Originally adopted in 1999, New Jersey’s renewable portfolio standard (RPS) required six percent of all utility retail electricity sales be generated from renewable sources by 2012. In 2004 New Jersey’s Board of Public Utilities (BPU) accelerated the target year to 2008.
The BPU further expanded New Jersey’s RPS, requiring all state utilities serving retail customers to procure 22.5 percent of the electricity they sell from renewable sources by 2021.
Qualifying sources are defined as Class I or Class II. Class I renewables are solar, wind, wave or tidal action, geothermal energy, landfill gas, anaerobic digestion, fuel cells using renewable fuels, approved forms of sustainable biomass. Class II renewables are hydropower facilities with less than 30 MW capacity, and approved resource-recovery facilities.
New Jersey’s RPS also requires a separate solar mandate. The solar mandate requires utilities to acquire at least 2,518 gigawatt-hours (GWh) from in-state solar electric generators by 2021, and 5,316 GWh by 2026.
In 2010, the BPU revised its solar carve-out from a percentage (2.12 percent of sales by 2021) to a real per-GWh amount. That same year the BPU implemented a percentage-based wind power carve out to equal 1,100 MW of offshore wind energy.
New Jersey utilities may also buy and trade renewable energy credits (RECs) for Class I, Class II, solar, and wind in a trading market with complicated rules.
Utilities that fail to meet compliance must pay either an alternative compliance payment (ACP) or a solar alternative compliance payment (SACP). The price of ACP/SACP are based on the estimated competitive market cost of meeting the RPS by purchasing a REC or solar REC, and the cost of meeting the RPS by generating the required renewable energy. The cost of an ACP is a flat $50 per MWh. The BPU set a sliding scale for the SACP beginning with $700 per MWh in 2009 to $594 per MWh in 2016. The 2010 changes to the RPS law require ACP and SACP payments to be refunded to ratepayers.
The BPU may freeze the solar requirement in any year if it determines the cost of meeting the requirement exceeds two percent of the total retail price of electricity for that year.
Utilities that fail to meet the RPS requirement face suspension of their license, monetary penalties, and loss of recovery costs.
Source: Database of State Incentives for Renewables and Efficiency