Wednesday, December 19, 2018

Gov. Signs NJ Nuke Subsidy, Renewables Bills

By Rich Heidorn Jr.

New Jersey Gov. Phil Murphy (D) on Wednesday signed legislation to subsidize the state’s nuclear generating fleet, raise its renewable generation targets, boost storage and offshore wind, and revamp its solar program.

In a press conference staged in front of solar panels in South Brunswick, N.J., Murphy signed Senate Bill S2313, which will create zero-emission certificates for three of Public Service Enterprise Group’s nuclear generators, and Assembly Bill 3723, which will raise the state’s renewable portfolio standard to 35% by 2025 and 50% by 2030. Murphy also signed an executive order to update the state’s Energy Master Plan with a goal of 100% “clean” energy by 2050.

new jersey nuclear subsidy renewable generation

N.J. Gov. Phil Murphy, speaks at bill signing at New Jersey Resources’ New Road solar installation in South Brunswick, N.J., surrounded by New Jersey Resources’ CEO Laurence M. Downes, left, and Senate President Stephen Sweeney, right. | New Jersey Office of the Governor

The state’s previous RPS requirement targeted 24.39% renewables for the “energy year” ending May 31, 2028, according to the North Carolina Clean Energy Technology Center’s Database of State Incentives for Renewables & Efficiency.

Murphy said the new targets represent “one of the most ambitious renewable energy standards in the country.”

“Today, we’re taking another step forward in rebuilding New Jersey’s reputation as a leader in the development of clean energy sources while fulfilling a critical promise to foster our state’s energy future,” said Murphy, who took office in January. “Signing these measures represents a down payment to the people of New Jersey on the clean energy agenda I set forth at the beginning of my administration.”

Murphy replaced Republican Chris Christie, who had balked at plans to develop offshore wind and withdrew the state from the Regional Greenhouse Gas Initiative. Murphy, who has pledged to rejoin RGGI, noted that the legislation codifies his goal of 3,500 MW of offshore wind by 2030 and reinstates tax credits for offshore wind manufacturing that expired during Christie’s term.

The bills were approved by the Legislature on April 12. (See NJ Lawmakers Pass Nuke Subsidies, Boosted RPS.)

ZEC Program

The ZECs, which are expected to cost up to $301 million annually, will be funded by a 0.4 cents/kWh tariff on retail distribution customers.

The legislation requires the state Board of Public Utilities to issue an order implementing the ZEC program within 180 days. The BPU will award ZECs to nuclear plants licensed through at least 2030 that can demonstrate they are at risk of closure within three years.

PSEG’s Salem Unit 1 (licensed to operate through Aug. 13, 2036) and Unit 2 (licensed through April 18, 2040) and Hope Creek (licensed through April 11, 2046) are eligible. Exelon’s Oyster Creek nuclear plant, scheduled to be retired in October 2018 under a prior agreement with the state, is not eligible. Exelon also is part owner of the Salem plant.

nuclear power new jersey nuclear subsidy renewable generation

Salem & Hope Creek Nuclear Power Plants | Green Delaware

The plants selected will initially receive ZECs for three years and the balance of the first energy year following selection. They will be subject to review by the BPU for additional three-year periods.

Out-of-state nuclear plants also could seek ZECs, but their approval may be dependent on a premature retirement of one of the remaining in-state plants because the bill caps ZEC eligibility at 40% of the state’s total electric usage. In 2016, according to the U.S. Energy Information Administration, the combined generation of the Salem and Hope Creek plants was 25.3 million MWh, 33.6% of the state’s 75.4 million MWh usage.

The state’s Office of Legislative Services calculated that the 0.4 cents/kWh tariff would generate $301.4 million based on 2016 consumption, translating to a ZEC cost of about $10/MWh.

Storage, Renewable Provisions

The Assembly bill requires the BPU to adopt energy efficiency and peak demand reduction programs and a community solar pilot program, and to revise the solar renewable energy certificate (SREC) program.

By Jan. 1, 2020, 21% of the state’s electricity must come from Class I renewable sources. The bill requires the BPU to begin a proceeding to reach the 2025 and 2030 RPS goals and caps the cost of the RPS program — excluding the costs of the offshore wind — at 9% of total costs to consumers in 2019 and 7% afterward.

This bill also requires the BPU, in consultation with PJM, to conduct an analysis determining the amount of energy storage to be added in the state over the next five years to provide the maximum benefit to ratepayers. The analysis will identify the optimum points of entry into the electric distribution system for distributed energy resources and include recommendations for financial incentives that may be required.

The BPU must submit a report on the storage findings within one year; six months after that, it must initiate a proceeding to add 600 MW of storage by 2021 and 2,000 MW by 2030.

The bill also requires electric power suppliers and basic generation service providers to increase the share of solar power in their portfolios to 5.1% by energy year 2021 before gradually reducing the percentage through 2033. The bill also reduces the solar alternative compliance payments beginning in energy year 2019 through 2033. Future solar RECs will be for 10 years, down from the current 15.

Electric customers would be able to participate in solar energy projects remotely located from their properties under   the “Community Solar Energy Pilot Program,” which is to be converted to a permanent program within 36 months.

Utilities will be required to adopt energy efficiency measures to reduce electric usage by 2% and natural gas consumption by 0.75%.

The bill provides a tax credits for qualified wind energy projects in an eligible wind energy zone and requires the state to establish job training programs to develop a workforce for the manufacture and servicing of offshore wind equipment.

Reaction

The NJ Coalition for Fair Energy — funded by the Electric Power Supply Association and independent power producers Calpine and NRG Energy — criticized the nuclear subsidies and hinted it will seek to overturn them in court. Challenges by EPSA and others to ZEC programs in Illinois and New York are pending in the 7th and 2nd U.S. Circuit Courts of Appeals.

“While PSEG shareholders just became more prosperous, the reality is New Jersey consumers now have to confront higher electric bills for no reason other than to bail out PSEG management’s bad business decisions,” spokesman Matt Fossen said. “We wish officials would’ve waited to make a decision until after the results of PJM’s capacity auction were announced, which will be literally only hours after the governor’s signing. But this issue is not over — and it’s unfortunate the courts may be necessary to bring a dose of reason to the debate.”

Environmental activists and solar energy industry groups celebrated the renewable and DER provisions.

“It has never been more important for leaders to stand up for clean energy jobs, local investments, and clean air and climate progress in our communities. We are encouraged that in the face of rollbacks in Washington, Gov. Murphy is stepping up with bold action,” said Pari Kasotia, Mid-Atlantic director for Vote Solar.

The Energy Storage Association said the storage mandates put New Jersey in league with California, New York, Massachusetts, Oregon, Nevada and Arizona as states encouraging the technology.

Sean Gallagher, the Solar Energy Industries Association vice president of state affairs, said the bill will give “many more New Jersey residents, businesses and communities … access to solar energy.”

“If properly implemented, this legislation will create access to solar energy for consumers and businesses across New Jersey for the first time,” said Brandon Smithwood, policy director for the Coalition for Community Solar Access.

“Thanks to this important legislation, New Jersey residents who rent, live in apartments or can’t afford the upfront cost to install solar panels will now be better able to get their power from the sun,” said Luis Torres, senior legislative representative for Earthjustice.

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