New Jersey Legislative Efforts to Promote Alternative Energy

May 8, 2010
Client Alert Newsletter May 2010

Under New Jersey's renewable portfolio standard, the State mandated that 20 percent of its energy will be renewable by 2020. With that commitment as a backdrop, New Jersey Governor Chris Christie has described building the State's energy industry as one of his administration's top priorities. To make New Jersey a “magnet for renewable energy manufacturers,” Governor Christie has called for tax incentives for clean energy manufacturers and regulatory changes to streamline the permitting of alternative energy projects. A recently passed bill and several pending pieces of legislation reflect the New Jersey Legislature's similar focus on increasing alternative energy incentives and removing current obstacles to renewable energy development.

On April 22, 2010, the Governor signed into law a bill exempting solar panels from being calculated as an impervious surface for purposes of regulations governing municipal land use, stormwater management, coastal and waterfront development, and Pinelands and Highlands activities. The law, which enjoyed notable bi-partisan support, removes a significant impediment to solar power projects because the prior regulatory framework frequently limited the total amount of land that could be developed with impervious surface. Where the full square footage of solar panels could previously be considered impervious, the new law exempts all but the base or foundation of a solar panel from the impervious designation, enabling the installation of elevated solar panels more widely in New Jersey, and potentially easing the permitting requirements facing solar projects in certain areas such as the Pinelands.

Legislation currently pending in both the New Jersey Senate and Assembly could further promote alternative energy development by joining New Jersey with other states including California, New York and Colorado in enacting a "Property Assessed Clean Energy" or "PACE" program. The proposed PACE program in New Jersey would create a financing mechanism for municipalities wishing to facilitate the purchase of solar energy systems by homeowners or groups of property owners. Through PACE programs, renewable energy improvements are typically funded by taxable municipal bonds or other municipal debt, repaid by the property owner over an extended period of time through a special assessment charged to their property tax bill. By enabling property owners to pay for renewable energy projects through low, fixed assessments spread out over years, PACE programs greatly reduce the upfront capital requirements that frequently deter homeowners from solar panel installation. The pending PACE program legislation sponsors include Senator Bob Smith, Chair of the Senate Environment and Energy Committee where the Senate bill is currently being considered.

On May 13, 2010, the Senate Environment and Energy Committee considered the referenced legislation and heard testimony from the New Jersey Department of Environmental Protection Commissioner Robert Martin on the State's environmental priorities. Like the Governor, Commissioner Martin expressed support for continued prioritization of alternative energy development and for additional energy-oriented legislation, citing the Department's work on legislation to help the financing of offshore wind energy projects as an example of its recent activities and accomplishments.