On July 23, 2012, L. 2012, c. 24 (the “Solar Act”) was signed into law by Governor Christie. The Solar Act, among other things, requires the New Jersey Board of Utilities (“BPU”) in consultation with the New Jersey Department of Environmental Protection (“DEP”) to establish standards and program incentives to encourage the development of solar generation projects on properly closed landfills, brownfields, and historic fill areas.
Pursuant to subsection (t) of the Solar Act, the BPU was required to, within 180 days to “complete a proceeding to establish a program to provide Solar Renewable Energy Certificate (“SRECs”) to owners of solar electric power generation facility projects certified by the board…as being located on a brownfield, on an area of historic fill or on a properly closed sanitary landfill facility.” Subsection (t) also requires the provision of financial incentives in connection with solar projects to be constructed on these properties, “the board shall establish a financial incentive that is designed to supplement the SRECs generated by the facility in order to cover the additional cost of constructing and operating a solar electric power generation facility on a brownfield, on an area of historic fill or on a properly closed sanitary landfill facility” (emphasis added).
On January 23, 2013, the BPU issued an Order implementing the portion of the Solar Act regarding SREC and financial incentive eligibility for solar projects on brownfields, areas of historic fill and landfills. For such projects, the BPU established two types of SREC eligibility certification under subsection (t):
“Conditional” certification for proposed projects where theDEP has determined that further remedial work is required; and
“Full” certification for proposed projects that do not require any remediation, i.e., projects on properly closed landfills.
For landfills, the BPU concluded that conditional certification will be recommended by the DEP if actions must be taken to “protect the integrity of the closed landfill or otherwise prevent contamination.” Full certification will be recommended once those requirements have been satisfied. The BPU will review the DEP’s recommendations and, if it approves the project, issue either a conditional or full certification. Full certification, however, is a pre-requisite for registration in the SREC Registration Program (“SRP”).
Requests for certification must be submitted by way of application. To that end, the BPU directed Staff to develop a form of application for certification. While the application has not yet been developed, one of the requirements is the submittal of a DEP map of the area that has been properly remediated, and a map of the proposed solar facility location. The applicant must also show that the proposed area is indeed a brownfields, historic fill area, or landfill as defined by the Solar Act.
Significantly, the Solar Act includes a provision for the BPU to develop a special financial incentive to compensate solar developers for increased costs of solar projects due to the siting of the projects on brownfields, areas of historic fill and landfills. However, Subsection (t) did not establish a deadline for the availability of financial incentives for these solar projects, and did not require that the certification procedures be established simultaneously with the financial incentives. Therefore, the BPU Staff recommended that the certification process and the financial incentive development be addressed in separate actions. Based on its Staff’s recommendation, the BPU determined it required additional information to formulate the appropriate financial incentives, and directed BPU Staff to continue to work with the DEP, NJEDA and stakeholders in establishing the financial incentive for these projects.
One interesting aspect of the BPU’s Order is that it infers that the special financial incentives the BPU develops should be related to the landfill closure and property remediation costs. That concept appears to depart from the intent of the Solar Act – which was to create incentives to accommodate “the additional cost of constructing and operating” solar projects on landfills and brownfields rather than to create a new source of revenue strictly for closure or remediation expenses. When the Solar Act was announced it was greeted with some fanfare that it would serve to promote solar projects on brownfield sites rather than on greenfield or farmland sites. However, aspects of the BPU Order seem to narrowly construe the financial incentives as a mechanism to facilitate remediation of those sites rather than truly promoting brownfield sites over greenfield sites for solar development.
It is unclear when the BPU will announce the incentive program but, in the meantime, it is likely that the BPU will continue to accept input from interested parties. We recommend that anyone seeking clarification of these issues should submit their comments or concerns directly to BPU.
We will continue to monitor the BPU position on the certification process and the financial incentives as required under the Solar Act. In the meantime, if you have any questions please contact us.