New Jersey Board of Public Utilities Issues Order Setting Forth New Community Solar Program

On August 16, 2023, the New Jersey Board of Public Utilities issued an order setting forth the new Community Solar program that is replacing the prior Pilot Program. This Community Solar Energy Program (“CSEP”) continues upon the foundation laid by the initial program, but builds upon, and in some way restricts, what has gone before.

The Basics of the CSEP

The order goes into effect on August 23, 2023, and has converted the prior Community Solar Pilot Program into a permanent program called the CSEP.

• This program will provide community solar opportunities for projects not to exceed a capacity of 5MW.
• CSEP projects can only be sited on rooftops, carports and canopies over impervious surfaces, contaminated sites and landfills, and floating solar on bodies of water that have little to no fauna and flora.
• The Board will open a 225MW capacity block for Energy Year 2024, broken down by electric distribution company (“EDC”) percentage.
• All projects must have at least 51% Low and Moderate Income (“LMI”) customers.
• All projects must provide at least 15% discount from the costs of the EDC.
• All projects must use consolidated billing.
• Applicants must post an escrow of $40 / kW DC nameplate capacity with the Board, that will be forfeit if not operational on time.
• Community solar facilities receive an 18-month expiration date based upon the conditional registration approval, or 24 months for community solar projects on contaminated sites and landfills.
• The CSEP application window opens to qualifying community solar projects starting November 15, 2023, closing just before midnight on November 28, 2023. Awards are on a “first come, first served” basis, after the first 10 days. If a segment is fully subscribed in those first 10 days, the Board will use a tiebreaker of the highest discount rate for customers to award projects.
• CSEP Projects receive SREC-IIs under the ADI program, which is currently valued at $90/SREC-II based upon the LMI Market Segment.

These programs may not be collocated on a single property or on contiguous properties if the combined projects exceed the 5MW, unless each sub-5MW project serves separate customers.

The yearly capacity will be set to no less than 150MW, with a cumulative capacity for the first 5 years of no less than 750MW. Towards this end, the Board will open a 225MW capacity block for Energy Year 2024, and a 225 MW block for EY 2025. The Board will continue to decide this capacity on a proportional basis with the electric distribution companies (“EDCs”).

The non-regulated affiliates of EDCs may now own CSEP projects, while the EDCs themselves remain unable to own the facilities.

Applicants must post an escrow of $40 / kW DC nameplate capacity with the Board, although public entities and community-based organizations may be exempt with Staff approval. The escrow is returned upon receipt of the PTO and the post-construction certificate and would be forfeit to the State if the facility is not operation within the time provided by the conditional registration. This escrow requirement goes into effect for EY2024 projects one year from the date of conditional approval.

Community Engagement remains a significant element of any application, and a developer should be expected to show the details of both the engagement and the approach to acquiring subscribers.

The definition of LMI remains the same as used in the Pilot Program, and now all Projects must have an LMI component of no less than 51%. Proof of LMI status include evidence of participation in all programs that were previously referenced in the Pilot Program, with the addition of Medicaid; Supplemental Security Income: Social Security Disability Insurance; Special Supplemental Nutrition Program for Women, Infants, and Children; Temporary Assistance for Needy Families; and the Low-Income Household Water Assistance Program, as well as a “self-attestation” by the LMI customer that their household income is less than 80 percent of the area median income.

The EDCs will implement consolidated billing for community solar, with a deadline of January 1, 2025. Consolidated billing will only be handled by the EDCs or a third-party energy supplier. All projects serving residential subscribers must participate in consolidated billing. Projects that were approved and bult under the original Pilot are now required to use consolidated billing, with a one year transition allowed.

Community solar projects no longer have a maximum number of participating subscribers, but must maintain the minimum of 10 subscribers, except for community solar projects sited on the property of, and delivering benefits to, multi-family buildings. No single subscriber may subscribe to more than 40 percent of the project’s energy production. Subscribers to a new community solar project in CSEP may be subscribed from anywhere within its EDC territory, providing maximum choice and driving competitive discounts.

Bottom Line

If you wish to be involved in this process, you MUST submit within the first 10 days of the window being open, must provide at least the 15% minimum discount, and would be better served if you could increase that discount over 15% to have a better chance in the event of a full subscription and a need to go to the discount value as a tie breaker. Because of this, consider using the least-expensive approach to building and remember that siting is key; rooftop will likely be the best option with the need for increased discounts for customers to ensure that the application has a better chance of success in what has traditionally been an over-subscribed program.

Also strongly consider the escrow requirement and the impact that might have, especially in light of the reliance upon the electric companies to move interconnection applications along. It once again is a place where a developer is putting up funds at the mercy of a third party, and the Board’s willingness to work with those delays has been less than consistent in the past years.

Please reach out to Genova Burns' Energy & Utility Law specialist and Counsel Kenneth J. Sheehan, Esq. via email here or call 973.533.0777.