Renewables Portfolio Standard (New Jersey)
Last modified on February 12, 2015.
Rules Regulations Policies Program
|Name||Renewables Portfolio Standard|
|Incentive Type||Renewables Portfolio Standard|
|Applicable Sector||Investor-Owned Utility, Retail Supplier|
|Eligible Technologies||Anaerobic Digestion, Biomass, Fuel Cells using Renewable Fuels, Geothermal Electric, Hydroelectric, Landfill Gas, Municipal Solid Waste, Photovoltaics, Solar Thermal Electric, Tidal Energy, Wave Energy, Wind|
|Energy Category||Renewable Energy Incentive Programs|
|Credit Trading||Yes (PJM-GATS)|
|Credit Transfers Accepted To|| PJM-GATS into MIRECS|
(Refers to tracking system compatibility only, not RPS eligibility. Please see statutes and regulations for information on facility eligibility)
|Standard||20.38% Class I and Class II renewables by energy year 2020-2021 + 4.1% solar-electric by energy year 2027-2028|
|Technology Minimum|| Solar-Electric: 4.1% by energy year 2027-2028|
Offshore Wind: 1,100 MW (standard must be defined in % terms by BPU, sufficient to reach this level of generating capacity)
|Date added to DSIRE||2001-05-07|
|Last DSIRE Review||2013-03-28|
| Last Substantive Modification
to Summary by DSIRE
Note: In July 2012 New Jersey enacted S.B. 1925 substantially revising its solar carve-out. The summary below incorporates information on the changes made to the solar carve-out as well as the qualification of certain hydropower projects under the RPS. While it contains information on many of the most important changes made by the law, it is not exhaustive and lacks some details. Extensive rule making activity will be necessary to implement the various provisions contained in S.B. 1925.
New Jersey's renewable portfolio standard (RPS) -- one of the most aggressive in the United States -- requires each supplier/provider serving retail customers in the state to procure 22.5% of the electricity it sells in New Jersey from qualifying renewables by 2021 (“energy year” 2021 runs from June 2020 – May 2021). In addition, the standard also contains a separate solar specific provision which requires suppliers and providers to procure at least 4.1% of sales from qualifying solar electric generation facilities by Energy Year 2028.
As detailed in the table below, prior to A.B. 3520 enacted in 2010, the solar carve-out was stated as a percentage-based target that, when combined with other resource targets, resulted in a total renewable energy standard of 22.5% by 2021. The January 2010 legislation adjusted the solar portion of the standard to be stated in terms of gigawatt-hours (GWh), resulting in a revised schedule requiring 17.88% from Class I and 2.5% from Class II renewables by EY 2021 (together 20.38% by EY 2021), and an additional 5,316 GWh from solar-electric facilities by EY 2026. In 2012 the solar compliance schedule was reverted back to a percentage-based target of 4.1% by EY 2028 by S.B. 1925. The offshore wind provision added in August 2010 by S.B. 2036 is defined so that it will reduce the percentage of electricity sales that must be provided from other Class I renewable energy sources (see Class I description below). In other words, the addition of the offshore wind resource requirement will not increase the overall renewable energy targets.
The mandate sets different requirements for different types of renewable energy resources, termed “classes”. "Class I" renewable energy is defined as electricity derived from solar energy, wind energy, wave or tidal action, geothermal energy, landfill gas, anaerobic digestion, fuel cells using renewable fuels, and -- with written permission of the New Jersey Department of Environmental Protection (DEP) -- certain other forms of sustainable biomass. As a result of S.B. 1925, Class I renewable energy also includes hydroelectric facilities of 3 MW or less that are: placed in service after July 23, 2012 (the effective date of S.B. 1925); located in the state and connected to the distribution system; and, certified as low-impact by a nationally recognized organization based on a system that includes a variety of minimum criteria.
"Class II" renewable energy is defined as electricity generated by hydropower facilities larger than 3 megawatts (MW) and less than 30 MW*, and resource-recovery facilities (i.e., municipal solid waste or MSW) located in New Jersey approved by the DEP. Electricity generated by a resource-recovery facility outside New Jersey qualifies as "Class II" renewable energy if the facility is located in a state with retail electric competition and the facility is approved by the DEP. Solar energy, while it remains an eligible Class I technology, occupies a special place as the only resource eligible for the solar electric component of the standard. Offshore wind, defined as a wind turbine located in the Atlantic Ocean and connected to the New Jersey electric transmission system, likewise also occupies a special place within the RPS.
The required percentages of each category and the total renewables percentage required are listed in the table below. The term EY refers to compliance period or “energy year” for the standard, which runs from June - May and is defined by the year in which an energy year ends. Note that for Basic Generation Service (BGS) contracts executed prior to July 23, 2012 the supplier's obligation is determined according to the standard in effect at that time (i.e., the A.B. 3520 energy-based standard). However, the ultimate statewide target for any year is determined by the S.B. 1925 targets and does not change regardless of this exemption. Thus any differences (i.e., deficits) arising from the pre-existing BGS contract exemption are distributed evenly across non-exempt sales.
|Energy Year||Solar Carve-Out (A.B. 3520)**||Pre-A.B. 3520/S.B. 1925 Solar Carve-Out**||Class I||Class II|
|EY 2005||--||0.0100% (pre-A.B. 3520)||0.740%||2.5%|
|EY 2006||--||0.0170% (pre-A.B. 3520)||0.983%||2.5%|
|EY 2007||--||0.0393% (pre-A.B. 3520)||2.037%||2.5%|
|EY 2008||--||0.0817% (pre-A.B. 3520)||2.924%||2.5%|
|EY 2009||--||0.1600% (pre-A.B. 3520)||3.840%||2.5%|
|EY 2010||--||0.2210% (pre-A.B. 3520)||4.685%||2.5%|
|EY 2011||306 GWh||0.3050% (pre-A.B. 3520)||5.492%||2.5%|
|EY 2012||442 GWh||0.3940% (pre-A.B. 3520)||6.320%||2.5%|
|EY 2013||596 GWh||--||7.143%||2.5%|
|EY 2014||772 GWh||2.050% (S.B. 1925)||7.977%||2.5%|
|EY 2015||965 GWh||2.450% (S.B. 1925)||8.807%||2.5%|
|EY 2016||1,150 GWh||2.750% (S.B. 1925)||9.649%||2.5%|
|EY 2017||1,357 GWh||3.000% (S.B. 1925)||10.485%||2.5%|
|EY 2018||1,591 GWh||3.200% (S.B. 1925)||12.325%||2.5%|
|EY 2019||1,858 GWh||3.290% (S.B. 1925)||14.175%||2.5%|
|EY 2020||2,164 GWh||3.380% (S.B. 1925)||16.029%||2.5%|
|EY 2021||2,518 GWh||3.470% (S.B. 1925)||17.880%||2.5%|
|EY 2022||2,928 GWh||3.560% (S.B. 1925)||--||--|
|EY 2023||3,433 GWh||3.650% (S.B. 1925)||--||--|
|EY 2024||3,989 GWh||3.740% (S.B. 1925)||--||--|
|EY 2025||4,610 GWh||3.830% (S.B. 1925)||--||--|
|EY 2026||5,316 GWh||3.920% (S.B. 1925)||--||--|
|EY 2027||5,316 GWh||4.010% (S.B. 1925)||--||--|
|EY 2028 +||5,316 GWh||4.100% (S.B. 1925)||--||--|
As shown above, the general compliance schedule ends in 2021; however, the BPU will adopt rules to determine the minimum percentages for energy year 2022 and beyond. The revised solar schedule is similarly intended to extend beyond the 2028 target “to reflect an increasing number of kilowatt-hours to be purchased by suppliers or providers from solar electric power generators” in the state.
Because of the unique nature of offshore wind, a time line has not been established for the offshore wind carve-out. The BPU's adopted rules define a system where the standard for any given year is based on projected energy production from operating, eligible offshore wind facilities. In order to qualify as an eligible offshore wind facility, an applicant must submit a detailed project analysis to the BPU for approval. Among other things, the application must contain a proposal for pricing Offshore Wind Renewable Energy Credits (ORECs) as a fixed, flat rate or as a fixed price for every contract year. Suppliers will be required to purchase ORECs at a price and time period defined by the BPU.
Suppliers/providers may meet these requirements by submitting "Class I" renewable-energy certificates (Class I RECs), "Class II" RECs, Solar RECs (SRECs), and ORECs, all of which represent the environmental attributes of one megawatt-hour (MWh) of generation from an eligible facility. All RPS compliance must be submitted in the form of RECs, which will be issued by the PJM-Environmental Information Services (EIS), through PJM's Generation Attribute Tracking System (GATS). Both RECs and ORECs may be used for compliance during energy year in which they were generated or the following two compliance years. As a result of S.B. 1925, the lifetime for SRECs has been extended by an additional two years, so SRECs may be used for compliance during the year in which they were generated or the following four years. This extension of SREC lifetime applies only to SRECs created on or after July 23, 2012, the effective date of S.B. 1925.
Additional solar electricity may be used to fulfill any of the three required categories, while additional "Class I" electricity may be used to fulfill the "Class II" requirement. To qualify as "Class I" or "Class II" renewable energy, electricity must be generated within or delivered into the PJM region. "Class I" or "Class II" renewable energy delivered into the PJM region must be generated at a facility that began construction on or after January 1, 2003, in order to qualify. Solar facilities are eligible to produce SRECs for 15 years, termed the “qualification life”, and thereafter may be issued Class I RECs, but not SRECs. Under the former rules suppliers/providers could not use RECs or SRECs associated with electricity generated at a customer-generator's premises unless the facility was eligible for net metering. However, S.B. 2936 (2007) amended the law to allow all facilities "connected to the distribution system in [New Jersey]", including but not limited to solar facilities, to generate RPS-eligible RECs or SRECs.
Prior to the adoption of S.B. 1925 in 2012, there was no explicit definition for "connected to the distribution system". With respect to solar-electric systems, S.B. 1925 defines the term to include: (1) net metered facilities, (2) facilities that meet the definition of "on-site generation"; (3) facilities eligible for aggregated net metering; (4) facilities owned or operated by a public utility approved by the BPU; (5) facilities connected to the distribution system at 69 kilovolts (kV) or less and approved by the BPU; and (6) facilities certified by the BPU and DEP as being located on a brownfield, an area of historic fill, or a closed landfill. The definition does not include any facility connected to the grid at a voltage of higher than 69 kV, unless the facility is a net metering facility.
Under (5) above, from EY 2014 - 2016, the BPU is generally only permitted to approve 80 MW of capacity in aggregate each year, and is not permitted to approve any single project with a capacity in excess of 10 MW. The law outlines a variety of parameters for BPU approval of grid-supply systems both before and after EY 2016. It also contains a slightly different path to approval for new grid-supply projects on agricultural land for which a PJM issued a System Impact Study on or before June 30, 2011. Finally, the law requires the BPU to consider establishing a program to provide additional support for net metered solar facilities of three MW or larger, including those owned by a public utility. In March 2013 the BPU issued an order concluding its investigation into the matter with a finding that such a program was unnecessary.
If a supplier/provider is not in compliance for an energy year, the supplier/provider must remit an alternative compliance payment (ACP) and/or a solar alternative compliance payment (SACP) for the amount of RECs and solar RECs that were required but not submitted. The BPU determines prices for ACPs and SACPs, and reviews the prices at least once per year. The price of an ACP and an SACP is to be higher than the estimated competitive market cost of (1) the cost of meeting the requirement by purchasing a REC or solar REC, or (2) the cost of meeting the requirement by generating the required renewable energy.The initial ACP and SACP levels were set by BPU order at $50 per MWh and $300 per MWh respectively in 2004. These levels were subsequently renewed several times without changes. The ACP remains unchanged at $50 per MWh. The modern SACP was established by BPU order in December 2007 as a rolling eight-year schedule beginning in EY 2009 (i.e., one additional year added to the back end of the schedule each year). In July 2012 S.B. 1925 established a 15-year schedule for EY 2014 - EY 2028. The SACP for past years covered under the former BPU schedule and the 15-year schedule as adopted by S.B. 1925 are as follows:
- EY 2009: $711 per MWh
- EY 2010: $693 per MWh
- EY 2011: $675 per MWh
- EY 2012 :$658 per MWh
- EY 2013: $641 per MWh
- EY 2014: $339 per MWh
- EY 2015: $331 per MWh
- EY 2016: $323 per MWh
- EY 2017: $315 per MWh
- EY 2018: $308 per MWh
- EY 2019: $300 per MWh
- EY 2020: $293 per MWh
- EY 2021: $286 per MWh
- EY 2022: $279 per MWh
- EY 2023: $272 per MWh
- EY 2024: $266 per MWh
- EY 2025: $260 per MWh
- EY 2026: $253 per MWh
- EY 2027: $250 per MWh
- EY 2028: $239 per MWh
All SACPs and offshore wind ACPs must be refunded directly to ratepayers. However, revenue generated by payment of the Class I and Class II renewable energy ACPs must be used to fund renewable-energy projects through the New Jersey Clean Energy Program. Prior to the enactment of A.B. 3520, SACP revenue was also required to be directed to funding solar projects. In addition, prior to the enactment of the Solar Advancement Act of 2010, the BPU was required to freeze the solar energy requirement if it determined that the total cost of solar incentives during a reporting year exceeded 2% of the total retail price of electricity during that reporting year. This provision has now been removed and is no longer in effect.
Each supplier/provider is required to file an annual report with the BPU by October 1, demonstrating that the requirements for the preceding energy year (ending May 31 of the same calendar year) have been met. The Solar Advancement Act of 2010 also changed the classification of a compliance period from a "reporting year" to "energy year". Failure to comply with any provision of the RPS may result in suspension of the supplier's license, financial penalties, disallowance of recovery of costs in rates, and/or prohibition on accepting new customers.
New Jersey's RPS was originally adopted in 1999 as part of the state's electricity restructuring legislation with initial renewables targets of 4.0% Class I and 2.5% Class I or Class II resources by 2012. In 2004 the BPU amended the standard to require the renewable energy targets be met by May 2008, and to add a requirement that at least 0.16% of sales come from solar electricity as part of the overall Class I target of 4.0%.
The New Jersey Board of Public Utilities (BPU) made even more extensive revisions to the RPS in April 2006, significantly increasing the required percentages of Class I, Class II, and solar resources towards an ultimate requirement of 22.5% renewables, including 2.12% solar, by May 2021. In December 2007 the BPU issued a far-reaching order (BPU Solar Transition Order) directing that further changes be made to many of the details of the RPS in an effort to increase the effectiveness and efficiency of New Jersey's solar energy policies. Formal rule amendments associated with many of these changes became effective in 2009, although the broader renewable energy targets were not affected. As noted above, during 2010 the solar carve-out was redesigned and expanded and the offshore wind requirement was also added, while in 2012 additional substantial changes were made largely affecting the solar carve-out.
*The administrative regulations under N.J.A.C. § 14:8-2.6 restrict the size of eligible Class II hydropower projects to 30 MW or less, though this restriction is not contained within the RPS statute.
**The A.B. 3520 and pre-A.B. 3520 solar targets have been included for informational purposes and historical context. The A.B. 3520 targets continue to have some revelance in that they continue to apply to BGS provider contracts in existence prior to the enactment of S.B. 1925. All BGS contracts under a similar exemption contained in A.B. 3520 expired by May 31, 2012.
|Contact Name||Benjamin Scott Hunter|
|Department||New Jersey Board of Public Utilities|
|Division||Renewable Energy Program Administrator, Office of Clean Energy|
|Address||2 Gateway Center|
|Place||Newark, New Jersey|
Authorities (Please contact the if there are any file problems.)
|Authority 1:||N.J. Stat. § 48:3-49 et seq.|
|Date Enacted||1999 (subsequently amended)|
|Authority 2:||N.J.A.C. 14:8-1 and 14:8-2|
|Date Enacted||2001 (subsequently amended)|
|Authority 3:||S.B. 1925|
- Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.