Net Metering in New Jersey

Net Metering

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Last Updated November 9, 2016

Program Overview

    • Implementing Sector:

      State

    • Category:

      Regulatory Policy

    • State:

      New Jersey

    • Incentive Type:

      Net Metering

    • Utilities:

      Atlantic City Electric Co, Jersey Central Power & Lt Co, Public Service Elec & Gas Co, Rockland Electric Co

    • Eligible Renewable/Other Technologies:

      Geothermal Electric, Solar Thermal Electric, Solar Photovoltaics, Wind (All), Biomass, Landfill Gas, Tidal, Wave, Wind (Small), Anaerobic Digestion, Fuel Cells using Renewable Fuels

    • Applicable Sectors:

      Commercial, Industrial, Local Government, Nonprofit, Residential, Schools, State Government, Federal Government, Tribal Government, Agricultural, Institutional

    • Applicable Utilities:

      Investor-owned utilities (electric distribution companies), electric suppliers

    • System Capacity Limit:

      System must be sized so that energy production does not exceed customer’s annual on-site energy consumption

    • Aggregate Capacity Limit:

      No limit specified but BPU may limit to 2.9% total annual kWh sold in the State by each electric power supplier during prior one year period

    • Net Excess Generation:

      Generally credited to customer’s next bill at retail rate; excess reconciled annually at avoided-cost rate

    • Ownership of Renewable Energy Credits:

      Customer owns RECs

    • Meter Aggregation:

      Only for public entities (state and local governments, local agencies, and school districts)

Summary

Eligibility:

New Jersey’s net-metering rules require state’s investor-owned utilities and energy suppliers (and certain competitive municipal utilities and electric cooperatives) to offer net metering at non-discriminatory rates to residential, commercial and industrial customers. Systems that generate electricity using solar, wind, geothermal, wave, tidal, landfill gas or sustainable biomass resources, including fuel cells (all “Class I” technologies under the state RPS), are eligible. In January 2010 A.B. 3520 removed the individual system size cap of 2 MW formerly contained on the Board of Public Utilities (BPU) rules, and the necessary rule changes were made effective in July 2010. System size of renewable energy facility is limited to that needed to meet annual on-site electric demand. S.B. 2420 enacted in August 2015 authorizes Board of Public Utilities (BPU) to limit net metering to 2.9% of the total annual kWh sold in the State by each electric power supplier during prior one year period. The legislation instead of providing a firm aggregate limit on net metering, it authorizes the BPU to cease offering net metering if this capacity is reached.  BPU may continue to allow net metering even if this threshold is reached.

Aside for public buildings (see below), the renewable energy facility should be located within the property boundaries or be located geographically next to each other. Each of the renewable generation facility can only be net-metered with one customer.

Net Excess Generation:
A single metering arrangement is preferred. According to the statute, customer-generators have several compensation options for net excess generation (NEG), as listed below. The latter two options were added by S.B. 2936 in January 2008.

  • Customer-generator receives month-to-month credit for NEG at the full retail rate and is compensated for remaining NEG at the avoided-cost of wholesale power at the end of an annualized period.
  • Customer-generator is compensated for all NEG on a real-time basis according to the PJM power pool real-time locational marginal pricing rate, adjusted for losses by the respective zone in the PJM.
  • Customer generator may enter into a bilateral agreement with their electric supplier or service provider for the sale and purchase of NEG. Real-time crediting is permitted, subject to the applicable PJM rules.

In addition to the real-time crediting options described above, S.B. 2936 also: (1) expanded the list of eligible customers to include industrial and large commercial customers; (2) extended net metering to all systems that generate electricity using “Class I” renewable-energy resources; and (3) allowed utilities to recover the costs of “any new net meters, upgraded net meters, system reinforcements or upgrades, and interconnection costs” either through their regulated rates or from net-metered customers.

A separate rule making proceeding completed in March 2009 allows customer-generators to select any month of the year to begin their annualized period. This rule applies to all net metering customers, regardless of whether they began net metering prior to March 2, 2009 when the rule took effect. The choice of an annualized period is generally permanent unless the utility voluntarily accepts the customer’s choice of a new annualized period.

Renewable Attributes:
Customers eligible for net metering retain ownership of all renewable-energy credits (RECs) associated with the electricity they generate. Utilities are required to report net metering enrollment reports to the BPU twice annually, one covering January – June and other covering July – December. The reports must contain information detailing estimated customer generation supplied to the distribution grid, estimated grid electricity supplied to net metered customers, the number of customer that received payments for annual NEG, and the total dollar amount paid to net metering customers for annual NEG by month.

Meter Aggregation:

In July 2012, New Jersey enacted legislation (S.B. 1925) requiring electric utilities to allow public entities such as state and local governments, local agencies and school districts to engage in “net metering aggregation” of solar facilities. However, the rules implemented do not meet the definition of aggregate net metering as typically defined.  In order to qualify for net metering aggregation, the solar facility must be on property owned by the customer, be owned and operated by the single customer, and with the exception of state entities, be located within the customer’s territorial jurisdiction. For state entity projects, all facilities must be located within 5 miles of one another. In addition, for all customers all facilities must be located within the territory of the same electric utility, be served by the same basic generation service provider or electric power supplier, and all facilities must be within the same customer class of the applicable electric utility tariff. The customer-generator (or host meter) receives credit for excess generation at the retail rate; meters other than the host customer are credited at the wholesale rate at the end of a designated annualized period. Third party meter aggregation is allowed.

For further information, please contact the New Jersey Office of Clean Energy or consult the program web site for the appropriate contact person at your utility.

Authorities

    • Date Enacted:
      1999 (subsequently amended)

    • Effective Date:
      1999

    • Date Enacted:
      09/13/2004

    • Effective Date:
      10/04/2004

    • Date Enacted:
      07/23/2012

    • Effective Date:
      07/23/2012

    • Date Enacted:
      08/10/2015

    • Effective Date:
      08/10/2015

Contact

Memos

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    • 11/09/2016 by Achyut Shrestha

      S.B. 2420 enacted in August 2015 authorizes Board of Public Utilities (BPU) to limit net metering to 2.9% of the total annual kWh sold in the State by each electric power supplier during prior one year period. The legislation instead of providing a firm aggregate limit on net metering, it authorizes the BPU to cease offering net metering if this capacity is reached. BPU may continue to allow net metering even if this threshold is reached. Previously,  the BPU was permitted to allow utilities to cease offering net metering if the statewide enrolled capacity exceeded 2.5% of peak electric demand. (Note that the metric for the system cap changed from peak electric demand to total annual kWh).

    • 06/26/2015 by Achyut Shrestha

      S.B. 2420 enrolled on June 25, 2015 authorizes Board of Public Utilities (BPU) to limit net metering to 2.9% of the total annual kWh sold in the State by each electric power supplier during prior one year period. The bill is currently presented before the Governor for approval. There is no current set cap for net metering in NJ, but the statue allows the BPU to limit net metering customers to 2.5% of the peak demand. Total netmetered systems in NJ have long surpassed the 2.5% limit, and BPU has allowed netmetering beyond this percentage.

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