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S4061 FISCAL ESTIMATE
LEGISLATIVE FISCAL ESTIMATE
SENATE, No. 4061
STATE OF NEW JERSEY
222nd LEGISLATURE
DATED: JUNE 22, 2026
SUMMARY
Synopsis:
Allows value of SREC-IIs to be included in cost-benefit
calculations under energy savings improvement programs.
Type of Impact:
Annual expenditure increases and cost savings for boards
of education.
Agencies Affected:
Board of Public Utilities, Boards of Education.
Annual Fiscal Impact
Boards of Education Expenditure Increase
Indeterminate
Boards of Education Cost Savings
Indeterminate
�
The Office of Legislative Services (OLS) notes that the bill
would authorize boards of education to include the value of successor solar renewable
energy certificates (SREC-IIs) in the savings calculation used to demonstrate
cost-neutrality under energy savings improvement programs.� The inclusion of
SREC-IIs in energy savings programs would incentivize boards of education to
undertake energy savings projects, which will result in increased financing
costs as well as energy cost savings that should balance out over the life of
the project.�
�
Under current law, when an energy services company submits an
energy savings improvement program proposal to a contracting board of
education, the savings calculation used to determine whether projected savings
will cover project costs cannot include the value of solar renewable energy
certificates (SRECs). This exclusion exists because traditional SREC prices
could fluctuate significantly based on supply and demand, making them an
unreliable revenue stream to support longer term financing obligations such as
lease-purchase agreements or energy savings obligations.
�
The bill would carve out an exception for
SREC-IIs
, which are certificates
issued under the successor program that pay a fixed price by project rather
than a fluctuating one.�
BILL DESCRIPTION
����� This bill makes changes to the statute authorizing boards
of education, including the board of education of any local school district,
consolidated school district, regional school district, county vocational
school and any other board of education or other similar body other than the
State Board of Education, the Commission on Higher Education or the Presidents'
Council and the board of trustees of a charter school, to participate in the
program.
����� Specifically, the bill provides that SREC-IIs would be
included as part of the calculation for determining whether the energy savings
resulting from an energy savings improvement program will be sufficient to
cover the cost of the program's energy conservation measures.� SRECs were formerly
prevented from being included in the calculation for determining energy savings,
as the value of SRECs fluctuates based on the supply and demand.� The successor
to the SREC program, the SREC-II program, provides a fixed price for its
certificate.�
FISCAL ANALYSIS
EXECUTIVE BRANCH
����� None received.
OFFICE OF LEGISLATIVE SERVICES
����� The OLS finds that this bill will result in increased
financing costs for boards of education as well as cost savings, which should
balance out over the life of the project.� Under current law, when an energy
services company submits an energy savings improvement program proposal to a contracting
board of education, the savings calculation used to determine whether projected
savings will cover project costs cannot include the value of solar renewable
energy certificates (SRECs). This exclusion exists because traditional SREC
prices could fluctuate significantly based on supply and demand, making them an
unreliable revenue stream to support longer-term financing obligations such as
lease-purchase agreements or energy savings obligations.�
����� The bill would carve out an exception for
SREC-IIs
, which are certificates
issued under the successor program that pay a fixed price rather than a
fluctuating one.� Specifically, boards of education would now be authorized to
include the value of SREC-IIs in the savings calculation used to demonstrate
cost neutrality, which is required by current law, of energy savings plans. The
inclusion of SREC-IIs in energy savings improvement plans would incentivize boards
of education to undertake energy savings projects, which will result in
increased financing costs for boards of education as well as energy cost savings
that should balance out over the life of the project.�
����� By way of background, P.L.2021, c.169 directed the Board
of Public utilities to develop a successor solar renewable energy certificate
(SREC-II) program to incentivize the development of at least 3,750 megawatts of
solar energy by 2026.� An SREC-II is distributed for each megawatt-hour of
solar energy produced by qualifying solar power facilities and is accompanied
by a renewable energy incentive reimbursement. The value of an SREC-II is
determined by the Board of Public Utilities, with consideration to the environmental
attributes of a facility, including facility size, project costs and revenues,
economic and demographic characteristics of the project site, eligibility for
net metering, and facility rate class.� Each SREC-II is established at a fixed
rate by project. �
Section:
Environment, Agriculture, Energy, and Natural
Resources
Analyst:
Anna Heckler
Associate Fiscal Analyst
Approved:
Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the
Office of Legislative Services due to the failure of the Executive Branch to
respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980,
c.67 (C.52:13B-6 et seq.).