Increasing Commercial Property Revenue with the New Jersey Community Solar Energy Program (CSEP)
If you’re a commercial property owner, there’s never been a better, and more lucrative time, to get into solar. The industry has conquered the split incentive problem to make renewable energy financially beneficial for both tenants and landlords, and the government has created the proper incentives to encourage adoption. While your public policy mileage may vary bny area, commercial properties in the Garden State can take advantage of upcoming re-opening of the New Jersey Community Solar Energy Program (CSEP) to bring solar on-site, offer discounted energy to their tenants, and increase their revenue in the process. Heres how:
What is the New Jersey Community Solar Energy Program (CSEP)?
Recently expanded by Governor Phil Murphy, the New Jersey Community Solar Energy Program seeks to increase the amount of solar energy generated in the state. In doing so, New Jersey hopes to accelerate its clean energy transition and meet its goal of having 50% of its energy come from renewable sources by 2030. The state looks to commercial properties to help them generate enough MWh to meet that need. Their flat rooftops save open space in urban communities, generate energy close to where it’s used, and allow for easy installation, making them the perfect location for solar infrastructure. To encourage adoption by commercial property owners, the state of New Jersey offers a REC (Renewable Energy Credit) as a part of their SuSi program to provide an incentive for every megawatt hour generated. This tax incentive accrues over time and holds a fixed 15 year-long value, helping commercial property owners recover some of the investment of installation and maintenance in the long term. By December 2023, the New Jersey Community Solar Energy Program received over 300 applications from commercial developers totalling more than 300 potential MW of solar capacity for the state’s utilities: PSEG, JCP&L, Atlantic City Electric, and Rockland Electric. These community solar projects will go to serve their local communities, particularly low and moderate-income subscribers. While the state closed the previous application, the Board will open a new Community Solar Energy Program capacity block for an additional 225 MW of community solar on June 1, 2024. This period will allow developers to submit new applications for proposed commercial projects for 2025.
How Does This Benefit Commercial Property Owners in New Jersey?
Commercial Property Owners in New Jersey can benefit from the Community Solar Energy Program by installing solar on their unused roof space to increase their revenue. But, while paying to create and manage their own solar system may seem unrealistic to some, developers have found a better way to bring systems to commercial buildings: roof rental programs. Instead of complicated revenue share agreements or REC incentives, solar partners rent your unused commercial roof space and install a solar system—covering all costs. They handle the process end to end: submitting the applications, working with the utility, coordinating equipment, and servicing the panels for their lifespan. In exchange, the solar partner pays monthly rent to the property owner based on the square footage of the system. With programs like the New Jersey Community Solar Energy Program, the increased demand means larger systems, more square footage, more monthly roof rent, and increased revenue for owners. This added rent also increases the commercial property’s rent roll and net operating income, raising its value in the process. Owners see more revenue from unused space, the community gets discounted energy, and the building’s tenants and common areas get discounted solar energy. Plus, there’s never any added costs or property tax concerns.
Why is New Jersey a Good State for Solar?
New Jersey is a very favorable state for both personal and commercial solar—and it’s seeing significant investment as a result. The state ranks 7th in the nation for cumulative solar capacity and has seen $14.8 billion in solar investment, an impressive feat given its smaller size. The primary factors for New Jersey’s success in solar are:
Forward-Thinking Solar Policies
When New Jersey set its ambitious sustainability goals, their policymakers knew the state needed strong solar incentives and programs to achieve them. They enacted policies to make it easier, affordable, and practical for developers to build large-scale solar installations. In 2004, New Jersey rolled out its first incentive program promoting the use of SRECs (Solar Renewable Energy Credits) to encourage development from both commercial properties and homeowners. The program ran until 2020, when it was replaced with a slightly altered Transition Incentive Program and now the current, long-term Successor Solar Incentive Program (SuSI). The current iteration offers fixed incentives based on MW generated for community solar projects. They also require electricity suppliers to purchase these credits to meet targets or they face a stiff penalty. In addition to the SuSi Program, New Jersey also independently invests in green public works like PSEG’s Solar 4 All project. The program repurposed unused public space like landfills, public school rooftops, and light poles for solar projects to increase the states output.
High Utility Rates
New Jersey also has some of the higher energy rates in the country, giving their investments in solar a greater urgency. The average residential electricity rate in New Jersey is around $0.17 per kWh and is more expensive than over half of US states. The state also has a deregulated energy market with a complicated network of utilities and third-party energy suppliers. Designed to offer competition, each option has varying pricing and service models, making it difficult to find the best price for energy.
Positive Solar Irradiance
Believe it or not, New Jersey also receives enough sunshine to make solar a viable energy option for the state. On average, it’s expected to receive over 200 sunny days in a calendar year. In addition, while it ranks a lowly 34th in the sunniest states category, solar panels in New Jersey will still generate power while it’s cloudy or snowing—albeit at limited rates. This makes energy storage, like an onsite solar battery, more important for New Jersey buildings using renewable energy on site.
How do I Join the New Jersey Community Solar Energy Program?
If you’re a commercial property owner looking to join the New Jersey Community Solar Energy Program, your first step is to contact a solar developer like King Energy. These partners have the experience needed to streamline the process and build a successful solar program. To start, the developer will perform a site evaluation to determine whether your building is a good fit for a solar program. Developers like King Energy will often conduct a virtual evaluation, using modeling software to evaluate sun patterns and infrastructure to maximize the efficiency of your system. With this information in hand, the developer will propose a roof rental lease, typically 20 years with increasing steps to account for inflation. Some developers make it simple and use a lease that looks a lot like the standard triple net lease used with other retail tenants. If you engage with the developer, they’ll handle the system end to end, covering maintenance, cleaning, servicing, and more, and you’ll see increased long-term rental income over the lifespan of the system. You can invest that additional income to renovate the property, leverage it to access capital, or simply watch it accrue. For commercial property owners in New Jersey, the Community Solar Energy Program offers nothing but upside: better power, stronger communities, and increased revenue. And, when purpose, policy and profit align, everyone wins. Increase your revenue with New Jersey’s CSEP. Contact King Energy