The Atlantic City Electric Company (ACE) is requesting a declaratory order with respect to the definition of Solar Renewable Energy Certificates (SRECs). ACE is a regulated electric distribution company (EDC) who is engaged in the transmission and distribution electric energy to residential, commercial, and industrial customers. ACE services 13% of New Jersey’s electric distribution load, has approximately 547,000 customers, and its territory spans eight southern New Jersey territories. ACE has submitted a verified petition to the New Jersey Board of Public Utilities (NJBPU) asking them to decide if solar renewable energy projects that interconnect with the Company’s 69 Kilovolt (“kV”) system or lower voltage lines are eligible for SRECs as defined in N.J.S.A. 48:3-51. “Without the ability for ACE to attach larger solar projects to the Company 69 kV and lower voltage lines, ACE’s distribution system will be unable to accommodate all the requests for interconnection, especially those from Net Energy Metering (NEM) customers seeking to participate in State-sponsored generation projects.” (Petition of Atlantic City Electric Company Pages 3-4).
The ACE territory has been targeted for large solar projects because of its rural nature and the high payment of Solar Renewable Energy Certificates (SRECs). Southern New Jersey has access to large parcels of open land and available farms that are ideal for developing large solar projects. ACE currently has 64 grid-connect solar projects requesting interconnection, that totals 950 MW and is nearly double the total number of solar generated MWs installed in the United States in 2009. ACE’s transmission lines cannot accommodate the influx of current solar projects, their“12kV distribution system, which it employs throughout most of its service territory, cannot accommodate larger solar projects as can the higher voltage distribution lines utilized by other EDCs in the State. It should be noted that ACE’s 69kV lines—no matter how they might be classified before any State or Federal agency—do not directly interconnect with facilities of any out-of-State electric distribution or transmission lines.” (Petition of Atlantic City Electric Company, Page 4). This eliminates any issues regarding the Commerce Clause of the United States Constitution by virtue of ACE’s physical inability to connect to ACE’s 69kV or lower voltage lines.
SRECs are the driving financial component that makes developing solar in New Jersey attractive. Power purchase agreement (PPA) providers, engineer, procurement, and construction (EPC) contractors, solar installers, and various other entities are flocking to New Jersey to develop solar, due to the favorable price of SRECs. The price of NJ SRECs has risen from $150 in 2007 to $683 in 2010 and energy year 2011 SRECs are currently trading $655 or 97% of the Solar Alternative Compliance Payment (SACP) on Flett Exchange. SRECs provide a revenue stream that can be monetized on a monthly, quarterly, or yearly basis for solar participants. For the past few years the NJ SREC market has only experienced upward price action. This was due to increased buying demand and less supply, a defined SACP schedule ($711 in 2009 to $594 in 2016), and favorable solar legislation. However the supply and demand equation for NJ SRECs could change with the introduction of larger solar projects. Grid-connect solar projects can bring more supply to New Jersey’s SREC market. Large blocks of SRECs could now be generated from grid-connect projects and cool red-hot SREC prices. In order for New Jersey to fulfill its lofty RPS goal (5,316 GWh by Energy Year 2026) large solar projects will need to be implemented and go online sooner rather than later.
ACE believes the State of New Jersey should encourage the development of renewable energy generation through regulatory policy. SREC eligibility needs to be clearly defined for State-sponsored programs and the PJM interconnection process: “ACE respectfully submits that the definitional language of the N.J.S.A. 48:3-51 was not intended to be limiting as it is currently being interpreted, such that only solar generators interconnecting with the distribution lines of an electric utility qualify for SREC payments. The Company believes the legislative intent and practical purpose of the law should be more broadly interpreted to (i) provide SREC payments to all solar generators who develop their solar facilities in the State and can directly interconnect to the electric delivery network operating within the State, and (ii) preclude solar generated MWs from the outside New Jersey, which are not directly connected to the State’s internal electric delivery network, from qualifying for SREC payments.” (Petition of Atlantic City Electric Company, Page 5). If this SREC issue gets resolved the bottleneck for large solar projects will begin to open up in New Jersey.