New Jersey

Incentives/Policies for Renewable Energy

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Renewables Portfolio Standard

Last DSIRE Review: 06/25/2009

Incentive Type:	Renewables Portfolio Standard
State:	New Jersey
Eligible Renewable/Other Technologies:	Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Resource-Recovery Facilities approved by the DEP, Anaerobic Digestion, Tidal Energy, Wave Energy, Fuel Cells using Renewable Fuels
Applicable Sectors:	Investor-Owned Utility, Retail Supplier
Standard:	22.5% by compliance year 2020-2021
Technology Minimum:	Solar-Electric: 2.12% by compliance year 2020-2021
Credit Trading:	Yes
Web Site:	http://njcleanenergy.com/ renewable-energy/program-updates/solar-transition/solar-transition
Authority 1:	N.J. Stat. § 48:3-49 et seq.
Date Enacted:	1999 (subsequently amended)
Authority 2:	N.J.A.C. 14:8-1.1 et seq.
Date Enacted:	2001 (subsequently amended)
Date Effective:	09/01/2001

Summary:
New Jersey's renewable portfolio standard (RPS) -- one of the most aggressive in the United States -- requires each supplier/provider serving retail customers in the state to include in the electricity it sells 22.5% qualifying renewables by 2021. The New Jersey Board of Public Utilities (BPU) made extensive revisions to the RPS in April 2006, significantly increasing the required percentages of "Class I" and "Class II" renewable energy, as well as the required separate percentage of solar electricity. By reporting year 2021, 2.12% solar electricity is required.

In December 2007, the BPU issued a far-reaching order (BPU Solar Transition Order) directing that further changes be made to the state RPS in an effort to increase the effectiveness and efficiency of New Jersey's solar energy policies. Formal rule amendments associated with many of these changes became effective March 16, 2009.

"Class I" renewable energy is defined as electricity derived from solar energy, wind energy, wave or tidal action, geothermal energy, landfill gas, anaerobic digestion, fuel cells using renewable fuels, and -- with written permission of the New Jersey Department of Environmental Protection (DEP) -- certain other forms of sustainable biomass. "Class II" renewable energy is defined as electricity generated by hydropower facilities no greater than 30 megawatts (MW), and resource-recovery facilities approved by the DEP and located in New Jersey. Electricity generated by a resource-recovery facility outside New Jersey qualifies as "Class II" renewable energy if the facility is located in a state with retail electric competition and the facility is approved by the DEP.

The required percentages of each category and the total renewables percentage required are listed below, by reporting year:

6/1/04 - 5/31/05: Solar – 0.0100%; Class I – 0.740%; Class II – 2.5%; Total – 3.2500%
6/1/05 - 5/31/06: Solar -- 0.0170%; Class I – 0.983%; Class II – 2.5%; Total – 3.5%
6/1/06 - 5/31/07: Solar – 0.0393%; Class I – 2.037%; Class II – 2.5%; Total – 4.5763%
6/1/07 - 5/31/08: Solar – 0.0817%; Class I – 2.924%; Class II – 2.5%; Total – 5.5057%
6/1/08 - 5/31/09: Solar – 0.1600%; Class I – 3.840%; Class II – 2.5%; Total – 6.500%
6/1/09 - 5/31/10: Solar – 0.2210%; Class I – 4.685%; Class II – 2.5%; Total – 7.406%
6/1/10 - 5/31/11: Solar – 0.3050%; Class I – 5.492%; Class II – 2.5%; Total – 8.297%
6/1/11 - 5/31/12: Solar – 0.3940%; Class I – 6.320%; Class II – 2.5%; Total – 9.214%
6/1/12 - 5/31/13: Solar – 0.4970%; Class I – 7.143%; Class II – 2.5%; Total – 10.14%
6/1/13 - 5/31/14: Solar – 0.6210%; Class I – 7.977%; Class II – 2.5%; Total – 11.098%
6/1/14 - 5/31/15: Solar – 0.7650%; Class I – 8.807%; Class II – 2.5%; Total – 12.072%
6/1/15 - 5/31/16: Solar – 0.9280%; Class I – 9.649%; Class II – 2.5%; Total – 13.077%
6/1/16 - 5/31/17: Solar – 1.1180%; Class I – 10.485%; Class II – 2.5%; Total – 14.103%
6/1/17 - 5/31/18: Solar – 1.3330%; Class I – 12.325%; Class II – 2.5%; Total – 16.158%
6/1/18 - 5/31/19: Solar – 1.5720%; Class I – 14.175%; Class II – 2.5%; Total – 18.247%
6/1/19 - 5/31/20: Solar – 1.8360%; Class I – 16.029%; Class II – 2.5%; Total – 20.365%
6/1/20 - 5/31/21: Solar – 2.1200%; Class I – 17.880%; Class II – 2.5%; Total – 22.5%

The BPU will adopt rules to determine the minimum percentages for reporting year 2022 and beyond. These minimum percentages will be equal to or greater than the minimum percentages required for reporting year 2021.

Additional solar electricity may be used to fulfill any of the three required categories, while additional "Class I" electricity may be used to fulfill the "Class II" requirement. To qualify as "Class I" or "Class II" renewable energy, electricity must be generated within or delivered into the PJM region. "Class I" or "Class II" renewable energy delivered into the PJM region must be generated at a facility that began construction on or after January 1, 2003, in order to qualify.

Suppliers/providers may meet these requirements by submitting "Class I" renewable-energy certificates (Class I RECs), "Class II" RECs and Solar RECs (SRECs), all of which represent the environmental attributes of one megawatt-hour (MWh) of generation from an eligible facility. All RPS compliance must be submitted in the form of RECs, which will be issued by the PJM-Environmental Information Services (EIS), through PJM's Generation Attribute Tracking System (GATS). As of June 2009, this now includes customer-sited systems. RECs submitted for RPS compliance will be permanently retired.

Under the original rules suppliers/providers could not use RECs or SRECs associated with electricity generated at a customer-generator's premises unless the facility was eligible for net metering. However, S.B. 2936 (2007) allowed all solar facilities connected to the distribution grid serving New Jersey to generate RPS-eligible SRECs. Expedited temporary rule amendments associated with this change were adopted effective May 23, 2008 by the BPU, and made permanent by the formal rule making order adopted in March 2009.

If a supplier/provider is not in compliance for a reporting year, the supplier/provider must remit an alternative compliance payment (ACP) and/or a solar alternative compliance payment (SACP) for the amount of RECs and solar RECs that were required but not submitted. The BPU determines prices for ACPs and SACPs, and reviews the prices at least once per year. The price of an ACP and an SACP is to be higher than the estimated competitive market cost of (1) the cost of meeting the requirement by purchasing a REC or solar REC, or (2) the cost of meeting the requirement by generating the required renewable energy. Revenue generated by the ACP is used to fund renewable-energy projects through the New Jersey Clean Energy Program. Revenue generated by the SACP is be used to fund solar projects under the program.

The initial ACP and SACP levels were set by BPU order at $50 per MWh and $300 per MWh respectively in 2004. These levels were subsequently renewed several times without changes; however, the December 2007 BPU order revised the way the SACP level is determined, effective for the RPS reporting year beginning in June 2008. The ACP remains unchanged at $50 per MWh.

The SACP is now determined according to an eight-year set schedule. The BPU will continue to conduct annual reviews of the SACP, adding one additional year to the back end of the schedule during each review. The initial eight-year schedule for the SACP is as follows:

2008-2009: $711 per MWh
2009-2010: $693 per MWh
2010-2011: $675 per MWh
2011-2012 :$658 per MWh
2012-2013: $641 per MWh
2013-2014: $625 per MWh
2014-2015: $609 per MWh
2015-2016: $594 per MWh

The BPU is required to freeze the solar energy requirement if it determines that the total cost of solar incentives during a reporting year exceed 2% of the total retail price of electricity during that reporting year. The "total cost of solar incentives" is defined to include the costs associated with the state solar rebate program, SREC purchases, SACP payments, and several other forms of assistance. The annual increases defined by the solar compliance schedule will resume when the BPU determines that the total cost of solar incentives did not exceed 2% during a reporting year. Freezing the requirements therefore has the effect of maintaining the percentage requirements, but pushing them back by a year(s).

Each supplier/provider is required to file an annual report with the BPU by September 1, demonstrating that the requirements for the preceding reporting year (ending May 31 of the same calendar year) have been met. Failure to comply with any provision of the RPS may result in suspension of the supplier's license, financial penalties, disallowance of recovery of costs in rates, and/or prohibition on accepting new customers.

Contact:

Benjamin Scott Hunter
New Jersey Board of Public Utilities
Renewable Energy Program Administrator, Office of Clean Energy
44 South Clinton Avenue
P.O. Box 350
Trenton, NJ 08625-0350
Phone: (609) 777-3300
Fax: (609) 777-3330
E-Mail: benjamin.hunter@bpu.state.nj.us
Web Site: http://www.bpu.state.nj.us

Please note: The information on the DSIRE web site provides an overview of incentives and other policies, but it should not be used as the only source of information when making purchasing decisions, investment decisions, tax decisions or other binding agreements. Please refer to the individual contact provided in each record to verify that a specific incentive or other policy is applicable to your specific project.