includes cities and towns surrounding major metro areas of Philadelphia and New York City
• Rockland Electric Company: ~72,000 in Northern NJ

Capacity in the community solar block is allocated to each utility in proportion to their average percentages of retail electric sales.

6. Appendix

Utility territory map:

Anticipated developments:

• Summer 2022: Development of rules and regulations for the establishment of the Permanent Program.
  • Community stakeholder meeting in July
• Fall 2022: Permanent Program opens to new registrations.
• Before 2023: Straw proposal for Dual-Use program

Other state community solar policy guides from Perch

• Illinois Community Solar Policy
• Minnesota Community Solar Policy
• Midwest Community Solar Policy (Michigan, Ohio, Wisconsin)
• New Mexico Community Solar Policy
• Maine Community Solar Policy
• Maryland Community Solar Policy
• Washington DC Community Solar Policy
• Delaware Community Solar Policy
• New York Community Solar Policy
• Massachusetts Community Solar Policy