New Jersey solar EJ plan: National model or warning?

Source: By David Iaconangelo, E&E News • Posted: Wednesday, October 27, 2021

Two solar installers working on a roof in Williamstown, N.J. AP Photo/Mel Evans

The Biden administration and clean energy advocates are pushing for solar power to be a key environmental justice tool, but New Jersey’s experience is showing that won’t be easy.

The state has one of the nation’s most ambitious experiments for bringing community solar to lower-income households, winning praise from many industry watchers. But it is also coming under fire from critics who say that solar companies are being set up for failure, raising questions about other emerging programs nationally.

The focus is New Jersey’s community solar pilot, which is one of over 20 state programs around the country that encourage developers to propose and build solar panel installations while reserving capacity for nearby apartment tenants and local residents who can’t afford their own rooftop units. Those local subscribers get to save money on their power bills, and developers scoop up renewable credits offered by the state.

The income-based framework of New Jersey’s program make it a national test bed for community solar’s use as an energy equity tool, observers say.According to a September report from the National Renewable Energy Laboratory, the state has twice as many megawatts of community solar waiting to be built for low- and moderate-income subscribers as any other U.S. state.

“New Jersey is the leader there,” said Jenny Heeter, a markets and policy researcher for renewables at NREL. “They’ve set a pretty strong policy for including low- and moderate-income customers in their projects.”

The pushback is coming from some state-level trade associations and solar companies that say proving that a given subscriber has low or moderate income involves too much sensitive paperwork and ends up scaring away prospective customers from those tax brackets. Regulators also haven’t sufficiently planned out where the grid will need to undergo expensive upgrades, raising the specter of unexpected, project-killing costs for developers, they say.

The state “has a very robust program for community solar,” said Fred DeSanti, executive director of the New Jersey Solar Energy Coalition. The special emphasis on reaching lower-income parts of the public is “dead on,” he added. “But doing it has become a little more difficult than anyone had originally envisioned,” he said.

Regulators at the state’s Board of Public Utilities, which runs the pilot, have defended the program, pointing to an outpouring of project proposals from developers that appeared to embrace the challenge of signing up lower-income New Jerseyans. All but one of the 410 proposals sent in for the latest round, the BPU noted in April, would include carve-outs for low- and middle-income customers.

Joseph Fiordaliso, the BPU’s president, said at the time that the pilot had allowed the state to “further the promise of environmental justice for our most underserved communities while deploying the renewable energy necessary to reduce our emissions and improve public health for all.” And Phil Murphy, the state’s Democratic governor, called the pilot “historic” and a “national example for its focus on clean energy equity.”

In early October, the BPU announced it would make the program permanent, while targeting 150 megawatts of annual project approvals. By 2030, roughly one-tenth of New Jersey’s solar capacity should come from community solar under the state’s energy master plan, a document drawn up chiefly by the BPU.

“I think the core elements of the program have been exceptionally successful,” said Ariane Benrey, the BPU’s program administrator for community solar, in an interview with E&E News.

Too much upfront grid planning, she added, would have discouraged applicants and delayed the program. Developers can use utility-provided capacity maps to figure out where the grid might be weakest or strongest.

The New Jersey developments come as the Biden administration also pushes for growth of community solar, which is a small-scale companion to the grid-scale solar farms pursued by utilities.

On Oct. 8, Energy Secretary Jennifer Granholm announced that the Department of Energy would undertake a new target of bringing community solar to some 5 million households, up from 600,000 at present.

“We want to see community solar really expanded,” she said then at a meeting with solar industry advocates, adding that programs are “a way for all kinds of communities to be able to have access to solar… and reduce their energy costs.”

The target could be a key way for the Biden administration to fulfill its pledge of devoting 40 percent of all clean energy investment “benefits” to environmental justice.

Solar advocates and civil rights groups are pushing for a far bigger federal commitment, with clear carve-outs for lower-income people.

In April, a 14-group coalition wrote to Congress urging it to support community solar policies that would reach 15 million low- and moderate-income households, while reserving 50 percent of the new solar installations’ capacity for those subscribers.

The groups’ letter didn’t specifically mention New Jersey, but their 50 percent target mirrored the state’s plans.

‘Perfect is the enemy of good’

In New Jersey, at least half of the community solar capacity being built out is destined for low- and moderate-income residents.

The program has a simple cornerstone: a lucrative payday for solar developers, in exchange for ramped-up equity provisions.

Ratepayer watchdogs in the past have criticized the price of New Jersey’s solar credits — the key source of developers’ profits — noting that they were often several times more generous than in other Mid-Atlantic states.

In order to claim them, though, community solar developers have to come out on top of a crowded field of competitors. In the first round of awards, developers sent in proposals for over 250 projects, of which 45 were ultimately chosen.

Built into the BPU’s evaluations was a points system that gave extra favor to projects sited on repurposed land — an important consideration in the country’s most densely populated state — and to developers that had buy-in from local governments and nonprofits.

However, the biggest source of points was related to income levels: At least 51 percent of a given project’s subscribers had to have low or moderate income, in order to win those points.

That ended up becoming, effectively, a requirement. Every single one of the community solar projects chosen by New Jersey’s regulators, thus far, will include that income carve-out.

Convincing low- and moderate-income people to subscribe, however, has been one of the hardest parts of building the projects, according to some solar developers and nonprofit partners.

“Unfortunately, the way things are set up, it’s extremely difficult to meet the requirements to bring LMI [low- and moderate-income] customers into these projects. And that’s something we’re really hoping to change,” said Gary Skulnik, CEO of Neighborhood Sun, which helps developers find and manage subscribers for the community solar program.

When prospective subscribers have to provide proof of income — a step that can involve submitting tax returns from past years — many of them give up, Skulnik said. Some low-income residents also lack credit cards or bank accounts, a requirement for participation, he noted.

Solar groups and environmentalists have long pushed for greater laxity on income verification. One letter to New Jersey’s BPU from June 2020, signed by 13 groups, provided a list of ways that the process could made easier, like requiring a single year of tax returns rather than three years’ worth.

“[R]equiring sensitive income documents like tax returns is intrusive and does not set up a respectful process,” particularly since low- and moderate-income subscribers aren’t guaranteed a bigger reduction on their energy bills than wealthier participants, the groups wrote.

One possible change backed by New Jersey solar groups would allow anyone within a low- to moderate-income census tract to qualify automatically.

“If you know there’s an area in a city where there’s a preponderance of people that are low-income, why go through the nonsense of asking?” said DeSanti of the New Jersey Solar Energy Coalition.

“Is it going to be perfect? No. But perfect is the enemy of good. We’ve got to get bureaucracy out of this. It’s weighing it down,” he added.

Tomorrow, the BPU is expected to announce which projects it has picked from the 410 recent proposals from solar developers. It may also announce changes to the New Jersey plan that could placate developers — including, possibly, by paring back the amount of paperwork that low- and moderate-income subscribers need to provide in order to qualify for lower energy bills.

“The objective going forward is, how do we take these lessons from the pilot … and turn that into a program that is, over the long term, permanent?” said Benrey of the BPU.

Multistate battles

New Jersey is not alone in facing growing pains over community solar.

In some states, the main battleground has pitted utilities against developers, and revolves around the cost of connecting to the grid. In others, consumer advocates and regulatory staff have criticized community solar programs for benefiting too small of a slice of ratepayers. Last year, staff at the Florida Public Service Commission found that just 1.5 percent of ratepayers served by Florida Power & Lilght, for instance, would be able to take part in a $1.79 billion slate of community solar projects that was ultimately greenlighted (Energywire, March 3, 2020).

As in New Jersey, Maryland regulators faced calls to simplify subscription requirements for lower-income Marylanders, after launching a pilot in 2017. Regulators eventually agreed, allowing people to automatically take part if they’re already enrolled in state or federal assistance programs.

Matt Hargarten, campaigns director for the Coalition for Community Solar Access, noted that several other states with community solar programs, like Illinois, Massachusetts and Maryland, have taken steps to simplify income verification. “For LMI customers to realize the benefits of community solar programs, we need to look at reducing barriers to entry in all states,” he wrote in an email to E&E News.

Other supporters of community solar broadly say it can spur employment in disadvantaged communities and reduce pollution.

Rob Sargent, campaign director for Local Solar for All, said in a statemet: “By making rooftop and community solar a priority in President Biden’s plan for 80% clean energy by 2030, we can save money and create more jobs, while building the foundation for a more equitable, consumer-focused energy system powered entirely by clean electricity.”

In New Jersey, community solar isn’t far from the core of the state’s energy future. New Jersey’s energy master plan, released in 2019 by Murphy’s administration, says that solar should become the biggest single power resource in the state by 2030, surpassing 12,000 MW of generation in the least-cost scenario — more than its nuclear plants and future fleets of offshore wind turbines, respectively.

The realization of that vision could hang on the results of next week’s gubernatorial election. Murphy has consistently polled ahead of his challenger, former Republican state Assemblyman Jack Ciattarelli, but in recent weeks, the gap has closed notably, hinting at an unpredictable outcome.

Ciattarelli, whose campaign did not respond to inquiries from E&E News, has criticized Murphy’s energy plans in broad strokes as disastrously expensive, and called for accelerated investments in natural gas.

Another, less partisan critic — the Division of Rate Counsel, which is the state’s official watchdog for energy consumers — has also spent years criticizing New Jersey’s solar subsidies as exorbitant handouts to developers that came at the expense of the public.

The community solar program, with its focus on equity, cracks open a way for the state to improve its record, wrote the division’s officials in a filing to the BPU last spring.

“We’ve suggested the grid-scale solar is a better way to meet our goals” for emissions reductions than building out distributed solar, said Brian Lipman, acting director of the Division of Rate Counsel. “Obviously rooftop is more expensive than grid supply.”

“On the other hand, you don’t want solar to be just for the rich,” he added.