Proposed Programs for the State Energy Program Funds Provided By ARRA

New Jersey’s State Energy Program (SEP) will receive $73,643,000 from the American Recovery and Reinvestment Act (ARRA) to support clean energy efforts in the State.  The SEP, which is administered by the New Jersey Board of Public Utilities, is funded by grants received from the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy.  The grants are used by states to advance their clean energy goals including renewable energy and energy efficiency programs. 

In Fiscal Year 2009, the SEP received $964,000 in funding from the DOE.  Traditionally, the SEP program funds alternative energy research programs at New Jersey’s colleges and universities.  These programs are unable to efficiently absorb any significant infusion of new funding, and directing all such funding to them would be inconsistent with the purposes and intent of ARRA.  Therefore, the ARRA funds will be allocated through other funding mechanisms that can effectively manage the funds and achieve the goals of the SEP.

The goals of the SEP are as follows:

  • Increase energy efficiency to reduce energy costs and consumption for consumers, businesses and government;
  • Reduce reliance on imported energy;
  • Improve the reliability of electricity and fuel supply and the delivery of energy services; and
  • Reduce the impacts of energy production and use on the environment. 

Beyond the traditional goals of the SEP, the ARRA states that funds should be used to:

  • Stimulate the creation or retention of jobs;
  • Save energy;
  • Increase energy generation from renewable sources; and
  • Reduce greenhouse gas emissions.

The ARRA also gives preference to activities that can be started and completed quickly.  The Act includes a goal of using at least 50 percent of the funds made available by it for activities that can be initiated not later than June 17, 2009.  Accordingly, special consideration will be given to projects that promote and enhance the objectives of the Act, especially job creation, preservation and economic recovery.

Consideration was also given to programs that will help New Jersey achieve its energy goals.  These goals, embodied in the State’s Energy Master Plan, include reducing projected energy consumption by 20% by 2020 and increasing the share of renewable energy in the state to 30% by 2020.  Therefore, programs were selected that increase the investment in energy efficiency and renewable energy generation to meet the goals and requirements of ARRA and advance the state’s clean energy efforts.  These programs focus on all energy consumers in the state, from individuals, to businesses, to government.

A majority of the funds, $47 million, is aimed at the private sector.  These funds will be leveraged with private dollars in order to maximize the investment in energy efficiency, renewable energy projects and job creation.

The remaining funds will support state government’s clean energy activities, including those undertaken by colleges and universities.  State government entities have large energy loads that can be extremely inefficient.  That reality coupled with this funding represents an opportunity to realize significant energy savings.  Such investments will reduce state costs, save taxpayers money and create jobs. 

The programs to be funded are as follows:
State Renewable Energy and Energy Efficiency - $20,643,000
The Board of Public Utilities (BPU) will administer a new grant program to enable New Jersey state government entities to invest in renewable energy and energy efficiency projects.  Applications will be reviewed by a team of representatives from the BPU, the New Jersey Economic Development Authority (EDA), the Office of Economic Growth, the Commission on Science and Technology, and the Office of Energy Savings. 

Technologies that qualify for this program include: wind energy, solar energy, biofuels, hydro energy, geothermal projects, and energy efficiency or energy storage applications that are used in coordination with renewable energy technologies. 

Any state department, agency, authority, or public college or university may apply for these funds. 

To be eligible, the applicant must demonstrate that its proposed project can commence work quickly and be completed within a given period of time based on guidance provided by the U.S. Department of Energy (USDOE) and the requirements outlined in the ARRA.  Once the eligibility of the applicant has been established, the following scoring criteria will be utilized to determine projects for funding:

  • 25%:  The use of an innovative technology, or an innovative application of a technology that furthers the goals of the SEP.
  • 25%:  The ability to create jobs.
  • 25%:  Reductions in greenhouse gas emissions.
  • 25%:  The amount of energy created or saved.

The level of the grant for each selected project will be determined by the evaluation team outlined above. 

Clean Energy Program - $17 million
The Clean Energy Program (CEP), administered by the BPU, provides incentives to individuals, businesses and local governments to invest in a variety of clean energy initiatives.  Such initiatives include rebates for Energy Star appliances, incentives for green buildings, and free energy audits.  All programs provided by the CEP are administered on a first-come, first-served basis. 
The CEP is funded by the Societal Benefits Charge, which is a levy on ratepayers’ energy bills by the major utility companies in New Jersey.  Customers of unregulated utility companies or energy providers that do not have this additional levy, such as oil heat customers, are ineligible to participate in the CEP. 
Therefore, the BPU will use these ARRA funds to supplement CEP funds for customers that currently are ineligible for CEP incentives because they do not pay into the Societal Benefits Charge.  These funds will be used to make comparable energy efficiency programs available to customers who fall into this category.  One such program will be the Home Performance with Energy Star program.  This program provides incentives to conduct a whole-building audit, and gives the applicant funding to support up to $1,000 worth of duct sealing in their house.  These improvements will help to expand the universe of customers that can access energy efficiency resources in the state. 
In addition, the BPU will consider further expansions to its Clean Energy Program that make it easier for other classes of customers to invest in energy efficiency.  This will include:
  • Increased energy efficiency incentives for residential customers that do not qualify under the HMFA program described below.  This increase could include an expansion of the Home Performance with Energy Star Program outlined above. 
  • Increased energy efficiency incentives for community based organizations, such as food banks, homeless shelters, and hospitals.  This increase could include an expansion of the Municipal Audit Program that makes energy audits available to local municipalities. 
  • Increased energy efficiency incentives for commercial and industrial customers whose capacity is greater than 200 KW.  The Pay for Performance program is one program that will be considered for an increase in its incentive levels.  The Pay for Performance program provides performance-based funding incentives for large commercial and industrial customers that participate in the program and implement whole-building measures that reduce their total energy consumption.
Innovative Energy Projects for New Jersey Businesses - $15,000,000
The New Jersey Economic Development Authority (EDA) will administer a new competitive program to provide financial assistance to businesses in New Jersey that are pursuing innovation in energy efficiency, renewable energy or alternative energy.  The program is specifically designed to push clean energy technologies beyond conceptual stages of development and into the marketplace.  Technologies such as energy storage, geothermal, biofuels and innovative uses for solar energy projects will be supported under this program. 

To be deemed eligible, applicants must demonstrate private funding and prove that their project can commence and complete work within a given period of time.  This determination will be made by staff at EDA based upon program rules provided by the USDOE and the requirements outlined in the ARRA cited above. 

Once applicant eligibility has been established, the following scoring criteria will be utilized to determine which projects to fund:

  • 25%:  The use of an innovative technology, or an innovative application of a technology that furthers the goals of the SEP.
  • 25%:  The ability to create jobs.
  • 25%:  Potential reduction in greenhouse gas emissions.
  • 25%:  The amount of energy created or saved.
No project will receive support for more than 50% of the total cost of the project. 
HMFA Residential Energy Efficiency - $8 million
The New Jersey Housing and Mortgage Finance Agency (HMFA) works to increase the availability and accessibility of safe, decent and affordable housing to families in New Jersey. As part of this effort, through its Green Homes Office, the HMFA is developing programs that aid in the development of sustainable and energy efficient affordable housing. Their efforts have included financial incentives to developers and property owners to include green building design and solar energy projects for their affordable housing units.

Continuing with this effort, the HMFA will administer a low-interest loan program to single-family and multifamily property owners to make energy efficiency upgrades to their buildings. The interest for these loans will not exceed 3%. CEP incentives will be used to offset the costs of the upgrades, and the HMFA loan will fund the remainder.

These loans will only be made available to:
Households that are at or below 250% Area Median Income:

  1. The higher of Statewide1 or County2 median income, based on a family of four.
  2. Owners of multifamily buildings that meet HMFA’s affordability requirements.
  3. Households or affordable multifamily building owners that are not eligible for other equivalent financing offered by the utilities.

To ensure strong participation in the program, the HMFA will work with the BPU and the electric and gas utility companies to market this program.

HMFA Solar Fund Program - $7 million
Expanding on the efforts of the Green Homes Office and the energy efficiency program above, an additional $7 million will be allocated to the HMFA to supply grants for the construction of solar energy projects on income qualified multifamily buildings across the state. These grants will fund the remaining cost of the solar array, after the federal investment tax credit and any state rebates have been collected. In exchange for the grant, the HMFA will own all of the Solar Renewable Energy Certificates (SRECs) that are generated from the system. These credits represent the clean energy attributes of solar energy and are required to be purchased annually by electricity suppliers to meet their solar energy requirements. The revenue from these SRECs will establish a revolving funding program at the HMFA to support additional solar energy projects at its residential properties.

The HMFA will work with its building owners to identify the best sites for the installation of these solar energy arrays. As part of this criterion, the HMFA will take into consideration the following:

  • the age of the roof; and
  • the structural characteristics of the property that may impact its ability to be a good candidate for solar energy, such as shading concerns.
Projects that maximize job creation, generate energy, provide a benefit to the residents of the property, and show an ability to complete the project within the timeframe specified by the HMFA in consultation with the BPU will be given priority status.
New Jersey Office of Energy Savings - $6,000,000
The Office of Energy Savings is charged with reducing state government’s energy consumption and lowering its energy costs.  It performs energy audits on state-operated buildings in order to identify opportunities for energy efficiencies.  It prioritizes the buildings that consume the greatest amount of energy first, and makes capital investments to those facilities.  Its current annual budget is $10 million dollars.

Candidates for upgrades include any building owned by the Treasury Department; for example, state-run medical facilities, prisons, and office buildings.

Based on their energy audits, the Office of Energy Savings prioritizes specific projects that maximize the following:

  • The number of jobs created;
  • Project readiness;
  • Expected savings in energy costs; 
  • Expected annual energy reductions;
  • The amount of greenhouse gas emission reductions;
  • The public benefit of the improvements.

The return on investment is realized by those who use the facilities and by taxpayers through consistently lower energy bills for the state.

1$81,800 = 100% AMI. $204,500 = 250% AMI
2Ranges from $85,000 to $96,700 at 100% AMI (250% AMI = $212,500 - $241,750)