On June 7, 2011, New Jersey Governor Chris Christie announced the issuance of the state’s draft of the 2011 Energy Master Plan (EMP). By way of background, the EMP is a road map describing the energy goals of the state’s executive branch. The plan is required to be issued and updated every 3 years. For details of the 2011 draft please click here. For details on the 2008 EMP click here.
Overall, the report outlines the continued implementation of the NJ Renewable Portfolio Standard (RPS) solar carve-out. As the report stands, there is no commentary made that would indicate a substantial change to the existing program. The following provides more insight into the aspects of the report that touch specifically on the RPS solar requirements.
The currently legislated RPS target in New Jersey is 22.5%. Of the several goals set forth in 2008 EMP, one sought to surpass this RPS target by achieving 30% of the state’s electricity needs from renewable sources by 2020. The recently released 2011 Draft EMP lays out 5 goals, one of which is to “Maintain support for the renewable energy portfolio standard of 22.5% of energy from renewable sources by 2021.”
The 2011 Draft EMP demonstrates support for behind-the-meter PV installations, highlighting solar’s ability to achieve reduction in carbon emissions and supporting a solar industry in the state, while also taking into consideration the cost associated with solar incentives to ratepayers. The document does not call for a reduction in the existing solar carve-out, but does indicate the following,
“As the all-in capital costs for diverse solar technologies continue to decline, the Board should take action to reduce the SACP through 2025. Doing so will not undermine new solar projects that are worthwhile, but will reasonably minimize the cost burden borne by nonparticipants.”
The Christie administration explains the benefit of larger scale solar projects while noting that they “…should be considered in addition to, not in lieu of, smaller-scale, grid-connected applications.”
The document highlights the fixed SREC requirements implemented by the Solar Energy Advancement and Fair Competition Act (SEAFCA) introduced in January 2010. Instead of a percentage-based solar requirement, this act insulated the requirement from fluctuating electricity usage by implementing targets in fixed gigawatt-hour terms. This proves beneficial, as part of New Jersey’s energy goals include demand response and energy efficiency initiatives that plan to reduce overall electricity usage.
Solar Alternative Compliance Payment (SACP):
1) The current SACP extends through 2016; the SEAFCA requires the BPU to set the schedule through 2026.
2) No time frame is required, but industry stakeholders suggest the implementation of a schedule to provide certainty to debt and equity investors enabling solar development.
EMP Policy Direction and Recommendations regarding the solar carve-out are as follows:
1) Reduce the SACP: One proposal recommends the reduction of the SACP by 20% in 2016 and 2.54% each year thereafter.
2) Subject Solar Renewable Incentives to a Cost Benefit Test: The EMP mentions, “Solar generation can contribute to the reliability of the grid…” and continues by stating, “…subsidies should enhance job growth and retention objectives and should contribute to reduction in taxes without inadvertently transferring wealth from non-participants to participants throughout New Jersey.”
3) Promote Solar PV Installations that Provide Economic and Environmental Benefit: Support for community solar power is encouraged, allowing economies of scale to give residents access to what otherwise could be an expensive individual solar system. Community solar projects help provide decreased electricity usage through the local utility and can spread the cost of distribution system upgrades among the ownership group.
Overall, the 2011 Draft Energy Master Plan lays out the goals for a diversified mix of energy sources throughout the state of New Jersey. The existing overall RPS targets and specific solar carve-out requirements appear to be a priority of the Christie administration. It is clear that the Governor’s office is focused on reducing the economic impact of implementing the RPS while enhancing electricity security and job creation. The EMP has no substantive proposals that should cause concern for stakeholders participating in the state’s SREC market, but at the same time does not include any discussion of expanding New Jersey’s solar goals to continue adoption beyond the current targets.