New Jersey, as does many other states, has a renewable energy portfolio standard (RPS). This requires utilities to either generate a certain percentage of the energy used in the state from renewable sources or to pay others to generate that electricity from renewable sources. This payment is in the form a renewable energy credits (RECs). People and companies that have wind turbines or solar panels (among other sources) create RECs for each megawatt of electricity that is generated. These RECs are then purchased by the utilities to fulfill their RPS obligations.
Currently NJ requires that 22.5% of electricity comes from renewable sources by May 31, 2021. Because the BPU and the State of New Jersey want to encourage the development of solar energy, the RPS has a carve out for solar energy. By May 31, 2021 2.12% of our electricity must come for solar systems. The remainder of the 20.38% is required to come from Class I and Class II renewables. Wind and solar are examples of Class I. Hydro and resource recovery facilities are examples of Class II systems.
Two things are occurring that will change this landscape. First, the energy master plan seeks to increase the RPS requirements. The RPS will be increasing to 30% once BPU proposes new regulations to implement the EMP. Again, there will be a carve out for solar energy. Under the EMP the state is expecting 2,120 gwh of solar energy which is an increase of gigawatts. The State is also seeking 3000 MW from offshore wind by 2020.
The second new event is that the BPU is considering a carve out for offshore wind. This would make two class I carve outs. BPU is looking to see whether it is feasible or advisable for there to be a carve out to encourage offshore wind farms so that the EMP’s goals of 1,000 MWs can be reached by 2012 and 3,000 by 2020. BPU is setting up a stakeholder process to determine whether if to set up a carve our; how to set up a carve out, what the schedule for the RPS should be and other factors. A copy of the BPU’s order is here.
The solar carve out is probably a major factor in NJ being the second in the nation in energy generated from solar systems. California is number one. The question is can a carve out for offshore wind accomplish the same thing. Also, is a carve out even necessary?