Beyond Solar: New Jersey’s Commitment to Renewable Energy
Lisa Bromberg and Steven Gouin
Faced with an overburdened power grid, rising energy prices, and a distressed economy, New Jersey is moving forward with an ambitious plan to implement a state-of-the-art renewable energy infrastructure. The goal is cheaper, cleaner, and more reliable energy. At the same time, the state government hopes to fuel a much-needed economic recovery by creating new jobs that will be relevant for years to come. By being proactive, New Jersey has emerged as a nationally recognized leader in solar power development. However, while solar power gets most of the media attention, its large-scale production remains costly. Because of the high costs, New Jersey is currently promoting many other forms of renewable energy. The following is an overview of the various opportunities, beyond investment in solar power, available to New Jersey’s business community.
In October 2008, New Jersey promulgated an Energy Master Plan that committed the State to an aggressive energy policy including wide-spread implementation of alternative energy technologies. Under the plan, twenty-percent of New Jersey’s energy demand must be provided by alternative energy sources by 2020. In addition, greenhouse gas emissions must be reduced to 1990 levels by 2020. The intent is to provide reasonably priced and reliable energy to the state’s homes and businesses. To that end, if the plan is followed, New Jersey’s homes and businesses stand to save more than $30 billion in total annual energy expenditures between 2010 and 2020.
To facilitate the plan’s goals and encourage investment in renewable energy, the state government, in partnership with the New Jersey Economic Development Authority, has made various tax credits and funding sources available. Under the American Reinvestment and Recovery Act, New Jersey has access to $73 million in federal grants to be devoted to renewable energy projects. The state is considering various approaches concerning how the money should be spent to ensure the funds achieve the highest possible energy efficiency and conservation benefits.
Already, New Jersey has instituted a Renewable Energy Incentive Program designed to improve the financial returns of renewable energy investments by offsetting the upfront costs of system installation. In addition, the Economic Development Authority has created Clean Energy Solutions, a suite of financing programs including interest-free loans and grants aimed toward commercial, industrial and institutional entities promoting the transition to renewable energy. Moreover, manufacturers of certain renewable energy or energy efficiency systems, products, or technologies may be eligible for up to $3.3 million in grants and interest-free loans through the Edison Innovation Clean Energy Manufacturing Fund. Finally, the Advanced Energy Manufacturing Tax Credit, a federal program, allows a taxpayer to obtain a tax credit equal to 30% of taxpayer’s investment in any qualified energy project. Such projects include geothermal, energy, fuel cells, grids to support the transmission of renewable energy and carbon capture devices.
In addition to those funding sources, many tax incentives have already been implemented and more are pending. For instance, New Jersey corporations may receive a credit of up to ten-percent of the cost for qualified geothermal property or up to 30% of the cost for qualified fuel cell property, qualified small wind energy property, or solar equipment. Further, the New Jersey Energy Production Tax Credit is an income tax credit based upon the amount of electricity produced from renewable resources including trash, biomass, wind, wave, geothermal and hydropower.
Companies interested in becoming involved with wind power generation may take advantage of New Jersey’s Wind Manufacturing Tax Credit, which affords tax benefits up to $100 million after an initial investment of $50 million and the creation of 300 new full-time jobs at a facility located within a qualified wind energy zone. Though not yet passed, a bill that would give businesses a reusable, fifty-percent corporate income tax credit to offset expenses incurred in purchasing or installing renewable energy systems has been introduced in the State Assembly.
As discussed above, these funding programs and tax incentives have aided New Jersey in becoming a national leader in solar power development. However, New Jersey’s renewable energy future will not be limited to solar power. A bill recently passed by the State Assembly would change the definition of “renewable energy source” to include green technologies such as fuel cells, nuclear power, and clean coal in addition to solar power, biomass fuels, and wind generation. Approximately one year ago, the state legislature passed a law allowing preserved farmland, normally deed-restricted to agricultural use, to be used for the installation and operation of biomass, solar, or wind energy generation facilities. Another new law prohibits municipalities from adopting ordinances that unreasonably limit the installation or performance of small wind energy systems. This past June, New Jersey, along with nine other East Coast states and the federal government, formed the Atlantic Offshore Wind Energy Consortium, a cooperative effort aimed at establishing commercial wind power development off the Atlantic coast.
A large-scale, inter-coastal wind generation facility may become a reality sooner than one might think. Notably, on August 19, 2010, Governor Christie signed the Offshore Wind Economic Development Act. Designed to spur the development of offshore wind energy, the Act establishes an offshore wind certificate program and makes financial assistance and tax credits available for businesses involved in the construction and manufacturing of qualified offshore wind projects.
More importantly, development of the East Coast’s largest (and only) off-shore electric grid is already underway. A group spearheaded by developer Trans-Elect and internet giant Google wants to launch the first stage of a $5 billion off-shore wind project off the coast of Atlantic City. This first of three stages would begin in 2013 and stretch between Atlantic City and Rehoboth Beach, Delaware. Eventually, transmission lines harnessing as much power as nine nuclear power plants would stretch from the New Jersey Coast to Norfolk, Virgina. Unlike other proposed grids, the massive project would be based on DC, rather than AC, power, meaning the turbines could be moved farther out to sea and away from public view. Electric companies PSE&G and Fishermen Energy have already committed to building off-shore wind farms and will potentially tap into Trans-Elect’s grid. If all goes well, New Jersey could be the first to develop a major offshore wind industry that will attract new factories and jobs all along the East Coast. Overall, the project has received a great amount of praise, including the endorsement of Secretary of the Interior Ken Salazar.
The New Jersey Legislature aims to pass legislation that will allow for shore-bound wind farms as well. On August 26, 2010, the State Senate unanimously passed legislation aimed at opening access to old landfills and quarries for developing renewable energy facilities. The bill would permit the construction of wind turbines on dozens of uncapped landfills. Additionally, the bill would allow development of renewable energy facilities in areas preserved under the Pinelands Comprehensive Management Plan. This includes nearly 80 unused landfills, only two of which have been capped. The bill was received in the State Assembly on September 13, 2010 and is working its way through committee.
New Jersey is committed to a future that includes an efficient, cheap, clean, and accessible renewable energy system. While the State is spearheading the effort, it needs private sector partners to make this goal a realty. Working together to create a renewable energy grid, New Jersey’s public and private sectors can transform the state’s energy marketplace and, in so doing, generate long-term environmental and economic benefits.
Ms. Lisa Murtha Bromberg is a principal and Mr. Steven P. Gouin is an associate in the Environmental Law and Litigation practice group of Porzio, Bromberg & Newman P.C. in Morristown.
