With energy bills passed in April, New Jersey commits to becoming a national leader in renewables. Yet, questions remain about support for nuclear power and the future of the SREC program. Call EcoMen Solar at 732-SOLAR-NJ.
There’s been a lot of news about legislation just passed in Trenton last month having to do with renewable energy. Maybe you’ve also heard some of the controversy over the state deciding to support not just solar and wind but also nuclear power. Homeowners and small businesspeople have been asking us how it will effect them if they have solar already or if they want to go solar in the future.
Energy policy can be complicated. So let me boil it down here to the basic point: The immediate impact on homes and small businesses won’t be huge. Many of the changes in the bills have to do with utilities and big power plants.
But there will be some changes for homes and businesses with solar, especially when it comes to selling solar renewable energy certificates (SRECs).
The bigger point for anybody who has solar or wants to go solar is that the state of New Jersey is giving its stamp of approval to renewable energy, with solar power playing the starring role. As a top-ten solar state for the last decade, New Jersey has been serious about solar for a long time. But now the state is upping its game and getting even more serious about solar and renewable energy.
Below, I’ll outline the main points of all three bills so you can see how they work together with the goal of making New Jersey a national leader in renewable energy. I’ll focus on the bill that has the most to do with solar power specifically. Then I’ll talk about the possible impact on SRECs.
Targeting Climate Change
Whatever you think about global warming, with Democrats in control in Trenton since last November’s elections, the state has reversed course from the Chris Christie era and has made a full-bore commitment to cutting its greenhouse gas emissions.
Just how big is this shift?
According to environmental writer David Roberts, the three bills passed in April have “vaulted [New Jersey] into the ranks of top US climate leaders, alongside California and New York.”
The New York Times says that in passing these bills “New Jersey significantly altered the future of its energy sector…The bills mark one of the biggest new policy steps that any state has taken toward cutting greenhouse gases since President Trump was elected.”
Since just about everybody expects Governor Phil Murphy to sign the bills, let’s look at each one.
1. Allowing Wind Turbines Offshore
The first bill is pretty straightforward. Aimed at developing the state’s resource in offshore wind power, Senate Bill 1217 directs the New Jersey Board of Public Utilities to accept applications for an ocean-based wind project near Atlantic City with a maximum size of 25 megawatts. The impact on homes and businesses of this bill should be minimal.
2. Subsidies for Nuclear Plants
The second bill is the controversial one, offering taxpayer support for nuclear power in New Jersey. Senate Bill 2313 approves a $300 million annual subsidy for the state’s remaining nuclear plants. Since nuclear plants are so expensive to run these days, the companies that operate those plants, Public Service Enterprise Group and Exelon, claim they need the subsidy to keep producing nuclear power. Subsidies are locked in for at least four years, but the bill doesn’t contain a sunset date, so it’s possible that the payments could be made for years to come.
For people who worry about both climate change and the safety of nuclear power, the deal is a big compromise. Nuclear plants still produce about 40% of New Jersey’s electric power. Without subsidies, the plants may have to cut production or eventually shut down entirely. If that happens before enough solar and wind comes online — along with expensive installations of big batteries to store the power at night or when the wind isn’t blowing — then the state would have to turn to other sources of electricity.
Right now, the state only gets about 5% of its power from solar, wind and other renewables. That’s growing quickly, but not fast enough to replace nuclear in the next few years.
Without nuclear power, New Jersey would have to use more natural gas, which already provides about half of the state’s electric power. For all its issues, nuclear is a carbon-free power source, which natural gas is not. So, as part of a plan to aggressively cut climate emissions, the state has decided that it needs to keep nuclear going for a while longer.
“New Jersey’s 2007 Global Warming Response Act set a goal of reducing the state’s greenhouse gas emissions 80 percent by 2050. That simply won’t be possible without almost completely decarbonizing the power sector,” Roberts explains.
Though some environmental groups opposed the nuclear subsidies, Governor Murphy thinks they’re necessary.
“I believe the biggest bridge we have to our clean energy future are the nukes and, not to mention, the thousands of jobs they support,” Murphy told the New York Times.
Utilities will pass the cost of the nuclear subsidies down to each ratepayer at a fee of about $41 a year, but Murphy plans to require utilities to cut rates using savings from the new federal tax law. Such cuts could potentially offset any increase to power bills from the nuclear subsidies.
3. Expanding RPS and Amount of Solar
For solar owners and those thinking of getting solar, the most interesting bill is the third one. Assembly Bill 3723/Senate Bill 2314 raises New Jersey’s renewable portfolio standard (RPS) to 35% by 2025 and 50% by 2030. This will spur a huge increase in renewables in the state and it will put New Jersey in the same league as New York and California as clean energy leaders.
This bill also increases New Jersey’s target for solar power to 5.1% by 2021, launches a community solar program and establishes a program to build 2 gigawatts of energy storage by 2030.
The community solar plan is especially good news for those who live in apartments or other places where they can’t get their own solar panels. It allows multiple households to use solar power from a shared solar array located nearby.
Advocates for low- and moderate-income families are excited about the community solar program. As Ronald McCray of the New Jersey State Conference of the NAACP explains, community solar
will make it so that if you live in an apartment building, own a small business, are lower-income, and so forth in New Jersey, you will be able to lease solar panels and have equal access to clean-energy ownership, as either individuals or together with a group of people, through a community solar program. As lower-income communities spend a disproportionate amount of their hard-earned income on utility bills compared to higher-income households, it is critical to implement legislation like these bills that can lower your electric bills and ensure consumption of clean energy with zero emissions.
What Will Happen to SRECs?
For homeowners and small businesses, the good news is that key programs to make solar power more affordable in New Jersey, especially net metering, are unchanged. While other states have rolled back payments for net metering customers over the last couple years, New Jersey’s net metering remains strong.
What will change as a result of A3723 is the state’s SREC program. Here’s a technical explanation from SREC Trade:
No later than 180 days after the enactment of the bill, the board [that oversees SRECs] will implement rules to close the SREC program to new systems upon reaching the 5.1% solar carve-out target. The legislation intends to close the existing SREC program to new projects on or before June 1, 2021. Within 24 months from signing the legislation, the Board of Public Utilities will be required to conduct a study that evaluates how to modify or implement a new solar incentive program. A variety of market stakeholders will be consulted in the process to determine the next best steps forward for the NJ SREC market.
The people over at Flett Exchange, a competitor of SREC Trade, are pretty worked up over this part of the legislation. They think it was put together without enough participation from the public and that it will benefit big investors to the detriment of the average solar homeowner:
“In the next few years [solar financiers] will be able to flip projects for huge profits to unsuspecting investors who will get caught holding the bag in the long term. New Jersey homeowners and businesses who invested in solar and relying on SRECs will be in limbo without the continuation of the SREC program,” writes company founder Michael Flett.
I think Flett is jumping the gun here. While this sounds like the state is planning to phase out the SREC program over the next few years, nobody knows exactly what will happen. Taken together, the three bills show that New Jersey is more committed to solar power and other renewable energy than ever. The state government certainly won’t want to get rid of such a key program as SRECs for making solar affordable without replacing it with another program to achieve the same level of benefit to solar buyers.
In the meantime, solar systems that are already in service as well as those that will be installed in the near future will not be affected by any changes in the SREC program.
I hope it’s now clear why these bills are so important to New Jersey’s energy future. The state has long been a big supporter of renewables and especially of solar. Now, New Jersey is reaffirming its commitment to making the state a clean energy leader. That’s good news for everybody, as it will create jobs and improve the environment.
And the new legislation is really good news for all the homeowners and small businesspeople who are thinking of going solar. The state has basically given solar its stamp of approval. If you’d like to find out more about what the new laws mean for you or find out if your location is a good candidate for solar panels, ask us for a free quote today.
— Joe Aurilia, Jr., EcoMen Solar
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