Private Sector Poised to Get Go-Ahead for Investment in NJ Public Energy Projects

Tom Johnson | January 13, 2020 | Energy & Environment
Advocates say it would provide cost-effective financing and would lower energy costs at a time when ratepayers face billions of dollars in rate hikes
Credit: Chrisfloresfoto/Twenty20
Supporters say the legislation could boost renewable energy, energy efficiency, and energy storage projects.

With government entities at all levels fiscally constrained, the state Legislature is poised to approve today a bill that would allow the private sector to invest in energy-related projects at public facilities.

The legislation (A-4535) aims to address the aging, and in many cases obsolete, energy infrastructure owned by government facilities that have long gone without upgrades and replacement because of budgetary constraints.

To advocates, the proposal represents a cost-effective way to finance projects while lowering energy costs, improving resiliency, and developing cleaner ways of meeting the facilities’ energy needs.

The legislation, approved by the budget committees in the Assembly and Senate last Thursday, could help governments develop a wide range of projects, including renewable energy, energy efficiency, and energy storage, according to proponents. At one time, the bill also would have allowed the financing of microgrids — energy centers capable of providing the power to keep critical services running even if the traditional power grid fails — but that provision was deleted in the version approved last week because of objections by utilities and others.

“We’ve come a long way on this bill,’’ said Sen Paul Sarlo (D-Bergen), a sponsor of the bill during a hearing last week, but added he was not sure the administration is supportive of the measure.

Under the current version of the bill, implementation of the program would be overseen by a new unit established in the New Jersey Economic Development Authority. The Governor’s Office is seeking Treasury department oversight of the program.

Using private sector know-how

Assemblyman Andrew Zwicker (D-Mercer), another sponsor, argued the bill would allow government entities to leverage the expertise and financial resources of the private sector to develop energy-related facilities.

Private entities would be responsible for all aspects of the projects with their government partners, including finance, design, construction, operation and maintenance under the bill, according to Steven Goldenberg, an attorney representing developers of on-site energy projects, also known as distributed energy.

More importantly, the projects would not be supported by utility customers or budgetary allocations. Instead, some would be entirely funded through energy savings over time. Others would rely on investment tax credits, tax exemptions and abatements, private equity, bonding and eminent domain authority.

With the state the largest consumer of energy in New Jersey, owing to its ownership of many government buildings, centers and prisons, Goldenberg said enactment of the bill would help meet many of the goals of the new state Energy Master Plan.

The prospects of the bill’s enactment occurs at a time when ratepayers are facing billions of dollars in rate hikes due to the Murphy administration’s aggressive efforts to modernize the power grid and replace older and more conventional ways of providing power with cleaner and more expensive technologies, like offshore wind, solar and energy storage.