New Jersey’s Board of Public Utilities (BPU) approved a new solar incentive package Wednesday for net-metered residential, smaller commercial and community solar projects that the agency hopes will double the state’s solar capacity in five years even as it cuts some subsidies for developers.

The program, Successor Solar Incentive Program, set incentives for solar projects between $70 and $100 per MWh, depending on the type of project, with an additional $20/MWh for public projects. The incentive levels for certain non-public projects are slightly below those in an interim incentive program the BPU enacted in May 2020 and are about half the size of those in the Solar Renewable Energy Certificate (SREC) Program that was the foundation of the state’s solar growth for many years before it closed last year.

The package drew the support of the New Jersey Division of Rate Counsel, who has criticized past solar incentive packages for being too generous, and solar developers, who claimed the subsidies in earlier iterations of the package were too small. BPU said the incentive levels struck a balance between supporting the solar industry and providing “significant savings” over the SREC program.

BPU President Joseph L. Fiordaliso said he had no doubt that the state’s solar capacity would continue to grow even with lower incentives than in the past.

“Our solar industry has been immensely successful,” said Fiordaliso, shortly before the five-member board unanimously backed the proposal. “And we expect with this measure today, and the new successor program, that it will continue to be successful.”

Solar developers vigorously pushed back against the reduced incentives in the proposed Successor Solar program after it was released in April, saying they would slow solar development. But Fred DeSanti, executive director of the New Jersey Solar Energy Coalition, said the goal of doubling the state’s capacity is “doable” under the final package. (See: Doubts Dog NJ Solar Proposal.)

“By and large, I think everybody feels that what’s been pushed forward is fair, equitable, and works,” he said.

Protecting Ratepayers

The state is seeking to quadruple solar energy capacity to 17.2 GW by 2035 as part of Gov. Phil Murphy’s goal of 100% clean energy by 2050. Murphy wants the solar sector to generate 32 GW by 2050.

The state currently has 143,555 solar installations with a combined capacity of 3,655 MW, which put the state at seventh in the nation by solar capacity according to a study by the Solar Energy Industries Association (SEIA).

The BPU expects the Solar Successor program to encourage the addition of 3,750 MW of capacity, with the first projects expected to be registered for the program in 30 days. About 60% of the new capacity is expected to be generated with incentives at rates set by the BPU, and the remainder with incentives set by competitive bidding.

Stefanie A. Brand, director of the New Jersey Division of Rate Counsel, said the new rates are “reasonable.” But she expressed concern that the BPU is setting the rates for 60% of the incentives, rather than having them set by competition, and said that could open the door to future increases because of developer lobbying efforts.

Brand also worried about a potential weakening of a state statute that limited the amount the state could spend on solar incentives. The calculation of the spending cap, under the grid-scale solar law signed by Murphy, must now be offset by the BPU’s estimate of the savings reaped through the use of clean energy, as well as an accounting of the health and other benefits from reduced emissions. The BPU approved details of the calculation on Wednesday.

“Normally, competition will protect consumers, or the (spending) cap would protect consumers,” from overspending on incentives, Brand said. “Right now, all we have is the board’s order, which could be changed at any time. So that makes me a little bit nervous.”

Competitive Bidding

The package approved Wednesday did not provide final rules for how the state will handle grid-scale solar projects, which are considered by some developers to be key to the state’s ability to reach its goals. Legislation signed by Murphy on July 2 provided the broad outline of a new incentive program and competitive bidding process for projects of more than 5 MW, and the board on Wednesday approved the hiring of a consultant to design and implement the program. The BPU said it expects the first competitive process to take place in early- to mid-2022. (See: NJ Grid-scale Solar Bill Signed by Murphy.)

The approval of the package concluded a three-year evaluation process that included 10 public hearings, BPU officials said.

Abe Silverman, general counsel for the BPU, explained the agency’s belief that the incentive levels will stimulate growth by noting that 2020 and 2021 “are really shaping up to be record years,” for the solar industry. He said that after “hundreds of hours of modeling, looking at cost data, taking actual cost of these projects over the last decade, looking at them, analyzing, slicing and dicing,” the BPU is “very comfortable” that it has set the incentives at a level to protect taxpayers while stimulating development.

The resulting package includes these incentive levels for each MWh of power generated:

• Net metered residential: $90
• Net metered, non-residential on rooftop, carport, canopy and floating solar projects smaller than 1 MW: $100
• Net metered, non-residential on rooftop, carport, canopy and floating solar projects between 1 MW and 5 MW: $90
• Ground mount net metered non-residential projects smaller than 1 MW: $85
• Ground mount net metered non-residential projects smaller between 1 MW and 5 MW: $80
• Community solar, non-low and moderate-income customers: $70
• Community solar projects low- and moderate-income customers: $90

The board also voted to end the Transition Incentive Program, which awarded incentives known as Transition Renewable Energy Certificates (TRECs), on Aug. 28. The BPU created the program to replace the SREC program after the state legislature decided it should close when solar installations reached 5.1% of the state’s electricity sales, in part, because the program was seen as unnecessarily expensive.

While the value of a SREC was above $220/MWh, TRECs ranged from $91.20/MWh for net-metered residential projects to $152/MWh for net-metered non-residential rooftop and carport projects.

New Public Solar Market

DeSanti, of the solar coalition, said the development sector softened its opposition to the program after the BPU increased the incentives in certain categories. In particular, the final package provides an incentive of between $110 and $120/MWh for carports, when there was no incentive in the initial proposal, and it increased the incentive by $15/MWh on commercial rooftop projects, he said.

The additional $20/MWh for public projects would create a “new market that will help us a lot,” he added.

Shaun Keegan, CEO of Asbury Park, NJ-based Solar Landscape, singled out the incentive for public projects, saying it was “encouraging.” He also welcomed the increased incentives on community solar projects, especially those for projects aimed at low- and moderate-income households.

“The increased incentives to support community solar adoption by low- and moderate-income households pairs the innovation in the renewable energy sector with New Jersey’s environmental justice goals,” he said.