New Jersey’s Renewable Portfolio Standard (RPS) is intended to increase use of renewable resources in the state by establishing the minimum amount of renewable energy that the state’s electricity providers must sell in a given year. This legally-established renewable energy procurement goal gradually increases over time to meet the overall target of 20.38% renewable power by 2021.
The state profile below explores the design of this policy, highlighting the factors that influence the success of New Jersey’s RPS goals and the tradeoffs inherent to it. Once you’re comfortable with the information on this page, you can evaluate the policy’s expected viability with the RPS Feasibility Calculator. You can also use the calculator to change the policy requirements, trajectory, cost cap, and more, to see how altering New Jersey’s policy design affects its success.
- 20.38% of the state’s energy consumption must be from renewable sources by 2021, subject to the cost cap
- Carve-out for solar, with additional offshore wind (no timeline)
- Implicit ‘cost cap’ defined by compliance payments
Carve-outs can create economic opportunities in the state by introducing new or promising technologies into the market. However, these standards limit the utilities’ ability to substitute between renewable energy sources, potentially increasing the cost of the policy. New Jersey requires that 4.1% of retail sales must come from solar electric generation by 2027/28 (included in the Class I portion of the requirement; see ‘Statute’ section below for details). 1,100 MW of offshore wind is also included, although there is not currently a schedule for its inclusion. The offshore provision will count towards Class I generation and will not add to the total RPS goal.
Compare the goal established in the RPS to what is being achieved.
The following chart compares the variety of sources currently used to generate New jersey’s electricity. The color of each bar is indicative of the carbon intensity of each source.
Cost Cap Details
If an electricity provider is not in compliance for a given year, they must submit an alternative compliance payment (ACP) or solar alternative compliance payment (SACP) equivalent to the total number of RECs and/or SRECs required. The BPU set the price of ACPs at $50/MWh in 2004, where it still remains. The Board also set a schedule of SACP prices from FY2008-FY2016 (FY2014 is $625/MWh) (§ 14:8-2.10). This established ‘penalty’ acts as a cost cap. A more conventional cost cap exists for the solar carve-out. This technology requirement is frozen if the price of solar exceeds a 2% increase over the retail rate.
Historic retail prices (¢ / kWh)
The above chart presents historical data from the Energy Information Administration (EIA) on the price at which residential customers can purchase electricity. Typically, states set explicit cost caps relative to the retail price (as opposed to the lower wholesale price).
Established in 1999, New Jersey’s Renewable Portfolio Standard (RPS) was last updated in July 2012 by S.B.1925. This law requires all investor-owned utilities and retail suppliers in the state achieve the goal of 20.38% of retail sales from renewables by 2020. This goal is divided into two portions: Class I (including solar, wind, tidal and geothermal) and Class II (including hydroelectricity) renewable energy. 17.88% of retail sales must come from Class I by 2020/21 and 2.5% from Class II. The RPS program is administered by the New Jersey Board of Public Utilities (BPU).
RPS Technical Details
(Class I) Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Municipal Solid Waste, Anaerobic Digestion, Tidal Energy, Wave Energy, Fuel Cells using Renewable Fuels
(Class II) Hydropower larger than 3 MW and less than 30 MW
|Geographic Eligibility||RECs and SRECs may be used as long as the energy was generated wihin or delivered into the PJM region. For energy generated outside of the PJM region but delivered into it, the generation facility must have been constructed after 2002.|
|Percent of Total Load||98.3%|
|Technology Requirements||Solar-Electric—4.1% by 2028|
|Sectors||Investor-Owned Utilities, Retail Suppliers|
|Penalty||ACPs/SACPs must be purchased for any portion of the unfulfilled requirement at a constant $50/MWh; $625/MWh for solar (on a decreasing schedule approaching $239/MWh in 2028)|
Tools and other links
- Database of State Incentives for Renewables & Efficiency (DSIRE) RPS data page—Datasets available for download in .xlsx format
- National Renewable Energy Laboratory (NREL) Energy Analysis Portal—Resources on renewable energy policies, and interactive web tools
- Energy Information Administration (EIA) U.S. Energy Mapping System—An interactive energy resource map with a myriad of data layers to explore
- DSIRE State RPS Page—Visit for detailed information on RPS and complete legislation
- New Jersey’s Clean Energy Program—RPS Regulations
- U.S. Department of Energy Office of Energy Efficiency and Renewable Energy (EERE)—State Profile—Access your states EERE page, and find information on renewable resources maps, energy statistics, and news