The NJ Board of Public Utilities (BPU) announced the approval of the Transition Incentive Program which will provide some certainty to solar projects until a successor program is announced. The current SREC (Solar Renewable Energy Credits) program will expire once 5.1% of the NJ megawatt hours are supplied by qualified solar generation. Once the capacity of the SREC program is reached, projects already accepted into the program, but not yet built, will qualify for the TREC (Transitional Renewable Energy Credits). In a February 7, 2020 report to stakeholders, the BPU estimated that the TI program would begin around June 2020.
What does this mean for businesses considering solar?
There are three classes of programs for companies that are generating solar.
- SRECs – Projects that reach their commercial operation date before the program hits the 5.1% goal is reached. Businesses that qualified for SRECs will continue to generated SRECs throughout their qualified life.
- TRECs – Projects that complete the registration before the program reaches capacity but do not reach their commercial operation date prior to the program hitting capacity will qualify for TRECs. Customer’s taking advantage of the TREC program will continue to receive the value for 15 years.
- Successor Program – A program not yet announced, solar facilities that do not complete registration prior to capacity being reached are at risk.
TRECs are valued based on a pre-determined, fixed-rate schedule. This varies from the SREC program which is traded based on market value. The first three years of the TREC program sets prices at $65. Starting in year 4, values will jump up to $189 for the remainder of the 15-year qualifying life.
A system producing around 450,000 kWh a year would generate over $1 million in TRECs over the 15 year period – about twice the value of the system.
When will the program reach capacity?
The BPU has published an estimated timeline of June 2020. However, they have made it explicitly clear that it is only an estimate that could be reached before or after. Genie Solar is advising customers who want to take advantage of the TREC program to enter into their agreement no later than April 15th in order to ensure that the application for the program can be completed and submitted in adequate time. This may shift forward or backward depending on how the capacity progresses.