Solar development at New Jersey public schools has been a point of pride for the New Jersey School Boards Association and our member districts. New Jersey’s public schools have collectively developed more than 600 solar energy projects. These solar installations save money for local taxpayers and allow funds to be redirected to the classroom, educate our students, reduce greenhouse-gas emissions, and send a highly visible message to our communities that clean energy is feasible.
This nation-leading progress has been made possible by New Jersey’s solar incentive program which, for over a decade, has motivated New Jersey’s necessary transformation to renewable energy through both Democratic and Republican administrations in Trenton. Unlike other states, which have focused on large solar farms, using those states’ ample open space, New Jersey’s open space is at a premium.
New Jersey has prioritized on-site solar projects located on the roofs and parking lots of schools, municipalities, and private businesses. Continued development of these on-site projects is a necessary ingredient to continuing the growth of solar power in New Jersey, as these projects are a wise use of space that deliver much-needed cost savings to their school hosts, as well as environmental benefits.
Not only do these on-site projects support wise land-use policy, they are distributed broadly across the state. The diversity of these distributed energy sources has energy being generated closer to where it is used. With a smarter grid, this can increase the resiliency of New Jersey’s energy delivery system.
Flawed reworking of incentive program
Now, under a proposal under consideration by the New Jersey Board of Public Utilities, this progress is about to be upended.
The BPU is currently restructuring its incentive program to create an update called the Solar Successor Incentive Program. The current proposal under review at the BPU calls for excessive and unjustified reductions in incentives for these on-site solar projects. It is vital that the administration of Gov. Phil Murphy and the BPU not abandon the development of on-site solar projects — a proven, highly effective approach to growing New Jersey’s solar market.
While making incentives as low as possible should remain a priority, it is counterproductive to set them so low that on-site solar development is no longer feasible. Such a move will discourage projects that preserve our open space and allow for a widespread distribution of solar energy and its benefits throughout the state. The proposal under consideration at BPU will thwart the efforts of school districts to reduce their operating costs to the benefit of local property taxpayers.
Public schools are motivated to pursue on-site solar installations, which provide the combined benefits of supporting clean energy and saving money. These motivators go hand-in-hand, as schools need to capture sufficient savings to justify solar development. With the steep decrease in incentives proposed by the BPU, savings from installing new on-site solar projects will suffer or disappear, and schools will no longer be able to justify these important solar initiatives.
A list of problems
To understand the consequences of the new incentive structure being considered by the BPU, it is vital to recognize the unique position of public schools. This proposed incentive program is based on several assumptions that simply do not apply to New Jersey schools and lead to an unusable incentive structure that will prevent the state from reaching its solar and Energy Master Plan (EMP) goals:
- The proposal is built on the assumption that schools will own and develop their own solar projects. This ignores the reality of how school districts operate: When a school district pursues solar, it does so under a business model where a private solar developer develops and owns the project and recovers its investment by selling low-cost energy directly to the school district. Schools depend on these solar developers for their expertise in the financing, construction, operation, and maintenance of solar projects. Schools are not in the business of developing and operating solar projects — they need to focus on education. Yet the BPU proposal writes this essential, and highly successful, public-private business model out of its incentive design.
- On top of the reality that school districts do not have the bandwidth to develop and own solar projects and need private solar developers to make these projects happen, these same developers can take the lucrative federal tax benefits that school districts and other public entities cannot and pass these benefits to their school customers. The proposal under consideration by the BPU fails to recognize this reality, further undermining the design of its proposed incentives.
- In calculating the cost of its proposed incentive structure, the proposal under consideration at the BPU neglects to acknowledge the cost reductions that solar projects deliver to schools. These savings help schools reduce the burden of school budgets on local property taxes, just as the savings from businesses which go solar let those businesses maintain their competitiveness in New Jersey. By ignoring these benefits, the proposal under consideration by the BPU undervalues its proposed incentives.
We must do better. The New Jersey School Boards Association calls upon the BPU and Gov. Murphy to continue policies that make our state and its public schools national leaders in sustainability and solar energy. The incentives currently under consideration at the BPU should be revised to encourage new solar projects at schools. Our students, our taxpayers, and our environment are counting on it.