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SuSI Replaces Extinct TRECs

August 31, 2021

Markets - PJM

“Sue” is the nickname given to the largest and most complete T. Rex specimen ever found. Today, she has a place of distinction in the Field Museum of Natural History of Chicago. And while Sue most likely died 67 million years ago, she seems to have come to life again in the wake of the New Jersey Board of Public Utilities (NJBPU) TRECs program through its successor - “SuSI”.

In May 2020, the NJBPU released their Solar Transition Program in a move meant to support the solar industry in New Jersey, while at the same time moving away from the historically volatile market for Solar Renewable Energy Credits (SRECs). Transitional Renewable Energy Credits (TRECs) had a fixed value of $152/MWh over a 15-year term and were temporarily put in place until a more permanent and longer-term solar incentive program could be implemented. On July 28, 2021, the NJBPU issued an order which created the Successor Solar Incentive (SuSI) Program, replacing the TREC structure. A strong incentive program like SuSI is an important part of New Jersey’s Energy Master Plan which seeks to have 34% of the state’s electricity generated from solar power assets by 2050 and 3,750 MWs of new solar generation by 2026.

Like many subsidized programs, SuSI attempts to strike a balance between offering an incentive that attracts solar developers while not placing an excessive burden on the state’s electricity customers. Under the SuSI program, the value of an SREC decreased from $152/MWh to between $70 and $120/MWh. Critics claim that the lower incentive will not be enough to foster a robust solar market in New Jersey while consumer advocate groups believe SuSI’s incentive rates are too high. The window to develop solar projects under the TREC program formally closed on August 27, 2021, and the SuSI program went into effect the following day.

The SuSI program is comprised of separate incentives for large and small-scale solar projects. The Administratively Determined Incentive (ADI) is intended for small net-metered projects under 5 MW. The ADI is available for residential, commercial, industrial, and public projects. The value of the SRECs is determined by the size of the system and the type of installation. For example, the SREC value for a small residential system is $90/MWh, while a small non-residential project under 1 MW is valued at $100/MWh. A table outlining the incentives for other types of ADI projects can be found here. Under the ADI, an additional $20/MWh incentive will be added to any project for a school district, municipality, or public college. The other class of incentives, for projects over 5 MW, is the Competitive Solar Incentive (CSI). Unlike the pre-established fixed rates in the ADI program, the SREC prices through the CSI will be set through an annual competitive solicitation process. This process is designed to obtain the lowest possible financial contribution from electricity customers in the state for larger solar projects. Like the ADI, the fixed incentive obtained through the CSI bidding process will be paid to successful bidders over a 15-year term. The first competitive CSI solicitation is expected to occur in the middle of next year.

The Garden State is already a national leader in solar energy with nearly 140,000 solar installations and 3,650 MW of generating capacity. New Jersey has more solar installations per square mile than any other state in the US and only six states have more solar generating capacity. And while the more lucrative TRECs are now extinct, the SuSI incentives remain strong for a thriving solar market for many years into the future.

Topics: Markets PJM

Written by 5

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