Release of New Jersey’s Draft 2011 Energy Master Plan – Solar Incentives Will Survive — But With Changes

On Tuesday, June 7, the Christie Administration released the State’s draft 2011 Energy Master Plan (Master Plan). The Master Plan provides the Administration’s strategic vision of energy in New Jersey. In particular, the “use, management and development of energy in New Jersey over the next decade,” and includes in-depth discussion of New Jersey’s electricity sources, uses, regulations, challenges, and incentives across all users of electricity in the State: residential, commercial, and governmental. These links provide access to the official State of New Jersey Governor’s Release of Tuesday, June 7th, and the full Draft.

Impact on Solar

While the Master Plan will be subject to public hearings before becoming final, the Master Plan supports the State’s solar initiatives. Although the Master Plan raises concerns about excess allocation of resources to certain energy sectors, such as solar, it, however, confirms the State’s commitment to solar as a key part of NJ’s energy future and proposes that incentives remain in place long term. The Master Plan acknowledges “the integral role that solar energy can play in New Jersey’s ability to meet its RPS objective as well as its role as an engine for economic growth.” The Master Plan, however, has encouraged the BPU to “step up its regulatory review of solar PV to ensure that State-sponsored programs represent worthwhile initiatives that achieve a sensible balance among competing ….objectives,” but the Plan clearly does support behind-the-meter commercial/industrial solar installations rather than residential and certain grid-connected systems.

To recap, New Jersey is at the forefront, along with California, among all states in the country with solar incentives. New Jersey’s RPS (Renewable Power Standard), including its “solar carve-out,” set the bar for Solar Renewal Energy Certificates (SRECs) which has led to significant solar project development in the State over the last several years. New Jersey’s SREC incentives, combined with other state and federal incentives, has made these projects commercially viable. However, there has been concern within the energy industry, including lenders, investors, and business owners, over the State’s long-term commitment to continue the country’s leading SREC incentive program beyond the current 2016 SACP schedule (BPUs Solar Alternative Compliance Payment schedule). The Master Plan proposes that while the incentives should continue through 2026 (the final year of the current SACP schedule), a significant reduction (potentially 20%) to the SACP cost is recommended for 2016, followed by annual reductions to reflect the continuing downward trend in installed costs. Even with the proposed reductions, the State’s intention is clear that it will continue to support behind-the-meter commercial and industrial solar projects through the use of solar credits.

Again, the draft Master Plan released on Tuesday, June 7, is the beginning of a process, with more updates expected. Please contact us with any questions regarding the above.

Gibbons Leadership Role in Solar Project Finance: Gibbons is proud to be serving our clients in significant, if not the leading, solar projects throughout New Jersey and the region. Funding for energy projects, particularly solar and other renewable energy projects, is complex and difficult. Gibbons has leveraged our many years of financing experience and deep relationships in business, equity, commercial banking, investment banking, and government to help our clients structure, finance, and close these complicated transactions.

Scope and Types of Projects: We represent all parties involved in planning, structuring, and developing solar projects throughout New Jersey and the surrounding region, including independent power producers, solar developers, engineers, financial institutions, state and local governments, business owners, commercial real estate owners and developers, commercial energy consumers, lenders, private investors and investment funds.

We advise clients on all aspects and components of energy projects, including project finance, infrastructure development, grant qualification, federal tax credits, solar renewable energy credits (SRECs), project structures, federal and state regulatory compliance matters, special purpose vehicles (SPVs), power purchase agreements (PPAs), engineering, procurement and construction agreements (EPCs) and other long-term contracts, tax exempt energy users, construction and development loans, bridge loans, and long-term finance, as well as mergers, acquisitions, joint ventures, joint bidding arrangements, and revenue securitizations.

Representative Matters:

  • Represented leading solar developer in its solar power systems contract with a NJ county improvement authority to establish over 7 megawatts (MW) of energy-producing solar power systems at over 30 local and county government locations, including public schools, community colleges, public works buildings, courthouses, libraries and senior, and community centers.
  • Representing leading real estate holding company in connection with the development and installation of a 10 MW photovoltaic system for approximately 20 commercial properties.
  • Representing leading PPA provider with its development of a 5 MW photovoltaic system for a regional NJ school district encompassing 12 schools.
  • Representing a leading PPA provider with the installation and development of two 5 MW photovoltaic systems at two New Jersey based commercial locations.
  • Representing an international pharmaceutical manufacturer in connection with a proposed 12 MW photovoltaic system for its New Jersey facility.
  • Represented a commercial lender in connection with a 9MW photovoltaic system for a NJ-based rooftop solar system.
  • Representing sponsors in the creation of a $100 million equity fund for the purpose of capitalizing northeast US residential and commercial solar projects.
  • Participating on the Renewable Energy Stakeholders Committee of a major governmental jurisdiction in the development of new renewable energy policies and regulations.

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