The New Jersey Board of Public Utilities (NJBPU) made official the new solar incentive program that will provide for a transition from the current Solar Renewable Energy Certificate (SREC) Program.
In May of 2018, the governor of New Jersey signed the Clean Energy Act. It required the NJBPU to adopt regulations that close the SREC program to new applications when 5.1% of the electricity sold in New Jersey comes from solar energy. This new, interim program will bridge the gap as needed between the anticipated early summer of 2020 expiration of the existing SREC program and a replacement long term program, which is not yet fully defined.
Now to be called Transition Renewable Energy Certificates (TREC), the plan introduces a new way to calculate the credits. TRECs will be offered for 15 years for any solar energy system installed during the interim period.
TRECs are like SRECs because both incentives are based on the production of your solar power system. New systems will continue to receive certificates for each megawatt-hour (MWh) of solar production. However, SRECs and TRECs vary in two important ways: fixed versus variable pricing, and factorization.
Old Variable and New Fixed Pricing
The primary difference between the two credits is their pricing structure: SREC prices are variable, and the value of the incentive depends on supply and demand in the market at the time you sell it. TRECs, on the other hand, will have set pricing for the duration of the program, making it easier to predict exactly how much incentive money you’ll receive from the program.
Another big difference between SRECs and TRECs is factorization. With SRECs, the value you receive for a single SREC is the same regardless of the design of your solar panel system. An SREC generated by a residential rooftop system being net-metered is worth the same as an SREC generated by a residential ground mounted system being net-metered, provided they are sold at the same time.
However, with TRECs, the value of your incentive varies depending the application. Community solar will have its own factorization (0.8). Non-residential, net-metered systems will receive a maximum 1.0 factor (or full credit). Residential, net-metered systems will be eligible for a 0.6 factor (60% of maximum).
The Final Value of TRECs
Originally, the NJBPU considered both a fixed pricing schedule and an escalating schedule across the 15-year benefit life of this interim plan. As of this writing, the governor signed the related bill, Senate Bill 4275 (SB-4275), which locks down a fixed 15-year schedule. However, the NJBPU has yet to set a firm price. Since the original proposal suggested a fixed price of $152, if that survives to become policy, residential solar factoring will place new TREC values at $91 (60%) for homeowners.
It is challenging to determine a precise date when the new TREC payment schedule officially begins. The state is estimating that the current SREC limit could be met as soon as early May 2020. But even if slightly prolonged, required inspection and final utility approval steps are out of the control of installers like Exact Solar. So, given this uncertainty, we are now using the $91 projected price in our savings estimates for New Jersey customers. This way, there will be no unwelcome surprises even if a customer’s project meets the SREC deadline prior to transition to TRECs.
We encourage New Jersey homeowners to revisit these pages or to reach out and contact us for up to date information.