|Eligible Renewable/Other Technologies:
||Commercial, Industrial, Residential, Nonprofit, Schools, Local Government, State Government, Multi-Family Residential, Institutional
|Funding Source:||Ratepayer surcharge (RGGI recovery charge, or RRC)|
|Program Budget:||$143 million (Solar Loan II)|
|Start Date:||December 2009 (Solar Loan II)|
NJ BPU Solar Financing Review Order|
Note: As of this writing this program is no longer accepting new applications. The summary below describes the program as it existed prior to its suspension and is included for informational purposes only. In May 2012 the New Jersey Board of Public Utilities (BPU) issued an order (see May 23, 2012 BPU Order above) providing for an extension of utility solar programs and allowing utilities a choice on whether to participate or not participate. All four of New Jersey's investor-owned utilities, including PSE&G, have signaled their intent to participate (see Utility Participation Letters) in extended programs. Any further programs will need to be approved by the BPU in order to proceed.
Public Service Electric and Gas (PSE&G) of New Jersey offers loans for "behind the meter" photovoltaic (PV) systems to all customer classes in its electric service territory. The program opened in April 2008 with a goal of installing 30 megawatts (MW) of customer-sited PV through the issuance of loans totaling $105 million. The initial program, termed Solar Loan I, was operating with a waiting list by July 2009 and a new program (Solar Loan II) was opened in December 2009 to provide additional loans of $143 million with an initial goal of supporting a further 51 MW of capacity (see details of capacity allocation below, which has changed since the original program approval).
The program will provide loans covering 40-60% of the cost of PV systems with the remainder to be financed separately by the customer. A loan term of 15 years is available to non-residential customers at an interest rate of 11.3092%. Residential customers are eligible for a loan term of 10 years at a 6.5% interest rate. The actual maximum loan amount is based on how much energy they system is expected to produce over the term of the loan. The program website contains a loan calculator tool for this purpose. Loans are only available to systems of 2,000 kW DC or less that are eligible for net metering and to generate Solar Renewable Energy Certificates (SRECs) under state rules.
Customers may repay the loan through cash payments or by signing their SRECs over to PSE&G. An SREC is equivalent to 1 megawatt-hour (MWh) of solar electric generation under the state trading system. The value of an SREC will vary according to market conditions, but may not fall below a basement price which varies by sector and system size, and declines over time. The basement price is currently (as of January 2011) set at $420 per SREC for residential systems; $380 per SREC for non-residential systems up to 150 kW; $350 per SREC for non-residential systems from 150+ kW up to 500 kW; and $340 per SREC for systems from 500+ kW up to the maximum size of 2 MW. The floor prices are scheduled to decline every two quarters (semi-annually) to ultimate levels of between $325 and $400 per SREC for different sectors and system sizes. The segment for the largest projects also contains an accelerated schedule of floor price reductions which will take effect if this segment becomes oversubscribed.
Thus, under current terms residential applicants will receive at least $420 per credit in the repayment of loan principal and interest, but may receive more if trading prices for SRECs are higher. The floor price determined for a loan remains in effect for the duration of the loan. For the purposes of loan repayment the market value of SRECs will be determined using the average monthly cumulative weighted price of SRECs published by the New Jersey Office of Clean Energy. Higher SREC prices will reduce the time period over which the loan is paid off. In the event that the loan is repaid prior to the expiration of the loan term, PSE&G retains the right to purchase SRECs generated by the system at 75% of the market price through the original term of the loan. The customer will own all SRECs generated subsequent to the end of the loan term, although according to state law solar facilities only remain eligible to generate SRECs for 15 years after they are placed in service.
Participants in this program remain eligible for benefits offered by PSE&G or New Jersey Board of Public Utilities (BPU) renewable energy programs, including net metering, as well as other forms of assistance (e.g., federal tax credits). Solar panels must be covered by a 20-year warranty and the customer is responsible for having a system maintenance agreement in place to ensure system performance. In addition, the customer must currently have a PSE&G account in good standing, and meet minimum credit rating and insurance requirements determined by the utility. The program has an application fee of $10 per kilowatt (kW) up to a maximum of $2,500.
Loan applications are scheduled to be accepted on a quarterly basis for 2 years with a current total program target of 56.5 MW of installed capacity. Loan availability is divided into three segments, with each segment allocated a portion of the overall target. Allocations as of January 2011 are as follows:
- Residential: 10.3 MW
- Non-residential, up to 150 kW: 16.0 MW
- Non-residential, 150+ - 500 kW: 10.2 MW
- Non-residential, 500+ - 2,000 kW: 19.8 MW
For each quarterly application period, each sector is allocated a certain amount of capacity to serve eligible applicants on a first-come, first-served basis. Excess capacity that exists in one quarter may be carried forward to the following quarter, while applications in excess of the available quarterly allocation will be put on a waiting list for the next quarter. The size of the waiting list is limited to the amount of capacity that will be available during the next quarter for that sector. While the sector and quarterly allocations are pre-determined by a schedule, the Board of Public Utilities (BPU) has permitted a certain amount of flexibility to adjust the program to market demands. The first quarter officially began January 1, 2010.
It is expected that the Solar Loan II program will issue $143 million in loans over two years with costs to be recouped by PSE&G through the Regional Greenhouse Gas Initiative (RGGI) recovery charge (RRC) on all PSE&G New Jersey electricity customer accounts. The utility will periodically sell the SRECs it acquires through the program in auctions open to all SREC market participants. The proceeds from these auctions will be circulated back into the program cost calculations that will be used to determine the actual charge. For further information on this program please consult the program web page or contact PSE&G.