New Jersey Prepares to Slash Solar Incentives
On July 28, 2021, the New Jersey Board of Public Utilities voted unanimously to end the Transition Renewable Energy Certificate program (TREC) and replace it with the Successor Solar Incentive program (SUSI).
The TREC program will continue accepting applications until midnight on Aug 27, 2021. Applicants who enroll in the program are paid a set amount for each megawatt hour of solar energy they produce. Under the current program, that income guarantees them nearly free electricity or a 3-4 year return on investment.
Which benefits an applicant receives depends largely on how they finance the project. If they use a PPA, and just buy the system’s power while leaving the installation costs to a third party, then the owner will receive nearly free electricity. Funding the project out of pocket, however, will give them an asset that pays for itself in less than 4 years and generates passive income for the next 15-20 years.
That income is substantial. One of our clients, a logistics center in NJ, has already built their system and is getting $275,000 worth of TRECs from it each year. Over the system’s lifetime, that adds up to $4M in net earnings.
But if they had waited to submit their proposal until after August 27, 2021, then they would only be eligible for $160,000 a year and would have left $1.7M on the table.
The good news is that you can still enroll in the TREC program. The application is free and only requires a couple administrative forms as well as a project design. Completing it usually takes 1-2 weeks for tenants and 2-3 for landlords with tenants. Submitting an application does not compel you to do anything further, as it is non-binding. Once it is accepted, the incentives are locked in for the system’s lifetime.
Applying with a contractor, however, is not advisable. Doing so gives them exclusive rights to build the project, which decreases your leverage down the line. SolarKal, an agnostic solar advisory, has gotten dozens of clients a better price by helping them apply first and then find their contractor later.