New Jersey lawmakers approve sweeping energy legislation

New Jersey’s electric utility landscape is set for an overhaul after lawmakers passed legislation requiring the state to get half its power from renewables within 12 years while providing subsidies to nuclear power plants.

The Legislature April 12 passed with strong majorities two bills — AB 3723 and S 2313 — that deal with renewables and the nuclear subsidies, respectively.

On renewables, the legislation, expected to be signed by New Jersey Gov. Philip Murphy, sets renewable portfolio standard targets of 21 percent by 2020, 35 percent by 2025 and 50 percent by 2030. Currently, including a solar carveout, New Jersey has a renewable requirement of 24.4 percent by 2028.

The legislation sets a cap on the cost of the renewables, not counting offshore wind, of nine percent for three years starting in 2019. The cap falls to seven percent a year after that.

The legislation also increases the amount of solar energy utilities are required to buy from 4 percent in 2027 to 5.1 percent in 2021. The solar requirements then ramp down until they end in 2033.

The legislation orders the New Jersey Board of Public Utilities to create a community solar program.

The legislation provides for up to $100 million in tax credits for qualified wind energy projects in an eligible wind energy zone.

Energy storage could get a major boost under the legislation. The BPU is required to analyze, with input from the PJM Interconnection, a range of energy storage issues including how renewable energy storage systems could benefit ratepayers by providing emergency back-up power, offsetting peak loads and stabilizing the distribution system.

The BPU has a year to file a report on storage opportunities in New Jersey and potential incentives that could support energy storage. Then, within six months, the BPU must develop a plan for getting 600 megawatts of storage by 2021 and 2,000 MW by 2030.

The legislation also requires utilities to cut electric and natural gas use and peak demand by 2 percent a year compared to the average usage during the previous three years starting five years after they begin their energy efficiency programs.

Meanwhile, the legislation also creates a "zero emission certificate" program for nuclear generation that would steer roughly $300 million a year to the 2,468-MW Salem plant and the 1,240-MW Hope Creek facility.

The program will be funded by a $0.004 per kilowatt-hour charge on retail customers.

Public Service Electric and Gas Nuclear owns the Hope Creek plant and has a majority share of the Salem plant, which it co-owns with Exelon Generation. PSEG officials have said the nuclear plants will close if they don't receive extra financial support. Exelon expects to close its 650-MW Oyster Creek nuclear plant in Lacey Township, New Jersey, in 2019.

The nuclear plants provide about 40 percent of New Jersey’s electricity and if they retire the state’s air emissions will increase, according to the legislation.

To be eligible for the subsidies, PSEG will have to show the BPU the plants could be forced to retire because of revenue shortfalls or an unexpected increase in operating costs.

The legislation directs the BPU to evaluate the ZEC program within 10 years.

New York and Illinois have also established programs to boost payments to cash-strapped nuclear plants.