New Jersey’s Board of Public Utilities (BPU) on Wednesday approved rules for a competitive utility-scale solar incentive program designed to nearly double the amount of solar capacity installed in the state a year.

The Competitive Solar Incentive (CSI) program will require interested developers to submit projects in one of five categories, each of which will award incentives at a rate determined by a competitive process in which developers submit bids on the minimum incentive they will accept to undertake their planned project.

The five categories are: basic grid supply; grid supply on a built environment; grid supply on contaminated sites and landfills; net-metered nonresidential projects above 5 MW; and storage paired with solar.

The five-member board’s unanimous approval of the program concludes its revamp of its solar incentive program, which in the past stimulated a dramatic growth in solar capacity installation but drew criticism that it cost ratepayers too much. The new program, with its reduced incentives, have drawn criticism from solar developers that the subsidies are too small to stimulate growth, especially as supply chain issues and other problems have pushed up the price of materials. (See Solar Industry Pushes for Bigger Incentives from NJ Program.)

The BPU shaped the CSI rules after six public hearings on different aspects of the proposed rules that attracted more than 130 registrants. The BPU expects to open the first solicitation on Feb. 1, 2023.

“For many types of projects, the CSI program will provide incentives for the first time in New Jersey,” according to the BPU order outlining the program. “There has been some evidence of pent-up demand for larger-scale solar development.”

Before voting to approve the program, BPU President Joseph Fiordaliso said that the state in 2001 had just six solar installations, compared to more than 160,000 installed projects today.

“This is just another step of our unwavering support of the solar industry here in the state of New Jersey,” Fiordaliso said. “Not only are we significantly increasing the amount of solar we purchase, we also expect to see significantly lower costs to the ratepayers.”

Commissioner Bob Gordon called it “a new … and even more exciting chapter in our development of solar in this state.”

‘Record Year’

The CSI program is the second part of the state’s Solar Successor Incentive (SuSI) program, which was approved in July 2021. The first part, the Administratively Determined Incentive (ADI) program, took effect immediately and provided incentives at rates set by the BPU to residential, community solar, and net metered non-residential projects of five MW and less.

The board also approved a measure Wednesday to amend the ADI program, reallocating incentive funds to provide 100 MW of additional capacity for residential projects because the 150 MW allocated in the program will soon be exhausted.

“We’re seeing a record year as far as residential solar,” Fiordaliso said. “I attribute a lot of this to the fact that obviously, the developers are out there pushing this because it is money, but also [to] the fact that our marketing campaign alerted an awful lot of residents in the state of New Jersey that we are doing solar, and how solar can benefit them insofar as their energy bill is concerned.”

The additional incentive capacity for residential projects was moved from two other project categories in the ADI program, with 70 MW coming from a category supporting landfills, brownfields or areas of historic fill, which had attracted only one project applicant since the program was opened a year ago. The BPU pulled another 30 MW from a nonresidential project segment, in which applications to date have only consumed about 20% of the available capacity.

Capacity Goals

The development of the CSI program is part of the state’s effort to reach ambitious solar goals set out in Gov. Phil Murphy’s Energy Master Plan, and state law. They call for New Jersey to install 5.2 GW of capacity by 2025, add another 7 GW by 2030 and reach 17.2 GW by 2035. State law requires the solar generated power to account for 50% of the state’s electricity by 2030.

With 4.2 GW of capacity in place as of October, the state could reach the 2025 goal. It installed 356,882 kW of capacity in the first 10 months of the year, a figure that is 5% higher than the installed capacity for all of 2021. Still, it is far lower than the 750 MW/year of installed capacity that the BPU has set as a target.

The BPU believes that competitively awarded incentives will both protect ratepayers, by incentivizing projects at the “lowest incentive contribution,” and also help developers.

“The fixed, long-term and guaranteed nature of the incentive provides a relatively low-risk incentive structure for developers, thereby encouraging investment of private capital,” the board’s order outlining the rules states.

By structuring the program into five categories, the program will “ensure that a range of competitive solar project types are able to participate despite potentially different project cost profiles,” the order says.

Protected Land

The program will award the largest share of the capacity — 140 MW — to the basic grid supply category. Grid supply on built environment will account for 80 MW; and grid supply on contaminated sites and landfill will account for 40 MW, as will net-metered nonresidential projects above 5 MW. Solar-plus-storage projects will account for 160 MWh.

The rules also set out project siting requirements to protect farmland, natural spaces and other valued land, which apply to not only projects seeking BPU incentives under the program, but all “grid supply solar installations, as well as nonresidential net-metered solar installations with a capacity greater than 5 MW.”

“This requirement will allow the board to track such projects on a nondiscriminatory basis, while also ensuring that non-incentivized projects intending to utilize the land they have reserved do so in a timely manner and are not hoarding available space or otherwise acting in an anticompetitive manner,” the board’s order says.

The guidelines were shaped using stakeholder input provided in two public hearings on a special straw proposal on the issues. New Jersey, like other states, is facing increasing pressure on open space and farmland from solar developers seeking project sites, as well as from housing and warehouse developers, sparking concern that farmland especially may be lost. (See NJ Tries to Balance Solar Growth vs. Farmland Protection.)

The rules prohibit the siting of solar projects on several types of land, among them: land preserved by funds in the state Green Acres program, which awards funds to create parkland and natural spaces; in forest areas in the state’s pinelands area; and on prime agricultural soils and soils of statewide importance.” However, the rules allow developers to seek a waiver from the prohibition in certain circumstances.