SREC-Based Financing Program (ACE, JCP&L, RECO)

NOTE: Round 6 of the solicitation for SRECs has been issued. Bids are due on April 17, 2017 by 5pm. Information and documents on the RFP can be accessed at the program website. 

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 that represents the renewable attributes of one megawatt-hour (MWh) of electricity generated from a solar energy resource (it does not include the energy or capacity aspect of the system). 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.

This program, now referred to as the “SREC I Program” concluded on November 9, 2011. In November 2011, the Office of Clean Energy (“OCE”) began a series of stakeholder meetings to develop recommendations regarding the then expiring SREC I Program regarding whether it should be extended or expanded. By Order dated May 23, 2012, the Board endorsed an extension of the SREC I Program for a total additional capacity of 79.5 MW (ACE – 23 MW, JCP&L – 52 MW, RECO – 4.5 MW) over three years. This is referred to as the “SREC II Program.” On December 13, 2013, ACE, JCP&L and RECO each executed individual Stipulations concerning the SREC II Program. By Orders dated December 18, 2013, the Board approved the three December 13 stipulations.

Program Description

Under the SREC II program, qualifying solar generation owners can participate in the program by responding to periodic (3 per year, 9 rounds in total), competitive Requests for Proposals (RFPs). The three utilities which offer long-term SREC contracts have all selected Navigant Consulting to perform solicitation management functions. Recent solicitations have been open to projects in all three utility service territories as a coordinated program. The program is anticipated to solicit total of 79.5 MW of solar capacity over three years. The requirements breakdown for each of the utilities as JCP&L (52MW), ACE (23 MW), and RECO (4.5MW). The proposals are solicited under three program segments:

• Segment 1: Net-Metered residential and small commercial PV projects less than or equal to 50 KW
•  Segment 2: Net-Metered solar PV projects greater than 50 kW (no maximum size limit for Round 6 solicitation)
• Segment 3: Grid-supply solar PV projects certified by the BPU as located on closed landfills, brownfields, or areas of historic fill. 

The total number of SRECs that the EDC will purchase over the entire term is limited to a base cap of 1,350 kWh of solar generation per KW DC, or a period of 10 years, whichever occurs first. For example, a 10 KW project with a 10 year SREC contract would be limited to selling 135 SRECs.

Eligibility

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 bidding into Segment 1 & 2 must be installed on the customer side of the electric meter, and agree to a net metering arrangement with the Electric Distribution Company (“EDC”)
•  Projects funded or scheduled to be funded by the Customer On-Site Renewable Energy (CORE) rebate program from 2001-2008 are not 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.

A Pricing Proposal, or bid, must contain several pieces of additional information, including a single, fixed SREC price and contract length of 10 years. The proposals will be evaluated on a price-only basis. There will be a confidential price limit set above which the bids will not be accepted. The solicitation manager provides recommendations to the BPU on the competitiveness of each proposal who will ultimately decide which bids will be awarded contracts.

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. Please visit www.njsolarprogram.com for information about bidding results.