Utility Solar Financing Programs (ACE, JCP&L, RECO)

March 23, 2015


Note: As of this writing there are no further solicitations scheduled under the current program. The summary below describes the program as it existed prior to its suspension and is included for informational purposes only. In May 2012 the New Jersey Board of Public Utilities (BPU) issued an order (see May 23, 2012 BPU Order above) providing for an extension of utility solar programs and allowing utilities a choice on whether to participate or not participate. All four of New Jersey's investor-owned utilities have signaled their intent to participate (see Utility Participation Letters) in extended programs; however, Rockland Electric has stated an intention to develop a solar loan program rather than extend the type of long-term contracting program described below. Utility programs will require BPU approval in order to proceed.

In September 2007 the New Jersey Board of Public Utilities (BPU) began an investigation into ways to develop and support the solar financing mechanisms based on Solar Renewable Energy Certificates (SRECs). An SREC is a tradable commodity equivalent to one megawatt-hour (MWh) of electricity generation from a solar energy resource. Electricity suppliers in New Jersey use SRECs to meet their obligations under the solar carve-out portion of the state's renewable portfolio standard (RPS). Because of this demand, SRECs are potentially valuable to qualifying solar system owners and their sale can result in significant revenue over the life of a solar project. The BPU SREC financing initiative, which ultimately resulted in the utility programs described below, is an attempt to introduce greater price certainty into the SREC system.

After extensive stakeholder consultations, in August 2008 the BPU issued an order requiring Atlantic City Electric (ACE), Jersey Central Power and Light (JCP&L), and Rockland Electric Company (RECO), three of New Jersey's four investor-owned electric distribution companies (EDCs) to offer long-term (10 - 15 year) SREC purchase contracts to solar system owners. The fourth investor-owned EDC in New Jersey, PSE&G, has not thus far been required to develop such a program because its Solar Loan program adopted in April 2008 provides similar benefits. The PSE&G Solar Loan program allows solar system owners within its service territory to finance a portion of the system cost through the utility, and repay the loan with SRECs at a guaranteed minimum SREC price.

Program Participant Information
Qualifying solar generation owners can participate in the program by responding to periodic (3 per year), competitive Requests for Proposals (RFPs). The three utilities which offer long-term SREC contracts have all selected NERA Economic Consulting to perform solicitation management functions. Recent solicitations have been open to projects in all three utility service territories as a coordinated program. A number of important restrictions related to project eligibility are included below (see the program web site for a complete description):

  • Projects must be located in the service territories of JCP&L, ACE, or RECO
  • Both residential and non-residential projects are eligible
  • Projects must be 2 MW DC or smaller*, installed on the customer side of the electric meter, and agree to a net metering arrangement with the utility
  • Projects funded or scheduled to be funded by the Customer On-Site Renewable Energy (CORE) rebate program from 2001-2008 are not eligible. Projects that will be funded by the Renewable Energy Incentive Program (REIP)** are eligible
  • Existing projects which are already interconnected to the grid are not eligible
  • Projects must be equipped with a generation meter to measure SREC production.

Prior submitting a long-term contract proposal to a given RFP, a prospective participant must obtain an Application Number through either the REIP** or SREC Registration Program (SRP), and submit an Expression of Interest (EOI) to the solicitation manager. A Pricing Proposal, or bid, must contain several pieces of additional information, including a single, fixed SREC price and contract length from 10 - 15 years. The proposal evaluation process ranks bids based on the net present value (NPV) under the contract for each annually delivered SREC, with the lowest NPVs receiving the highest ranking (discount rates used vary by utility). The solicitation manager provides recommendations to the BPU on the competitiveness of each proposal and the BPU ultimately decides which bids will be awarded contracts.

For solicitation bids from January 1, 2011 - June 10, 2011, residential projects of 10 kW or less and non-profit/public projects of 50 kW or less which that were awarded long-term SREC contracts were eligible for an extra incentive of $0.50/W up to $3,750 for residential projects and $15,000 for public/non-profit projects. This additional incentive has now been discontinued and new applications will not be accepted for subsequent solicitations.

Additional Regulatory Information
Through its initial August 2008 order and subsequent follow-up orders (available on the program web site in the Documents section), the BPU has made a series of determinations about the goals and design the EDC Solar Financing Programs in the context of the larger SREC/RPS program. Of note, the programs are not intended to support all new solar projects in New Jersey with long-term SREC contracts. The BPU program authorization is limited to three RPS reporting years ending May 31, 2012 and the program targets are for SREC procurement are set at 60% of each utility's incremental SREC allocation for the first full reporting year, declining to 50% in second reporting year and 40% in the third reporting year. The actual capacity targets for each utility during each reporting year are based on these parameters, as well as any adjustments deemed necessary by the BPU based on market conditions. As listed in the January 2011 RFP, the capacity targets set for the Report Year ending May 31, 2011 (RY 2011) and RY 2012 are as follows:

  • RY 2011: 18 MW for JCP&L, 12.7 MW for ACE, and 2.9 MW for RECO, leading to a total program target of 33.6 MW for RY 2011
  • RY 2012: 9 MW for JCP&L, 4 MW for ACE, and 0.7 MW for RECO, leading to a total program target of 13.7 MW for RY 2012

The first two solicitations for bids during a reporting year are generally designed to each procure half of each annual target for that year, with a potential third solicitation to procure any remaining portion of the reporting year target. The details of each solicitation are ultimately left up to the BPU, although the solicitation manager provides recommendations.

Solicitations include separate segments for small (50 kW and smaller) and large projects. The BPU has set an aspirational goal that 25% of projects be from the small segment for JCP&L and ACE, and 50% of projects be from the small segment for RECO. For JCP&L and ACE territories, there is also a developer cap of 20% of the planned solicitation quantities across all solicitations during a reporting year. Projects in RECO service territory are not subject to this cap, but there is a cap of 50% of the planned solicitation quantity across all solicitations during a reporting year for affiliates of RECO that are not regulated by the BPU.

One further point of note is that the EDCs themselves do not have SREC procurement obligations under the New Jersey RPS (i.e., they are electricity distribution companies, not energy suppliers). The EDC capacity allocations detailed above are based on the incremental SREC obligations borne by energy suppliers providing service within each service territory. The SRECs obtained by the EDCs under the long-term contracts are auctioned off to energy suppliers which do have RPS obligations. The utilities are permitted to recover program costs under the Regional Greenhouse Gas Initiative (RGGI) surcharge. The revenue generated from SREC auctions is used to offset program costs.

*Prior to 2011, eligible project size was capped at 500 kW.

**It is important to note that while REIP projects are eligible for the program, existing projects are not eligible and the REIP no longer offers incentives for solar installations.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: New Jersey
Incentive Type: Other Incentive
Web Site: http://www.njcleanenergy.com/renewable-energy/programs/utility-financing-programs/atlantic-city-electric-jersey-central-power-and-
Administrator: National Economic Research Associates (NERA)
Start Date: August 2009 (first solicitation for projects)
Eligible Renewable/Other Technologies:
  • Solar Photovoltaics


Name: NJ BPU Solar Financing Board Order
Date Enacted: 08/07/2008
Name: NJ BPU Solar Financing Review Order
Date Enacted: 05/23/2012


Name: Program Information - SREC-Based Financing Program Solicitation Manager
Address: One Gateway Center, Suite 720
Newark NJ 07102
Phone: (973) 297-0880
Email: NJSolar@nera.com

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.