New Jersey Community Solar: Pilot Program Turns Permanent

CSEP vs. Pilot: What Changed?

Awards

Instead of using a competitive solicitation process to determine awards, the BPU has proposed a set of project maturity and quality requirements that all projects have to meet. The resulting process should be first come, first served – but due to such high anticipated interest in the program, a tiebreaker may be required. If more than 225 MW of qualified projects are submitted in the initial application window, BPU will distribute awards to projects with the highest guaranteed bill credit discount rate (which must be at least 15%).

Incentives

REC prices for the CSEP will be in line with the value for low- and moderate-income (LMI) projects under the pilot: $90/MWh. The BPU, however, reserves the right to adjust that incentive level if a project receives an allocation from the IRS in the low-income communities bonus ITC program. The bill credits will still be at the pre-tax retail rate, inclusive of both supply and delivery charges but excluding non-bypassable charges. The one notable change is that, in order to incentivize the participation of multifamily housing buildings on commercial rate classes, bill credits for master-metered buildings will also include demand charges. The calculation will use average demand charges from the previous year and updated bill credit calculations across subscriber types for all four investor-owned utilities are available here.

Capacity

The first and second years of the CSEP will both offer 225 MW. Capacity will be separated by utility territory based on percentage of retail sales, which corresponds with the following breakdown for 225 MW: 129 MW for PSE&G, 65 MW for JCP&L, 27 MW for ACE, and 4 MW for RECO. The third year will offer at least 150 MW and any unused capacity from a given year will roll over into the subsequent year. Projects that were approved to participate in the pilot program but have not reached operation will be allowed to register under the CSEP without counting against these capacity limits, as long as the new program’s requirements are met.

Product

The minimum bill credit discount for all projects is 15%, but as noted above, a higher discount gives your project a better chance in the case of a tiebreaker. The rules also include a requirement for utilities to implement consolidated billing systems by January 1, 2025, at which point all residential subscribers will have to receive a consolidated bill. The BPU has mandated that the model allow for as many savings rates as needed for different subscribers on a single project and committed to setting up a working group for stakeholders to provide input as consolidated billing implementation begins. 

Subscribers

Applicants will no longer have the option to limit the geographic zone for eligible subscribers to a project; under the pilot, applications would be viewed more favorably if subscribers only came from counties or municipalities adjacent to the site of the project. Now, subscribers are eligible as long as they live in the utility’s service territory. The pilot program reserved 40% of capacity for projects that served at least 51% of capacity to LMI customers, but all 150 pilot projects ended up being LMI-access projects. Thus, the carveout has been removed and replaced by a simple program-wide requirement to meet 51% LMI. The anchor rule has carried over as well – no single subscriber can be allocated more than 40% of the project.

Income Verification

Solstice is thrilled that the BPU has given a green light to self-attestation, which is the least intrusive method for income verification and the only one that truly creates accessibility for every single qualified household to participate. New Jersey now serves as an example for other programs around the country, especially since regulators didn’t start here – it’s taken several years of advocacy and lessons learned. When the program was initially authorized in 2018, it required income verification through either proof of participation in one of only four state programs or copies of federal tax returns. As a result, potential subscribers were skeptical upon being asked to provide sensitive personal information. Since then, New Jersey has removed the tax return verification method, increased the number of qualifying income-based programs, and introduced geo-qualification. Now, beginning in November when the standardized form is published, qualified customers will be able to verify that their income is below the threshold by simply signing the form. 

The evolution of New Jersey’s rules illustrate the importance of implementing a simple, scalable, and accessible method for income verification. State regulators learned that overly invasive and complicated verification rules impose an inequitable burden on income-qualified subscribers. Fortunately, the same lessons are underway at the federal level. New Jersey’s newly sanctioned self-attestation method aligns with the standard set for community solar projects under the low-income communities bonus credit program. 

In addition, the pilot-approved methods of categorical eligibility and geo-qualification both still stand under the CSEP, with new programs (including Medicaid) added to the eligibility list. Subscriber organizations can also qualify master-metered affordable housing providers via a signed affidavit demonstrating that specific and substantial benefits will be passed on to the residents. One concern that Solstice does have is around the proposed requirement to re-verify income qualification every five years, which creates unnecessary additional touch points with customers, introduces a perverse incentive, and does not align with best practices elsewhere.