TRECs: Powering New Jersey's Solar Future

New Jersey has long been at the forefront of solar energy adoption in the United States.

In 2020, the state introduced a new solar incentive program called Transition Renewable Energy Certificates (TRECs) to replace the previous Solar Renewable Energy Certificate (SREC) system.

However, New Jersey has further evolved its solar incentive framework with the introduction of the Administratively Determined Incentive (ADI) Program, which is part of the broader Successor Solar Incentive (SuSI) Program. This program sets new incentive levels for eligible solar facilities, continuing the state's commitment to promoting clean energy.

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What are TRECs?

TRECs are performance-based incentives awarded to solar system owners for the clean energy they produce.

For every megawatt-hour (MWh), or 1,000 kWh, of electricity generated by an eligible solar installation, one TREC is created. These certificates provide a financial benefit to solar owners, encouraging the adoption of solar energy across the state.

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How do TRECs work?

Unlike the previous SREC system, which had a fluctuating market price through brokers like SRECTrade, TRECs offer a fixed incentive price for a 15-year period.

This stability provides long-term certainty for solar project owners, making solar investments more attractive and predictable.

The TREC program uses a factorized system, where different types of solar projects receive different incentive rates. For instance, net-metered residential rooftop systems have a factor of 0.6, meaning they receive 60% of the full TREC value.

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TREC Values and Earnings

The full value of a TREC is set at $152.

For residential rooftop solar projects, which have a factor of 0.6, this translates to $91.20 per MWh generated.

Let's break down what this means for an average New Jersey household:

• A typical 6kW solar system in New Jersey produces about 7,008 kWh (or 7.008 MWh) annually.
• This would generate approximately 7 TRECs per year.
• At $91.20 per TREC, this amounts to about $638.40 in annual earnings.
• Over the 15-year lifespan of the TREC program, a homeowner could earn around $9,576.

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New ADI Program

The Administratively Determined Incentive (ADI) Program sets specific incentive levels for various types of solar projects.

This program aims to ensure continued growth in the solar sector by offering predictable, long-term financial benefits to solar system owners.

Check out this PDF from the NJ ADI program (dated May 2024)

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Incentive Values and Categories:

• Net-Metered Residential: All sizes receive $85 per SREC-II.
• Small Net-Metered Non-Residential (Rooftop, Carport, Canopy, Floating Solar): Projects smaller than 1 MW receive $110 per SREC-II.
• Large Net-Metered Non-Residential (Rooftop, Carport, Canopy, Floating Solar): Projects 1 MW to 5 MW receive $100 per SREC-II.
• Community Solar (Low-to-Moderate Income, LMI): Projects up to 5 MW receive $90 per SREC-II.

Program Details:

• The ADI Program is open to new registrations and will accept applications on a first-come, first-served basis until capacity blocks are filled.
• The program is structured to ensure a steady flow of projects, with capacity blocks defined for each market segment.
• Solar facilities must be new and connected to a New Jersey public utility or local government unit's distribution or transmission system.

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Advantages of TRECs and ADI

• Stability: Unlike the volatile SREC market, TRECs and ADI incentives offer fixed prices, providing long-term financial certainty.
• Longer Duration: TRECs are available for 15 years, while ADI incentives ensure ongoing benefits for the system's lifespan.
• Boosting ROI: Both programs significantly enhance the return on investment for solar installations, making solar more accessible and attractive.

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Impact on Commercial Enterprises

TRECs are particularly advantageous for commercial enterprises in New Jersey.

The fixed price of $152 per MWh for roof-mounted commercial solar projects provides a stable, long-term revenue stream.

This certainty makes it easier for businesses to forecast their energy costs and ROI, encouraging more commercial entities to invest in solar.

Large-scale commercial enterprises with ample unused space on rooftops or parking lots can leverage the TREC program to significantly offset their energy costs while contributing to New Jersey's clean energy goals.

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The Future of Solar Incentives in New Jersey

The TREC and ADI programs represent significant steps forward in New Jersey's commitment to renewable energy. By providing stable, long-term incentives, they make solar energy more accessible and financially attractive to both residential and commercial property owners.

Now is an opportune time to take advantage of these programs. With fixed rates and long durations, they offer a predictable return on investment that can significantly offset the costs of going solar.