New Jersey is providing limited relief to solar projects being developed under a legacy incentive program known as the Transition Incentive program, and additional targeted relief may be coming from the state Legislature for certain projects in this program.
As has been widely reported, solar developers in New Jersey are having difficulties completing construction within the timeline required to remain eligible for the incentives available under the TI program. In particular, 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.
At a recent meeting of the commissioners of the state Board of Public Utilities, BPU President Joseph L. Fiordaliso, discussed the challenges faced by developers seeking interconnection: “If anything keeps me awake at night, it is the fact that we are going to have wind turbines out there, we have solar programs out there, and there is no place to plug them in. The utilities must without any question continue to work — and I know they are — but continue to work on infrastructure to ensure the fact that they are able to accept clean energy generation into their system. Otherwise what we are doing is for naught.”
While the BPU had recently denied petitions for individual projects seeking extensions of the applicable TI deadlines, the agency has now issued an order providing a path for certain projects to seek a limited and conditional six-month extension to the construction deadlines applicable to solar projects admitted into the TI program. The Legislature also is considering a longer extension for a limited subset of TI projects located on brownfields, on areas of historic fill or properly closed sanitary landfill facilities.
Although applicable deadlines vary based on circumstances specific to each project, many projects within the TI program had a completion deadline of April 30, 2022 determined in accordance with BPU rules, the dates in their conditional registration and prior general extensions. Projects within the TI program must complete construction and obtain permission to operate from the local electric utility 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 ones, and that is certainly the case for commercial projects comparing the TI and SuSi programs.
Details of conditional extension
The BPU issued an order providing the availability of a conditional six-month extension to TI projects that meet certain criteria detailed in the order, including:
- The project can demonstrate that it was electrically and mechanically complete prior to its TI program expiration date;
- The project can demonstrate that it had received and satisfied all necessary permits from all authorities having jurisdiction over the project prior to its TI expiration date;
- Project construction was proceeding based on a representation from the electric distribution company that any necessary interconnection upgrades would be completed prior to the project’s TI expiration date, that the upgrades were fully funded by the project developer, but that despite the developer’s best efforts, the estimated upgrade completion date was unilaterally extended by the electric distribution company.
The BPU’s order provides additional detail on the criteria to be met, and the documentation required to meet these criteria. Project developers should consult with experienced counsel to ensure that the necessary documentation is provided in a timely manner.
Previously, in order for a project developer to obtain an extension of the deadlines set forth in the TI program, the developer was required to file a petition in accordance with N.J.A.C. 14:1-4 and -5. In seeking an extension, the developer is required to show that waiver of the deadlines is based on “good cause” or that failure to provide a waiver “adversely affects 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).
The BPU’s recent order determines that good cause is shown where a project meets the criteria in the order and allows projects to demonstrate good cause through the normal, administrative post-construction documentation process. Projects that do not meet these criteria must submit petitions to attempt to obtain relief from the deadlines, but such relief may be difficult to obtain.
Projects within pending petitions have until July 8, 2022 to notify the board secretary that they intend to seek relief of the conditional extension process provided by this order. In such cases, the BPU will hold their pending petitions in abeyance.
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), extension requests for SuSi projects will be reviewed “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.”
The state Legislature has introduced bills that would provide a separate extension for TI projects located on brownfields, areas of historic fill or properly closed sanitary landfills, which are governed by Subsection (t) of the TI program. While the bills have not yet advanced significantly, if adopted as currently written the legislation (S-2732/A-4089) would provide deadline extensions for the length of certain interconnection delays.
TI projects will continue to come up against applicable deadlines, and the BPU has provided only limited relief. Project developers should be guided by the criteria provided and document additional grounds for extensions carefully. It remains to be seen whether the Legislature will act to extent the TI program on the limited basis already suggested or on some broader terms.