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How residential solar projects in New Jersey retained incentives despite regulatory missteps

Regulators granted relief to these projects after recognizing the difficulties resulting from the pandemic and its rapidly changing solar incentive regulations.

Contributed by Matthew A. Karmel, Esq.

Residential solar projects remain eligible for solar incentives despite failing to meet strict regulatory requirements in New Jersey, as the New Jersey Board of Public Utilities waived regulatory requirements for 26 residential solar projects. The Board granted relief to these projects after recognizing the difficulties resulting from the pandemic and its rapidly changing solar incentive regulations. Even though this is the third such waiver, developers and property owners that have not yet received necessary waivers from the Board should act promptly to request relief as the Board has expressed that the window for such relief may be closing.

By way of background, New Jersey’s solar incentive programs have gone through significant changes in recent years.  The current incentive program, the Successor Solar Incentive (SuSI) consists of two components, the Administratively Determined Incentive (ADI) Program and the Competitive Solar Incentive (CSI) Program. The ADI Program is open to residential projects, net metered non-residential projects equal to or less than 5 MW, and community solar projects.  In contrast, the CSI Program, which remains under development, will be available to projects greater than 5 MW.

In its recent order, the Board granted waivers to residential solar projects seeking incentives under the ADI Program within three different categories:

  • Projects that commenced construction without registering in the ADI Program, as the ADI Program rules deny incentives to any projects that began construction prior to registration.  N.J.A.C. 14:8-11.4(b),
  • Projects that completed construction before the opening of the ADI Program, as the ADI Program rules deny incentives to projects that commenced commercial operation prior to the opening of the ADI Program.  N.J.A.C. 14:8-11.4(b).
  • Projects that installed capacity greater their approved system size, as the ADI Program rules prohibit increases of over ten percent of the approved system size or 25 kW, whichever is smaller. N.J.A.C. 14:8-11.5(k). 

The Board exercised its authority to relax strict regulatory requirements. That is, The Board’s rules state that “[i]n special cases and for good cause shown, the Board may… relax or permit deviations from these rules.” N.J.A.C. 14:1-1.2(b). The rules go on to explain that “[t]he Board shall, in accordance with the general purpose and intent of the rules, waive section(s) of the rule if full compliance with the rule(s) would adversely affect the ratepayers of a utility or other regulated entity, the ability of said utility or other regulated entity to continue to render safe, adequate and proper service, or the interests of the general public.” N.J.A.C. 14:1-1.2(b)(1).

GO DEEPER: California’s rooftop solar industry is in the midst of its biggest fight yet, with broad implications for the rest of the country. The proposed overhaul of the state’s net energy metering policy is underway. Vote Solar executive director Sachu Constantine joined the Factor This! podcast to break down the latest in the fight to save rooftop solar. Subscribe wherever you get your podcasts.

In exercising its discretion, the Board recognized that “these projects achieved commercial operation during a time of novel challenges which affected many aspects of solar development. The Board closed one incentive program, opened and closed a second, and opened a third within the span of two (2) years.” 

Adding to the confusion, this is the third time that the Board has relaxed regulatory requirements relating to the ADI Program, as the Board issued similar orders in January and April 2022.  Board Staff also have issued guidance about the applicability of the Board’s prior orders regarding ADI eligibility.  Pursuant to this guidance and the prior orders, there are certain categories of residential solar projects that have received a blanket waiver of the ADI Program rules.  

However, the scope of these blanket waivers is not certain, and the Board’s most recent order expressly directs similarly situated projects to file a petition setting forth their facts.  The Board’s recent order also suggests that the tolerance for further waivers is limited, and that the Board may soon expect strict compliance with regulatory requirements.  

As a result, developers and property owners with questions about their eligibility for the ADI Program incentives should consult with legal counsel and, if appropriate, promptly file petitions with the Board seeking relief.  The Board will closely scrutinize the facts of each case, and, indeed, has denied several recent petitions for regulatory waivers under the now-closed Transition Incentive Program.

About the author

Matthew Karmel is the Chair of the Environmental and Sustainability Law Group at Offit Kurman P.A.  Matthew represents solar developers as well as other businesses helping to make the world a better and more sustainable place.  His particular focus and experience have garnered wide recognition, including from NJBiz, which included Matthew on its 2022 “Law Power 50” list highlighting the most influential attorneys in New Jersey, and from Waste360, which included him on its 2022 “40 under 40” list recognizing professionals driving the future of the waste and recycling industry.

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