On July 23, New Jersey Governor Chris Christie signed into law a bill which amends the state's solar energy incentive program in an effort to increase the demand for solar renewable energy credits (SRECs), stabilize the market for SRECs, which has seen a substantial decline in price over the last year, and support the development of solar projects within the state.
The primary features of the law include an increase in the solar renewable portfolio standard (SRPS) in the near term to accelerate utilities' purchase of SRECs and reduce the current oversupply, and an extension of the "shelf-life" of SRECs for up to 5 years, from 3, permitting developers more flexibility to sell SRECs into the market at advantageous times. To prevent an over-supply of RECs and protect ratepayers, the law also calls for the Board of Public Utilities (BPU) to establish an approval process for large non-net metered projects to qualify for SRECs, changes the SRPS from a fixed megawatt requirement to a variable percentage reflective of the demand for energy, and significantly reduces in the penalties for failure to comply with the SRPS to effect a lower ceiling price on SRECs.
In addition, the New Jersey law provides certain incentives for brownfield development, such as an exemption from the BPU approval process, authorizes certain public entities to aggregate net metering to permit such entities to offset electricity costs at non-connected buildings, and clarifies that large net metered systems can connect to higher voltage lines to create more space for all systems on the distribution system.
According to the trade group Mid-Atlantic Solar Energy Industries Association, construction activity in New Jersey’s solar sector could increase 30% over the next two years on account of the new law. However, some remain concerned that the program may not yield sufficiently consistent and attractive prices to draw banks and financiers after a similar SREC initiative enacted in Massachusetts at the end of 2010 has so far met with skepticism from banks. Until the financial players are satisfied, the benefit of this law will be realized by very small-scale projects.