New Jersey’s Community Solar Program

The New Jersey Legislature established the state’s first pilot community solar energy program in 2018 after passing AB 3723 / SB 2314 unanimously. Governor Phil Murphy signed New Jersey’s community solar legislation during the same year. The program utilizes a subscription-based model where residents can apply to a subscriber organization (i.e. developer) to gain access to local solar energy. For the first two pilot years, all approved projects reserved a majority of capacity for lower-to-moderate-income residents, greatly exceeding program requirements. The pilot program was set to run for three years; however, due to its success, legislators opted to make the program permanent in 2021.

Watch the top state community solar programs progress in our Community Solar Tracker.

New Jersey Pilot Program Takes Off

New Jersey’s Community Solar Energy Pilot Program enables households to participate in a solar energy project that is remotely located from their property. Residents can benefit from solar energy without needing to install or purchase solar panels independently.

The program also contains carve-outs for lower-to-moderate-income residents, requiring that 40 percent of community solar projects reserve at least 51 percent of their capacity for lower-income households. However, all of the projects approved for the program’s first year served lower-income households. Under the New Jersey Board of Public Utilities review and approval process, applications are reviewed for completeness and then scored by an Evaluation Committee, using a scoring rubric issued by the Board. According to this rubric, programs that served low-to-moderate-income households were given a higher preference — this criteria was weighted with 25 out of 100 possible points. In year one, the program had a 75 MW cap, and this weighted criteria upheld this limit. In subsequent years, the “competitive” application process determines the order of which projects are built since the program’s capacity for new projects must be at least 75 MW.

In the program’s first year, the New Jersey Board of Public Utilities approved 45 out of 252 applicants. Developers began to install 78 MW of total solar capacity that year on landfills, brownfields, and rooftops, slightly exceeding the 75 MW cap.

The second year of the pilot program included the same carve-out for lower-income residents. However, the state doubled the amount of community solar capacity to be awarded to 150 MW. The New Jersey Board of Public Utilities approved 105 applications which, in total, represented almost 165 MW of solar energy capacity. All of the approved projects benefitted low-to-moderate-income & historically underserved communities. According to Board Rules at N.J.A.C. 14:8-9.3(c)7, reiterated in the program’s Construction Extension Request Form, community solar projects are required to begin construction within six months of their approval.

Program Implementation

New Jersey’s community solar program covers all four of ILSR’s principles of successful community renewable energy.

First, the program has tangible benefits for participants. The unique, subscription-based model for community solar allows subscribers to easily switch to clean energy and receive guaranteed cost savings. Unlike other communities solar subscription programs, subscribers benefit from community solar credits that are provided at full retail rate rather than receiving partial credits. Subscribers of a community solar system receive credit on their utility bill at the wholesale value of electricity for excess generation at the end of each year.

Second, the program allows for flexibility in ownership structure and a wide variety of groups are eligible to apply to the program to build community solar projects. Past approved applicants include government entities, nonprofits, and private developers.

Third, New Jersey’s community solar program adds onto other renewable energy policies that establish a successor program to the solar renewable energy certificate program (S2605) and increase the amount of solar energy generation on farmlands that are eligible for assessment (S3484). These policies work together to contribute to the state’s goal of achieving 100 percent clean energy by 2050.

Fourth, the program considers ways to expand access especially for marginalized communities, establishing that 40 percent of approved projects must reserve at least 51 percent of their capacity for lower-to-moderate-income communities. As of 2021, the New Jersey Board of Public Utilities has approved over 105 new community solar projects totalling to over 164 MW. All of these projects will focus on serving low- to moderate-income households.

The Future of Community Solar in New Jersey

Rather than waiting for the pilot to finish its scheduled third year, the Board decided to make the program permanent in 2021. In October 2021, Board staff began organizing a stakeholder process to discuss the design of the permanent program. This process began in early 2022 and will build upon comments received in response to the Solar Successor Program Straw Proposal in April and May 2021.

As more states move to meet renewable energy goals, New Jersey follows Minnesota, New York, and Massachusetts in powering the future of community solar. In fact, a new 2022 report by Wood Mackenzie predicts that over the next 5 years the U.S. will gain 4.5 GW of community solar capacity, which is a great increase from previous predictions. In addition to the transition towards a permanent community solar program, recent New Jersey law A3352 requires that all new warehouses over 100,000 square feet must be “solar-ready.” Because of this legislation, warehouses must have enough roof space for solar panels and install solar water heating systems, preparing and maintaining these spaces for the possibility of future community solar projects.

With its new community solar legislation, New Jersey remains a leader in clean energy while providing greater financial security to residents across the state.

“Community solar is, for many people, a new way to think about how energy is delivered to customers. The states where community solar is thriving are those with supportive policies in place that break down barriers and drive investment.” – Rachel Goldstein, solar analyst at Wood Mackenzie

This article was originally posted at ilsr.org. For timely updates from the Energy Democracy Initiative, follow John Farrell on Twitter or Bluesky, and subscribe to the Energy Democracy weekly update.

Featured photo credit: Phil Murphy via Flickr. (CC BY-NC 2.0)