Contributed by Matthew A. Karmel, environmental attorney at Riker Danzig
New Jersey has been successful in supporting the development of solar energy facilities through incentive programs, but solar projects within New Jersey’s Transition Incentive Program are having difficulties completing construction within the timeline required to remain eligible for these incentives. This issue and others have caused New Jersey to fall steadily and significantly in a well-regarded ranking of solar activity across the United States.
Although applicable deadlines vary based on circumstances specific to each project, many projects within the Transition Incentive (TI) program have a completion deadline of April 30, 2022. These projects must complete construction and obtain Permission to Operate from the local electric utility in order to remain eligible for the incentives. (TI projects are entitled to receive financial incentives referred to as Transition Renewable Energy Certificates or TRECs. The TI program replaced the original Solar Incentive program, and in turn is being replaced by the Successor Solar Incentive program, referred to as the “SuSi Program.” Generally, the incentives under each new program are less lucrative than under the prior programs.)
The value of the TREC for a given project depends on the market segment; for instance, solar projects on brownfields receive a higher incentive than community solar projects, which in turn receive a higher incentive than residential solar projects and ground mount grid supply projects. The completion deadline discussed in this article is more likely to be an issue for projects greater than 50kW and especially for larger projects.
Solar developers are facing a wide range of difficulties in meeting the applicable completion deadlines, including supply chain issues as well as delays in the process of connecting to the grid. An estimate from at least one large NJ-based solar developer suggests that as many as 90% of TI projects will fail to meet the current deadlines.
However, the New Jersey Board of Public Utilities has denied four recent requests from projects seeking extensions to applicable deadlines. Based on the reasoning of these denials, the Board has set a high bar for extension requests for TI projects. Going forward, developers should carefully craft any request for an extension based on the lessons in these recent decisions.
How to get a TREC extension
There is no specific standard for extension of the deadlines set forth in the TI program, but the New Jersey Board of Public Utilities’ regulations provide that “[i]n special cases, upon a showing of good cause the [B]oard may relax or permit deviations from the rule,” including through the extension of applicable deadlines N.J.A.C. 14:1-1.2(b). The Board’s rules go on to explain that “the 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 ratepayers, hinders safe, adequate and proper service, or is in the interest of the general public.” N.J.A.C. 14:1-1.2(b)(1).
Because of the absence of a specific extension provision, TI projects must file a petition for an extension. The petition should be prepared and filed in accordance with N.J.A.C. 14:1-4 and -5, including requirements relating to filing, verification, service and notice.
The Board generally acts on petitions only at regularly scheduled meetings, and there are only two meetings remaining before April 30, 2022, the deadline applicable to many TI projects.
In contrast, the SuSi program has a built-in extension mechanism, which allows projects to request one six-month extension. As set forth in N.J.A.C. 14:8-11.5(i), SuSi program extension requests will be reviewed “on a case by on a case-by-case basis, based on consideration of extenuating circumstances for the delay in completing the facility, evidence that the facility has made progress towards completion, and the likelihood of timely and successful completion of the solar facility.”
Lessons from recent petitions
As noted above, the New Jersey Board of Public Utilities has received and recently denied four different petitions for extensions of deadlines under the TI Program, thereby setting a high bar for any TI project seeking an extension.
Among other reasons, the Board justified its decision to deny these petitions by indicating that the projects:
- previously received an extension for similar delays, including pandemic-related delays covered by the blanket extensions granted by the Board;
- identified only generalized delays, such as supply chain issues, that were known to the developer at the time of admission to the TI program, rather than unanticipated, project-specific delays;
- were not “mature” (e.g., had not proceeded substantially through the interconnection or construction process); and
- placed too much responsibility or blame on the relevant electric utility for delays in the interconnection process.
TI projects will continue to come up against applicable deadlines, and the New Jersey Board of Public Utilities has shown that it will closely scrutinize the facts and may be unwilling to issue extensions. Project developers seeking extensions should fully detail the special circumstances that justify the extension request and should distinguish their requests from the facts of the Board’s recent denials. Otherwise, it seems likely that the Board will continue to push TI projects that are unable to meet their deadlines into the less lucrative SuSi program. While time is running out, there’s always hope that legislation will be introduced to extend the TI program deadlines.
About the author
Matthew Karmel is an environmental attorney at Riker Danzig representing solar developers as well as other businesses helping to make the world a better and more sustainable place. Matthew’s particular focus and experience has garnered wide recognition, including from Best Lawyers in America®, a peer review of U.S. lawyers, which included Matthew on its “Ones to Watch” list in the field of Environmental Law and from Waste360, which included him on its 2022 “40 under 40” list.