Opportunities and Profitability of Solar Energy Continues to Increase

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Renewable energy opportunities continue to exist and will likely increase drastically in the future. One of the concerns here in New Jersey is the need to extend, accelerate or expand the Solar Renewable Energy Credit (SREC) opportunities.
 

SRECs are those credits purchased by power companies for the production of solar energy. Given that solar energy facility production has exceeded expectations, creating a glut of SRECs available for purchase, the value of the SRECs have dropped to less than half of the pre-glut value.
 

The newly adopted New Jersey Energy Master Plan proposes to accelerate the purchasing obligation of utilities, or take other actions to stabilize the SREC market, and therefore may improve the value of SRECs and increase the ability to finance solar energy facilities. That, along with ongoing federal tax credits, create the opportunity for New Jersey to continue to be one of the national leaders in solar energy production, currently second only to California.
 

However, one significant component of solar energy facilities is the cost of the solar panels themselves. A recent report conducted by Science Daily concludes that the cost of solar panels has dropped by 70% since 2009, significantly enhancing opportunities to make solar energy production a more attractive investment for those producing and selling energy as well as those building net-metered energy facilities, providing energy for on-site use.
 

For the foregoing reasons, opportunities and profitability of solar energy continues to increase and should be considered by most property owners, including those that might have declined to pursue solar energy as recently as a few months ago. Below is the link to the Science Daily article discussing the huge drop is the cost of solar panels.

How Does Solar Energy Production Work?

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Gary Forshner, Shareholder in Stark & Stark's Real Estate, Zoning and Land Use Group, meets with Chris Savastano, Director of Commercial Development for NJR Clean Energy Ventures to discuss how solar energy production works.

How Does Solar Energy Production Work? from Stark & Stark on Vimeo.

Solar Panels: A Statutorily Protected Power Substitute in Common Interest Communities

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What good is low affordable housing when utility costs outweigh the benefits?  Faced with the burden of tough economic times, more and more homeowners are looking for ways to cut costs.  While some individuals have chosen to cut back, others have chosen to seek out economically advantageous alternatives in affordable housing communities.  In particular, the search for substitutes has become increasingly important when it comes to necessary household expenditures such as heat and electricity.  Although it has become common practice for local utility companies to power common interest communities, low cost alternatives such as solar panels may be the wave of the future.   Accordingly, Condominium and Homeowners Association Boards may soon find themselves faced with a new set of issues never before contemplated, and it is essential that they develop an understanding of the legal obligations associated with these changes.  

It is important to note that New Jersey statutory law, specifically, the Planned Real Estate Development Full Disclosure Act ("PREDFDA"), N.J.S.A. 45:22A-48.2, lays out very specific guidelines governing the installation of solar panels in a common interest community.  

According to the Statute, the extent to which an Association can regulate the installation of solar panels largely depends upon the type of housing unit involved and the way “roofs” are defined in the Association’s governing documents. Overall, a prohibition against solar panels is permitted in communities where the unit roofs are considered “common elements.” Conversely, solar panels cannot be prohibited in communities with single family homes or communities where the unit owners are responsible for the roofs.  However, the law provides that Associations which are required to allow solar panels may also adopt rules and regulations governing their installation.

In particular, the Statute provides that an Association can adopt rules governing the following items:

  1. The qualifications, certification and insurance requirements of personnel or contractors who may install the solar collectors;
  2. The location where solar collectors may be placed on roofs;
  3. The concealment of solar collectors' supportive structures, fixtures and piping;
  4. The color harmonization of solar collectors with the colors of structures or landscaping in the development; and
  5. The aggregate size or coverage or total number of solar collectors 

If an Association decides to promulgate rules and regulations in this regard, the extent to which it may do so is limited.  The Statute states that an Association shall not adopt or enforce any rule if compliance would increase the solar panels’ installation or maintenance fees by an amount greater than 10 percent of the total cost of the initial installation, including costs of labor and equipment.  In addition, the Statute prohibits Associations from adopting or enforcing any rule which inhibits the solar panels from functioning at their intended maximum efficiency. Therefore, an Association must adopt certain rules and regulations that adhere to the specific guidelines expressed in the Statute.  

As a rule of thumb, if an Association is responsible for the roofs, it can ban solar panels. However, if an owner is responsible for the roofs, the Association must allow solar panels, so long as the rules and regulations it has adopted are followed.  As always, it is advisable to have a professional draft or review any restrictions you intend to put into place to ensure your community’s compliance with the law.

 

New Jersey Clean Energy Program: Pay for Performance

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The New Jersey Clean Energy Program administered by the New Jersey Board of Public Utilities through its Office of Clean Energy offers a host of financial incentives.  Among these is the Pay for Performance Program, which is funded by the societal benefits charge authorized by the New Jersey Electric Discount and Energy Competition Act.  Under this program, a qualifying utility customer may receive up to 50% of the total cost of energy-efficient measures recommended by an energy efficiency expert, also known as a program “partner,” who the customer selects from a pre-approved list, provided that the implementation of such measures will achieve an energy savings of at least 15%.  A customer participating in the Pay for Performance Program may also receive funds to offset the cost of the program partner’s services at a rate of $0.10 per square foot up to a maximum of $50,000 or 50% of the annual energy cost of the building or facility that is the subject of the application for benefits, whichever is less. 

 

In addition to the foregoing, the pay for performance program provides advanced measure incentives for combined heat and power and incentives for new construction provided that the project contains at least 50,000 square feet of planned conditioned space, is located in a smart growth area and achieves energy costs that are at least 15% below the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) standards 90.1-2004.

 

In order to be eligible for the Pay for Performance Program, (1) an applicant must be a customer of a regulated electric utility and/or gas utility in New Jersey, including Atlantic City Electric, Jersey Central Power & Light, Rockland Electric Company, New Jersey Natural Gas, Elizabethtown Gas, PSE&G and South Jersey Gas, and (2) the project for which an application is made must consist of one or more preexisting commercial, industrial, institutional or multi-family residential structures having over 200 kW average annual peak demand electrical usage, except for affordable housing, which is exempt from the requirement of having over 200 kW average annual peak demand electrical usage. Individual buildings, as well as multiple buildings in complexes owned by a single person or entity, may qualify for benefits under the program provided that they meet the above criteria.  Condominium associations may also be eligible to receive incentives for energy-efficient measures relating to common elements under this program.

Governor Corzine Signs Residential Development Solar Energy Systems Act Into Law

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On March 31, 2009, Governor Jon Corzine signed into law new legislation known as the Residential Development Solar Energy Systems Act. (P.L. 2009, c.33) codified at N.J.S.A. 52:27D-141.1, et seq.. The Act requires developers of residential developments containing 25 or more single-family dwelling units to disclose in advertising and offer to install solar energy systems. The act requires the Department of Community Affairs (DCA) in consultation with the Board of Public Utilities to adopt regulations respecting the technical sufficiency of solar energy systems to be installed pursuant the act and prescribes certain minimum standards.  For example, a solar energy system installed under the act shall have components that are new and shall have a manufacturer’s warranty of not less than 10 years.

Although the Residential Development Solar Energy Systems Act became effective immediately, in actuality, it shall apply only to dwelling units that have received a construction permit on or after the 90th day following the DCA’s promulgation of the aforesaid technical sufficiency regulations for solar energy systems.

Inherently Beneficial Uses - Wind, Solar and Photovoltaic Energy Facilities

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A bill that would amend Section 3.1 of the Municipal Land Use Law (P.L. 1975, c.291) codified at N.J.S.A. 40:55D-4, to add to the statute a definition of “inherently beneficial use” was introduced in the Assembly as A3062 on June 23, 2008.  The proposed definition, if enacted, would specifically designate certain uses as being inherently beneficial, such as “a wind, solar or photovoltaic energy facility.”

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