New Jerseys Renewable Energy Incentives:

Past, Present, and Future

Matthew Singer

RPS
Electricity suppliers with retail customers in state
Must procure 20.38% of sold electricity from renewable energy resources by 2021

Goals by classification
Class 1 = 27.88% by 2021
Solar, Wind, Geothermal, Landfill Gas, Tidal, Fuel Cells, Biomass, and Tidal

Class 2 = 2.50% by 2021

Hydro 30 MW or less & Resource Recovery

NJ RPS Schedule
Energy Year (EY) Solar Carve-Out (GWh) Class I (%) Class II (%)

2010 2011
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

-306
442 596 772 965 1150 1357 1591 1858 2164 2518

4.685 5.492
6.320 7.143 7.977 8.807 9.649 10.485 12.325 14.175 16.029 17.880

2.5 2.5
2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5

NJ Electricity by Fuel Type

RPS Cont

RPS Cont
2010
MWh sold in NJ
Total electric industry = 79,179,427 MWh

EY 2011 RPS requirements

5.492% Class I = 4,348,534 MWh 2.5% Class II = 1,979,486 MWh

Past Incentives
Customer On-Site Renewable Energy Program (CORE)
Ended 12/31/08 2008 budget falls $20 million short of rebate applications on hold

Renewable Energy Incentive Program (REIP)

Solar- ended 12/31/10

SREC Registration Program (SRP)

REIP Solar rebates not available to new projects New projects register for SRECs through SRP
Must register prior to construction

Rebated projects through REIP solar program do not need to submit SRP materials 15 year SREC shelf life

SREC Pricing
Oversupply of SRECs
EY 2012 & 2013 requirements already satisfied Feb. 2012 SRECS = $205

Legislation to increase RPS (S.2371) failed Remedies?

Reauthorize incentives Accelerate RPS schedule Banks SRECs

SREC Pricing
EY 2012 RPS requirement = 442,000 SRECs

596,800 - 611,000 SRECs predicted for EY 2012

Predicted SREC generation = 135 138.3%

Supply > Demand

Biopower

REIP: Biopower Eligibility

Energy crop or waste has a sustainable supply

Biogas satisfies NJs emissions standards

Allowable fuel manufacturing processes:
Anaerobic digestion Gasification Pyrolysis

REIP: Biopower Incentives

Net metered Rates
Capacity First 500,000 watts Next 500,000 watts Rebate $2.00/watt $1.00/watt Rebate w/ CHP $3.00/watt $2.00/watt

Small Wind Systems (SWS)

REIP: Wind Incentives

Rebates
Based on expected energy production not capacity

Federal Investment Tax Credits (FITCs)

Residential SWS Business SWS 30% net cost of system 30% gross cost of system & accelerated depreciation schedule

Class 1 Renewable Energy Certificates (RECs)

Net Metering

REIP: SWS Program Delays

Wind program currently on hold
No new application processing or rebate commitments

Based upon the comments receivedStaff does not feel the proposed changes adequately protect public safety -OCE

Business Energy Investment Tax Credit (ITC)

Expires 12/31/2016

ITC Eligibility
Solar (30% exp w/ no max)
Eligible
Electricity Heating/Cooling Process Heat Lighting

Not Eligible
Passive Pool Heating

ITC Eligibility cont

Fuel Cell (30% exp w/ no max)
Cap = $1,500/kW
Pre 10/4/08 = $500/kW

Minimum Capacity = 0.5kW

Electricity-only efficiency = 30% +

ITC Eligibility cont

SWS (30% w/ no max post-12/31/08)

Up to 100 kW eligible

$4,000 max credit 10/3/08 1/1/09

Removed by ARRA

ITC Eligibility cont

Geothermal (10% exp w/ no max) Eligible equipment
Heat pump (HP) Equipment used to produce/distribute/use energy from deposit

Geothermal electric up to but not including transmission Geothermal heat (minus HP)- no exp date on credit (post 10/3/08)

ITC Eligibility cont

Micro-turbines (10% exp w/ no max)
Cap = $200/kW

Up to 2MW capacity eligible

Electricity-only efficiency = 26%+

ITC Eligibility cont

CHP (10% exp w/ no max)

Up to 50 MW

Must exceed 60% energy efficiency

Not applicable to systems using 90%+ biomass

Renewable Electricity Production Tax Credit (PTC)

PTC Eligibility
Marine/Hydrokinetic = min 150 kW Agricultural Livestock Waste = min 150 kW In Service Deadlines
12/31/12
Wind

12/31/13
Biomass/Geothermal/LFG/MSW/Marine/Hydro

PTC Amounts
2.2/kWh
Wind Geothermal Closed-loop Biomass

1.1/kWh
Open-loop Biomass LFG MSW Marine/Hydrokinetic

PTC Future
American Wind Energy Association (AWEA)
Failure to extend PTC
Annual installations = 2GW Jobs 78,000 41,000 Annual installations = 8-10 GW Wind supported jobs grow to 95,000

Extending PTC to 2016

MAKE Consulting
Rushed build cycle for 2012 Reduced development plans for 2013

PTC Future cont

PTC extension amendments not passing
Failed to pass twice
Payroll Tax Cut Bill Highway & Highway Safety Bill

American Energy & Job Promotion Act (S.2201)

2 year extension to Wind PTC
Proposed expiration = 1/1/2015

1 year extension to biomass, geothermal, landfill gas, trash, hydropower, marine, and hydrokinetic
Proposed expiration = 1/1/2015

Energy Freedom & Economic Prosperity Act (EFEPA)

EFEPA
Senator Jim Demint (R- SC) Senator Mike Lee (R- UT)

S.2064

Would repeal all energy specific tax credits Revenue Neutral

Reduction in corporate tax rate 26 - 72

Voted down as S. Amdt. 1589 H.R. 3308 (equivalent to EFEPA)

Mike Pompeo (R- KS)