S250

An Act concerning critical renewable microgrids and supplementing P.L.2018, c.17 (C.48:3-87.8 et al.) and P.L.2001, c.246 (C.App.A:9-64 et seq.).

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. As used in this section:

“Critical renewable microgrid” means a microgrid that utilizes renewable energy as its primary source of energy, to the largest extent technically and economically feasible, and that serves a critical function in protecting the State’s economy, public health and safety, and transportation sector during power outages caused by natural or man-made disasters.

“Microgrid” means a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the electric grid, which can connect and disconnect from the electric grid to enable it to operate both connected to, or independent of, the electric grid.

"SREC-II" means the same as the term is defined in section 3 of P.L.1999, c.23 (C.48:3-51).

b. No later than three months after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the board shall develop a program that would allow certain solar energy systems that are connected to a critical renewable microgrid to be designated as solar energy projects under the permanent Community Solar Energy Program, established pursuant to subsection f. of section 5 of P.L.2018, c.17 (C.48:3-87.11). A solar energy system that is approved for designation in the program shall be eligible for SREC-IIs at the monetary value designated for low- or moderate-income customers, and, notwithstanding the provisions of any rules or regulations adopted pursuant to P.L.2021, c.169 (C.48:3-114 et seq.) to the contrary, may have a rated capacity larger than five megawatts. In order for a solar energy system to receive this designation, the solar energy system shall:

(1) demonstrate that the solar energy system will devote at least 75 percent of its energy output to low- or moderate- income customers, at a price that is at least 20 percent lower than the value of a community solar credit provided on a community solar program subscriber’s utility bill; and

(2) meet the eligibility requirements, developed by the board pursuant to subsection c. of this section.

c. In developing the program pursuant to subsection b. of this section, the board shall establish eligibility criteria for solar energy systems that are connected to a critical renewable microgrid and an application and approval process for such systems. The program shall require approved solar energy systems that have a rated capacity of up to 20 megawatts to commence commercial operation no later than three years from the date of designation, and approved solar energy systems that have a rated capacity of greater than 20 megawatts to commence commercial operation no later than four years from the date of designation. When determining the size of a solar energy system for the purposes of this subsection, the board shall use the portion of the system that is connected to a single critical renewable microgrid.

d. The board shall adopt, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), rules and regulations to establish and implement the program. The rules and regulations shall, at a minimum:

(1) limit the total annual capacity of approved solar energy systems that are connected to a critical renewable microgrid to no more than 100 megawatts per year;

(2) provide that an approved solar energy system's designation as a community solar project shall be for a term of 25 years;

(3) require that the solar energy systems connected to a single critical renewable microgrid account for no more than 15 megawatts per year of the total annual capacity of projects approved to participate in the program, unless there are no other eligible applicants;

(4) establish a process, in a form and manner determined by the board, for municipalities to partner with, support, and acquire customers for a solar energy system that is connected to a critical renewable microgrid, which may include the use of automatic enrollment of customers to participate in the solar energy system as long as the customers are notified of their enrollment and ability to opt out;

(5) provide that any incentives, including SREC-IIs, provided to a solar energy system that is approved for designation in the program and is designated as part of an asset of importance for homeland security pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be subject to the Class I renewable energy requirement cost cap established by paragraph (2) of subsection d. of section 38 of P.L.1999, c.23 (C.48:3-87); and

(6) provide that any solar energy system that meets the eligibility requirements established in this section and in the rules and regulations adopted pursuant to this section shall be eligible to participate in the program, and that the owners or operators of the system may apply or reapply until accepted into the program.

e. The solar capacity of solar energy systems that are connected to critical renewable microgrids and designated by the board as community solar projects shall be in addition to the capacity of community solar projects approved by the board pursuant to subsection f. of section 5 of P.L.2018, c.17 (C.48:3-87.11).

2. No later than six months after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), the Director of the New Jersey Office of Homeland Security and Preparedness shall develop standards for designating a critical renewable microgrid as an asset of importance for homeland security. If a critical renewable microgrid is so designated by the director, the State incentives provided for the solar energy system connected to the critical renewable microgrid, pursuant to section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall not be subject to the Class I renewable energy requirement cost cap established by paragraph (2) of subsection d. of section 38 of P.L.1999, c.23 (C.48:3-87).

As used in this section, “critical renewable microgrid” means the same as defined in section 1 of P.L. , c. (C. ) (pending before the Legislature as this bill).

3. This act shall take effect immediately.

STATEMENT

This bill would require, no later than three months after the bill is enacted into law, the Board of Public Utilities (BPU) to develop a program that would allow certain solar energy systems that are connected to a critical renewable microgrid to be designated as solar energy projects and eligible for incentives under the permanent Community Solar Energy Program, established pursuant to subsection f. of section 5 of P.L.2018, c.17 (C.48:3-87.11). A solar energy system that is approved for designation in the program would be eligible for SREC-IIs at the monetary value designated for low- or moderate-income customers and may have a rated capacity larger than five megawatts.

As defined in the bill, “microgrid” means a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the electric grid, which can connect and disconnect from the electric grid to enable it to operate both connected to, or independent of, the electric grid. As also defined in the bill, “critical renewable microgrid” means a microgrid that utilizes renewable energy as its primary source of energy, to the largest extent technically and economically feasible, and that serves a critical function in protecting the State’s economy, public health and safety, and transportation sector during power outages caused by natural or man-made disasters.

In order for a solar energy system to receive this designation, and therefore be eligible for incentives under the permanent Community Solar Energy Program, the solar energy system would be required to: (1) demonstrate that the solar energy system will devote at least 75 percent of its energy output to low- or moderate-income customers, at a price that is at least 20 percent lower than the value of a community solar credit provided on a community solar program subscriber’s utility bill; and (2) meet the eligibility requirements, as developed by the BPU.

In developing the program pursuant to this bill, the BPU would be required to establish eligibility criteria for solar energy systems that are connected to a critical renewable microgrid and an application and approval process for such systems. The bill would also: (1) limit the total annual capacity of approved solar energy systems that are connected to a critical renewable microgrid to no more than 100 megawatts per year; (2) provide that solar energy systems' participation in the program would be for a term of 25 years; (3) require that approved solar energy systems that are projected to have a total rated capacity of greater than 15 megawatts are constructed in a manner to add a rated capacity of no more than 15 megawatts per year; (4) establish a process, in a form and manner determined by the BPU, for municipalities to partner with, support, and acquire customers for a solar energy system that is connected to a critical renewable microgrid, which may include the use of automatic enrollment of customers to participate in the solar energy system as long as the customers are notified of their enrollment and ability to opt-out; (5) provide that any incentives, including SREC-IIs, provided to a solar energy system that is approved for designation in the program and is designated as part of an asset of importance for homeland security pursuant to section 2 of this bill would not be subject to the Class I renewable energy requirement cost cap established by paragraph (2) of subsection d. of section 38 of P.L.1999, c.23 (C.48:3-87); and (6) provide that any solar energy system that meets the eligibility requirements would be eligible to participate in the program, and that the owners or operators of the system may apply or reapply until accepted into the program.

The solar capacity of solar energy systems that are connected to critical renewable microgrids and designated by the BPU as community solar projects would be in addition to the capacity of community solar projects approved by the BPU pursuant to the permanent Community Solar Energy Program.

The bill would also require, no later than six months after the bill’s effective date, the Director of the New Jersey Office of Homeland Security and Preparedness (director) to develop standards for designating a critical renewable microgrid as an asset of importance for homeland security. If a critical renewable microgrid is so designated by the director, the State incentives provided for the solar energy system connected to the critical renewable microgrid, pursuant to the bill, would not be subject to the Class I renewable energy requirement cost cap established by paragraph (2) of subsection d. of section 38 of P.L.1999, c.23 (C.48:3-87).

Microgrids can provide a multitude of benefits to the State, such as improving electric reliability, enhancing energy resilience, lowering energy costs, strengthening the central electric grid, bolstering cybersecurity, and improving overall community well-being.

Hurricane Sandy caused tens of billions of dollars of damage to New Jersey, and caused the curtailment or loss or of vital infrastructure protecting the economy, the environment, public health, public safety, and transportation. Several other unusual weather events have caused widespread and long-lasting power outages in the State during recent years. The frequency and intensity of such events is expected to increase as a result of global warming. In response, many state and local governmental entities and quasi-governmental entities plan to develop microgrids to provide resilient power to facilities providing critical public functions. Microgrids can play a vital role in protecting the State’s economy, environment, public health, public safety, and transportation during future widespread power outages.

The planning and development of renewable microgrids is essential in providing resilient power throughout the State and in combating the adverse effects of climate change. For these reasons, solar energy systems that are connected to critical renewable microgrids should be eligible for incentives under the Community Solar Energy Program.