Increases solar development goals of SREC-II program and extends certain target dates of program to 2035.

A3969 1R

[First Reprint]

ASSEMBLY, No. 3969

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman ROBERT J. KARABINCHAK

District 18 (Middlesex)

Assemblyman� MICHAEL VENEZIA

District 34 (Essex)

SYNOPSIS

���� Increases solar development goals of SREC-II program
and extends certain target dates of program to 2035.

CURRENT VERSION OF TEXT

���� As reported by the Assembly Telecommunications and
Utilities Committee on February 12, 2026, with amendments.

��

An Act
concerning certain solar power generation incentives
and amending P.L.2021, c.169.

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

���� 1.��� Section 2 of P.L.2021,
c.169 (C.48:3-115) is amended to read as follows:�

���� 2.��� a.� There is established
in the Board of Public Utilities a program to be known as the SREC-II program,
which shall serve as the successor program to the SREC program established
pursuant to section 38 of P.L.1999, c.23 (C.48:3-87).� The goal of the program
shall be to provide incentives for the development of at least
[
3,750
]

1
[
6,500
]

750
1

megawatts
1
per
year
1

of new
residential, commercial, industrial, and grid-scale
solar power
generation
1
[
by
]

until
1

[
2026, although
this goal may be extended or revised by the board
]

2035. The board may extend
the program or increase the generation goal
as necessary to conform to the
State's solar energy policies.

���� b.��� The board shall develop,
as part of the SREC-II program, a process for the creation and distribution of
renewable energy certificates, to be known as �SREC-IIs,� for each megawatt
hour of energy produced by a qualifying solar electric power generation facility
for a duration established by the board.� The board shall also establish a
system by which to distribute a renewable energy incentive payment, to be known
as the �SREC-II value per megawatt-hour,� to the owner of an eligible solar
electric power generation facility, which shall be measured in
dollars-per-megawatt-hour of solar power generation, and which shall represent
the value of the environmental attribute produced by the solar electric power
generation facility.� SREC-IIs shall be transferable and capable of being used
by an electric power supplier or basic generation service provider to satisfy
the State's renewable portfolio standards established pursuant to section 38 of
P.L.1999, c.23 (C.48:3-87).� SREC-IIs shall be eligible for use in renewable
energy portfolio standards compliance in the energy year in which they are
generated, and for the following energy year.

���� c.���� No later than one year
after the effective date of P.L.2021, c.169 (C.48:3-114 et al.), the board
shall adopt, pursuant to the �Administrative Procedure Act,� P.L.1968, c.410
(C.52:14B-1 et seq.), rules and regulations establishing the SREC-II program in
accordance with the provisions of P.L.2021, c.169 (C.48:3-114 et al.).

���� d.��� The board is authorized
to establish, impose, and collect fees, escrows, and other charges the board
deems necessary and proper to implement the provisions of P.L.2021, c.169
(C.48:3-114 et al.).

���� e.���� The costs of the
SREC-II program shall be apportioned to ratepayers using a methodology approved
by the board.� Except as provided in subsection h. of section 4 of P.L.2021,
c.169 (C.48:3-117), the methodology shall be similar to that by which the board
apportions the costs of SRECs and other renewable energy certificates pursuant
to section 38 of P.L.1999, c.23 (C.48:3-87) and consistent with the competitive
retail market established by the �
1
[
Energy
]

Electric
1

Discount and Energy Competition Act,� P.L.1999, c.23 (C.48:3-49 et al.).

(cf:� P.L.2021, c.169, s.2)

���� 2.��� Section 3 of P.L.2021,
c.169 (C.48:3-116) is amended to read as follows:

���� 3.��� a.� The board shall
develop, as part of the SREC-II program, a small solar facilities incentive
program to award SREC-IIs to the owners of community solar facilities, solar
facilities up to five megawatts in size that participate in the remote net
metering program established pursuant to section 6 of P.L.2018, c.17
(C.48:3-87.12), and net metered solar facilities less than five megawatts in
size, as measured in direct current, or another size specified by the board.�
The small solar facilities incentive program shall aim to provide SREC-IIs for
the generation of at least 300 megawatts of net-metered solar facilities per
year
, 3,000 megawatts of community solar facilities between October 1, 2025
and December 31, 2029,
and
at least
150 megawatts of community solar
facilities per year
thereafter
, and 50 megawatts of solar facilities in
the remote net metering program, for
[
each
of the five years after the establishment
]

the duration
of the SREC-II program.

���� b.��� The board shall
establish eligibility criteria and an application process by which an owner of
a solar electric power generation facility may apply to receive SREC-IIs
pursuant to this section, until the program reaches the energy generation
target established by subsection a. of this section, as determined by the
board.� Only solar electric power generation facilities that receive permission
to operate from the appropriate regional grid operator after the effective date
of P.L.2021, c.169 (C.48:3-114 et al.), shall be eligible to receive SREC-IIs
pursuant to this section, unless otherwise specified by the board.� A facility
shall be eligible to receive SREC-IIs pursuant to this section for a duration
established by the board if it is connected to the distribution or transmission
system owned or operated by a New Jersey public utility or local government
unit.

���� c.���� The small solar
facilities incentive program shall include criteria by which to assign an
SREC-II value per megawatt-hour to a solar electric power generation facility.�
The criteria shall be designed by the board to incentivize the development of
new solar power projects sufficiently so that the goals for solar power
development in the State's Energy Master Plan are met, to further other State
goals, and to incentivize projects that are especially in the public interest.�
The SREC-II value per megawatt-hour may include the value of the environmental
and other benefits to the State provided by the facility, as determined by the
board.� The criteria may include, but is not limited to, consideration of the
following factors:

���� (1) �the size of the facility;

���� (2) �the costs and revenues
associated with representative facilities;

���� (3) �for community solar
facilities, the economic and demographic characteristics of the area served by
the facility, including whether it is located in an overburdened community, as
that term is defined in section 2 of P.L.2020, c.92 (C.13:1D-158);

���� (4) �whether the facility is
located on already developed land or the built environment;

���� (5) �the facility's
eligibility for net metering pursuant to subsection e. of section 38 of
P.L.1999, c.23 (C.48:3-87) or participation in the community solar program
established pursuant to subsection f. of section 5 of P.L.2018, c.17
(C.48:3-87.11); and

���� (6) �the rate class of the
facility, as determined by the appropriate New Jersey electric public utility
or local government unit.

(cf: P.L.2023, c.190, s.2)

���� 3.��� Section 4 of P.L.2021,
c.169 (C.48:3-117) is amended to read as follows:

���� 4.��� a.� The board shall
develop and administer, as part of the SREC-II program, a transparent, fair,
and competitive solicitation process for awarding SREC-II contracts to promote
the construction of solar electric power generation facilities.�

���� (1)�� In order to be eligible
to participate in the solicitation process, a solar electric power generation
facility shall be:

���� (a)�� a grid supply solar
facility or net metered solar facility greater than five megawatts in size, as
measured in direct current, or another size specified by the board;

���� (b)�� constructed after the
effective date of P.L.2021, c.169 (C.48:3-114 et al.);

���� (c)�� interconnected to a
distribution or transmission system operated by a New Jersey electric public
utility or local government unit; and

���� (d)�� sited in conformance
with the siting criteria established by the board pursuant to section 6 of
P.L.2021, c.169 (C.48:3-119).

���� (2)�� The board shall develop
additional eligibility criteria and application processes for participation in
the solicitation process.

���� b.��� The board may establish
a system of distinct bidding categories within the competitive solicitation
process set forth in this section, such that only bids from the same category
compete with one another.� The category system may take into account the size
of the facility, location of the facility on a contaminated site or landfill,
as determined by the board in consultation with the Department of Environmental
Protection, or any other feature of a facility, provided that the category
system enhances the continued diversification of the energy resources used to
meet consumer demand in this State and results in environmental and public
health benefits to New Jersey residents, as determined by the board.� The board
may revise the category system as it deems appropriate after each solicitation
round.

���� c.���� Solicitation rounds
shall occur at least as frequently as once every 18 months, beginning on the
effective date of P.L.2021, c.169 (C.48:3-114 et al.) and ending no earlier
than January 1,
[
2026
]

2035
.�
The solicitation process shall:

���� (1)�� be open on a
non-discriminatory basis to any entity seeking to construct a solar electric
power generation facility that complies with the provisions of subsection a. of
this section;

���� (2)�� be carried out in
accordance with criteria developed by the board and applied equally to all
responses to the solicitation;

���� (3)�� award contracts for
SREC-IIs to promote the construction of solar electric power generation
facilities for no less than an average of 300 megawatts per year, for
[
five years
]

the
duration of the program
, with the first awards made no later than 18 months
after the effective date of P.L.2021, c.169 (C.48:3-114 et al.);

���� (4)�� award projects selected
as part of the competitive solicitation process the right to receive a
renewable energy incentive payment, in the form of an SREC-II value per
megawatt-hour established by the board, for the environmental attribute
produced by the solar electric power generation facility, for a duration to be
established by the board.� The SREC-II value per megawatt-hour may include the
value of the environmental and other benefits to the State provided by the
facility, as determined by the board;

���� (5)�� ensure that the length
of any award is sufficient to encourage low financing rates, reasonable risks
to ratepayers, and to enable the development of affordable renewable energy
resources;

���� (6)�� mitigate price and
delivery risks for consumers;

���� (7)�� include requirements
designed to ensure successful completion of projects, including, but not
limited to, the imposition of appropriate escrow fees, bid maturity
requirements, required interconnection milestones, and conditions on when a
project must achieve commercial operation; and

���� (8)�� ensure that the
environmental and public health benefits of solar electric power generation
facilities on contaminated sites or landfills are recognized, including
accommodating the long development timescale for these projects.

���� d.��� The board may establish
[
confidential
]
high and low
bid thresholds
, which may be confidential, or other cost containment
measures,
prior to conducting a competitive solicitation pursuant to this
section, provided that the
[
thresholds
]

cost
containment measures
promote fiscal responsibility for the State and the
likelihood of successful bids, as determined by the board.� The
[
thresholds
]

cost
containment measures
may include a cap on the renewable energy incentive
payments required pursuant to paragraph (4) of subsection c. of this section.�
The board may also procure more than the minimum quantity of solar power
required by this section if bids are below the predetermined bid threshold.

���� e.���� The board shall
determine, in consultation with the Department of Environmental Protection, if
a solar electric power generation facility may be sited on a contaminated site
or landfill for the purposes of this section.� If the board authorizes a
facility to be sited on a contaminated site or landfill, the facility shall be
afforded the protections provided in paragraph (2) of subsection t. of section
38 of P.L.1999, c.23 (C.48:3-87).

���� f.���� At the end of each
bidding round, the board shall:

���� (1)�� rank all bids received
based on the bid price, or, pursuant to subsection b. of this section, based on
the bid price within each category;

���� (2)�� select bids in ranked
order, up to the procurement budget set by the board, or, pursuant to
subsection b. of this section, the procurement budget of each category; and

���� (3)�� adjust quantities
awarded
[
if
prices are above or below any confidential pre-determined thresholds
]

based on
the bid thresholds or cost containment measures
established pursuant to
subsection d. of this section.

���� g.��� Any moneys placed in
escrow by an applicant as part of the competitive solicitation process shall be
reimbursed to the applicant in full or in part upon meeting the conditions set
forth by the board when the board established the escrow requirement, including,
but not limited to, selection in the competitive solicitation or commencement
of commercial operation of the solar electric power generation facility.� The
escrow amount shall be forfeited to the General Fund if the facility does not
meet the conditions set forth by the board when the board established the
escrow requirement, including, but not limited to, commencing commercial
operation within the term specified by the board's requirements established
pursuant to paragraph (7) of subsection c. of this section, including any
extensions as may be granted pursuant to procedures established by the board.

���� h.��� The costs of the
competitive solicitation process, including the issuance of renewable energy
incentive payments pursuant to paragraph (4) of subsection c. of this section,
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).

(cf: P.L.2021, c.169, s.4)

���� 4.��� This act shall take
effect immediately.