New Jersey legislators looking to ensure that solar projects are a key part of the state’s booming warehouse development sector have passed a bill that would require new warehouses more than 100,000 square feet to be ready to install rooftop solar projects in the future.

The bill, which now sits on Gov. Phil Murphy’s desk, would require warehouse developers to ensure that at least 40% of the area of a new warehouse roof is available and structurally ready to take solar photovoltaic or thermal systems. The area is calculated after the space taken up by skylights, occupied roof decks, vegetative roof areas and other uses is removed from the calculation.

The New Jersey Senate on Thursday approved the bill, A3352, 25-13, and the General Assembly backed it 46-24 the same day.

New Jersey, like other states, is seeing a surge in demand for warehouse space after the COVID-19 pandemic helped trigger a dramatic shift in consumer behavior from in-person shopping to online. The pressure from demand for space for fulfillment centers and smaller warehouses to serve as launch-pads for last-mile deliveries is enhanced in New Jersey by the presence of the Port of New York and New Jersey, the third largest port on the East Coast, which needs warehouse space for logistics companies. That’s all enhanced by the state’s location in the massive New York consumer market.

The amount of industrial space leased in New Jersey the first quarter of 2021, 13.7 million square feet, was the “highest level in history” for the quarter, according to the quarterly report by real estate broker JLL. The average rent for industrial space is higher than at any time in the last 14 years, and vacancies are at their lowest level over the same period, according to the report, which said that the market in 2021 is “primed for more gains.”

Murphy is pushing solar power as part of New Jersey’s effort to reach 100% clean energy by 2050. He wants the state to have 32 GW of solar by then, about nine times the capacity online today. The capacity of new non-residential solar projects grew each year from 2016 to 2019, with a 65.7% increase in 2019 over the previous year to 227,731 kW installed, according to data on the state’s Clean Energy Program website. The annual installation figure dropped dramatically in 2020 to 35,511 kW.

After the bill’s passage, its sponsors, Democratic Assemblymen James J. Kennedy, Sterley Stanley and Clinton Calabrese, released a statement saying that by promoting solar projects, the bill would help the buildings save energy and be cost effective because lighting and space heating account for approximately 76% of total energy used in a warehouse.

“We want to encourage building owners to begin a transition toward using solar energy for their warehouses,” the the legislators said. “New Jersey is rapidly moving toward solar energy, and we need to begin preparing our buildings for the future.”

Potential Boon for Solar Developers

Shaun Keegan, CEO of Asbury Park-based Solar Landscape, said the bill will be a big help for the solar development sector and has already prompted building developers to ask questions about and “give more consideration to solar.” It also gives comfort to solar developers to know that buildings will be strong enough to take the weight of a solar project if they can show the owners that putting solar on the roof is in their interest, he said.

“There are instances where [existing] buildings can’t handle the weight, and it takes some engineering to figure that out,” he said. “So, we spend time and money developing and contracting for a project only to find out the building is incompatible after undertaking engineering work to evaluate the building’s weight load capacity.”

Others were skeptical that the bill would do much except put new requirements on developers and warehouse owners.

Ray Cantor, a lobbyist for the New Jersey Business and Industry Association, one of the state’s largest trade groups, said his organization considered the bill “an unnecessary mandate on the construction industry,” which could add to the cost of building a warehouse.

“Most warehouses that are built on spec would meet the requirements of this bill,” he said. “There are other warehouses built at the specific direction of a company, and they may have no need or desire to spend extra money for it to be solar ready.” The property may also be in a location where it “does not make sense to build solar.”

Jim Coyle, president of the Gateway Regional Chamber of Commerce — whose affiliates include the Gateway Solar Alliance, which promotes the use of solar — said that putting solar projects on their roofs is not a high priority for warehouse developers and owners at present, in part because they are so busy meeting the demand for their regular services: designing, building and operating warehouses.

One reason is that New Jersey requires that rooftop solar projects generate electricity only for use in the building; it does not allow them to sell excess power to the grid, he said. That reduces the potential to make money from a solar project, and many warehouses, unless they are refrigerated, don’t use a lot of energy because they are built for efficiency, he said.

The exception to the selling prohibition is if the project participates in the state’s Community Solar Energy Pilot Program. But that tactic requires extensive administration to apply to the program, which is competitive and oversubscribed, so the outcome for applicants is unsure. New Jersey is expected in the coming weeks to announce the second set of project approvals, after approving the first 45 community solar projects in 2020, with the first one coming online in January of this year. (See Billing Key to NJ Community Solar Growth.)

“In my talks with developers/owners of warehouses, as opposed to tenants, the feeling is, ‘If it doesn’t make me a whole lot of money, why would I do it?’” Coyle said. In addition, the roof of a warehouse is to many owners and developers the most precious part of the building, and they are reluctant to potentially jeopardize it by putting solar panels on it, he said.

Blunting Competitive Edge

Assemblyman Gerard Scharfenberger, a Republican who voted against the bill, said at a hearing on the legislation held in February by the Assembly Environment and Solid Waste Committee that he feared it would drive up the cost of warehouse construction and make buildings less competitive than those in neighboring states.

“I have concerns about pricing, about pushing projects, maybe, to surrounding states,” he said. He also noted “the fact that it would add cost to an already expensive project.”

But Jeff Tittel, who was at the time director of the New Jersey Sierra Club, told the committee that New Jersey is so far away from its 32-GW goal that it will have to consider all options on where to put solar panels. Tittel noted that even as conservationists complain about putting solar panels on farmland, more and more farmland is being developed into warehouses.

“We’ve been kind of short sighted in how we’re doing our warehouses,” he said. “And so we think this legislation will not only help preserve farmland but will also help make some of these warehouse projects actually be greener” because they will have solar panels on the roof, he said.

“There’s a real opportunity here to move New Jersey forward with clean energy and clean energy jobs,” he said.