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New Jersey Approves New Solar Incentive Program to Replace SRECs

Updated: Mar 14



December 16, 2019


Shannon Yerk

Director of Marketing

National Energy Partners

(856) 273-­‐5761 x150

(215) 971-­‐6947


New Jersey Approves New Solar Incentive Program to Replace the Solar Renewable Energy Certificate (SRECs)

The program, titled “Transition Renewable Energy Certificates (TREC)” is projected to provide a substantial boost in solar development investments. TREC provides ample revisions to the Legacy SREC Program by providing certainty where investor confidence was previously lacking.

TRENTON, N.J.— On Friday, December 6, 2019, The New Jersey Board of Public Utilities (NJBPU) approved a new solar incentive program1, titled Transition Renewable Energy Certificates (TREC) to aid in the transition from the current Solar Renewable Energy Certificate (SREC) Program.

Jeremy Conner, CEO of National Energy Partners – a national solar development firm – helps to break down the practical implications of the TREC program.


In May 2018, Governor Phil Murphy signed The Clean Energy Act2 into law to lessen the burden on utility ratepayers. The legislation included The Solar Act3, which amended certain aspects of the statute that governs the generation, interconnection, and financing of renewable energy. The Solar Act introduced two leading rules relating to the SREC program. First, regulations were adopted that would require the New Jersey Board of Public Utilities (NJBPU) to close the SREC program to new applications when 5.1% of the electricity sold in New Jersey was generated by solar or by June 2021, whichever comes first.

Second, the Solar Act required the NJBPU to conduct proceedings to establish new standards and to develop new programs to implement the Act’s overall goals to stabilize the Solar Renewable Energy Credits market and continue growth in the solar industry. On December 6, 2019, these proceedings were conducted by the NJBPU, which then announced the Transition Renewable Energy Certificates (TREC) program to replace the Legacy SREC program. The TREC program provides ample revisions to the Legacy program, dramatically increases available incentives, and provides certainty where investor confidence was previously lacking.


New Jersey has historically been one of the most attractive states in the nation for solar installations. This is largely because of the NJ Solar Renewable Energy Certificates (SRECs) program, which is one of the most substantial incentives available for solar. The SREC program allowed the owner of a solar power system to earn 1 SREC for every 1,000 kWh of energy that they produce through solar.

SRECs are purchased by Load Serving Entities (LSE) to comply with the terms of a Renewable Portfolio Standard (RPS) that requires LSE’s to provide a certain percentage of electricity through in-­‐state solar installations. LSE’s opt to purchase SRECs instead of paying the penalty for non-­‐compliance with the RPS. Consequentially, the value of an SREC, under the Legacy program, was dependent on market conditions, and always fluctuated below the rate of the penalty assigned.


The guarantee of price and terms for the TREC program will help stabilize the solar market. “This change will lead to a surge of new projects coming to the market and will make it easier to finance projects. Since the utilities limit how many projects can interconnect to the grid and handle these requests on a ‘first come, first served’ basis, customers who wish to install a solar energy system must act quickly. When a similar program was introduced in Massachusetts, it led to a flood of projects which caused the utilities to deny projects’ necessary permission to interconnect to the grid. The TREC program is a significant improvement over the legacy SREC program. It will increase the lifetime savings a project owner can expect from a solar project in New Jersey as long they beat the rush. The TREC program makes solar an even more attractive investment. Any entity that has the capacity for a solar project should act quickly to ensure they are not shut out of the market.” says Jeremy Conner, CEO of National Energy Partners.


The Transition Renewable Energy Certificates (TREC) program initiates several changes to the Legacy SREC program, with three leading terms. Transitional Renewable Energy Certificates are:

(1) Factorized

(2) Fixed-­‐price, and

(2) 15-­‐Year


What it means:

Under the TREC program, TRECs are “factorized,” meaning that different types of solar panel systems will receive different levels of subsidies. As shown in the “Project Type Factor” chart at the end of this document, solar that is installed via preferred methods will receive the full value of a TREC; while other systems will only receive 60% of the value of a TREC.

Projected impact:

The beneficial effect of the TREC program will be even more significant for non-‐residential rooftop or carport systems. Further, guidelines established through the TREC program will have a dramatic effect upon the installation methods for commercial projects, with rooftop and carport system mount types preferred.


What it means:

One of the main arguments for eliminating NJ’s SREC program is that the price of SRECs is unpredictable. SRECs are traded in a market, so prices fluctuate due to supply and demand. Any changes in the SREC market directly impacts the price a solar system owner will receive for their SRECs.

However, under the TREC program, the value will be at a fixed rate, not subject to market conditions.

Projected impact:

A fixed-­‐rate value assigned to the TREC program provides a dynamic transformation to the state of the market for solar energy. First, a fixed rate offers a guaranteed return. Whereas, the Legacy SREC program was based on market performance and speculation, TRECs provide heightened assurance (and confidence) for i solar energy project owners and investors.

Further, TREC’s fixed rate of return provides simplicity. Under the Legacy SREC program, i solar energy project owners had to employ brokers to manage their SREC portfolio, which provided service for a fee. Fixed rates enable investors to manage their investment personally, eliminating the need for third-­‐party brokerage firms (and the service fees that accompany them).

Finally, the fixed-­‐rate TREC program provides sound projections, allowing project owners to estimate their life savings from a solar project more accurately than they would have been able to under the legacy program.

(3) 15-­‐YEAR

What it means:

The current iteration of the SREC Program only allowed Solar Systems to create SRECs for the first ten years. The TREC program increases this period by 50%, to 15 years.

Projected impact:

This should greatly increase the Project Owner’s savings for net­‐metered non­‐residential rooftop and carport projects.


Still outstanding is the annual value of the TREC (specifically for the NJBPU must decide between a flat 15-­‐year TREC price of $152, or a lower cost of $65 for the first three years and then $189 for the remaining 12 years). However, despite the outcome, over the course of 15 years, the total project incentive will be the same under both scenarios. The final rate will be determined during a cost-­‐cap proceeding in early 2020, hosted by the New Jersey Board of Public Utilities4 (NJPBU).

Staff is working toward having a Successor Program ready to follow the Legacy SREC and Transition Incentive when the Board determines that the 5.1% milestone is attained. The Solar Consultants’ modeling of Successor Program alternatives is anticipated to conclude in December 2019, after which time a Staff Straw Proposal on the Successor Program will be issued. The next meeting for stakeholders to voice their input on the part of the successor program is scheduled for Tuesday, December 17, 2019.


Commercial Residential

Roof and Carport Systems Ground Mount Systems All Systems

RY 2021 $ 65.00 $ 39.00 $ 39.00

RY 2022 $ 65.00 $ 39.00 $ 39.00

RY 2023 $ 65.00 $ 39.00 $ 39.00

RY 2024 $ 189.00 $ 113.00 $ 113.00

RY 2025 $ 189.00 $ 113.00 $ 113.00

RY 2026 $ 189.00 $ 113.00 $ 113.00

RY 2027 $ 189.00 $ 113.00 $ 113.00

RY 2028 $ 189.00 $ 113.00 $ 113.00

RY 2029 $ 189.00 $ 113.00 $ 113.00

RY 2030 $ 189.00 $ 113.00 $ 113.00

RY 2031 $ 189.00 $ 113.00 $ 113.00

RY 2032 $ 189.00 $ 113.00 $ 113.00

RY 2033 $ 189.00 $ 113.00 $ 113.00

RY 2034 $ 189.00 $ 113.00 $ 113.00

RY 2035 $ 189.00 $ 113.00 $ 113.00

Project Type Factor 5 1.0

Subsection (t): landfill, brownfield, areas of historic fill.

Grid supply rooftop 1.0

Net metered non-­‐residential rooftop and carport 1.0

Community solar 0.85

Grid supply ground mount 0.6

Net metered residential ground mount 0.6

Net metered residential rooftop and carport 0.6

Net metered non-­‐residential ground mount 0.6

About National Energy Partners:

National Energy Partners (NEP) is a solar energy development company dedicated to bringing clean, renewable energy to businesses and residential consumers alike. At the forefront of the solar energy landscape, our passion is in fostering relationships through integrity, knowledge, and efficiency. NEP embraces the specific needs and challenges of each project, offering our valued clients the best experience through strategic management, trusted relationships, and eco-­‐ friendly solar energy solutions. With over ten years of experience in the solar industry, our portfolio includes over $100 million of projects with more in development. Learn More at https://www.nepsolar.com



1 https://www.nj.gov/bpu/newsroom/2019/approved/20191206.html

2 The Clean Energy Act P.L.2018, c.17

3 The Solar Act of 2012 P.L. 2012, c.24

4 https://www.nj.gov/bpu/newsroom/2019/approved/20191206.html

5 The value of each TREC will be “right-­‐sized” depending on the type of project. The value for a TREC for a particular project will be the TREC Price multiplied by the appropriate Project Type Factor.

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