New Jersey commercial property owners provide the space that businesses and organizations need to thrive, making them an integral part of the state’s economy. Given Gov. Phil Murphy’s ambitious plans to source 100% of the state’s energy from renewable sources by 2050, commercial property owners are now integral to transitioning the state to a clean-energy economy. To accomplish this goal in the most cost-effective manner, the administration estimates that 34% of the future energy mix will need to come from in-state solar sources. For context, in May, New Jersey was sourcing 5.1% of its electricity from solar projects.
Therein lies the opportunity for commercial real estate owners: monetizing unused space to host a solar project for an annual lease payment from a solar company that owns and operates the system. Currently, the opportunity for solar leases is limited to community projects but is likely to expand to utility projects. A community solar project is designed to provide power to multiple participants, known as subscribers, through a credit on their utility bill. Subscribers must live in the same town, county or utility zone — depending on the specific project parameters.
Last year, the New Jersey Board of Public Utilities (BPU) completed the first round of a three-year community solar pilot program in which it awarded 45 projects totaling 77.6 megawatts of solar capacity — enough to power an estimated 15,500 homes annually. The application period for the program’s second round will open this fall with awards being announced in December.
Most of the awarded projects will be built on commercial rooftops — bringing millions in additional revenue to New Jersey property owners each year through solar lease payments. Based on CoStar data, New Jersey has more than 700 million square feet of industrial rooftop space on buildings ideally sized to host a large community solar project. If we assume half of the buildings are suitable for solar, New Jersey’s commercial real estate owners could collectively provide enough space to build 3.5 gigawatts of solar capacity, which is enough energy to power around 542,500 New Jersey homes.
In designing the program, BPU envisioned a clean-energy future that takes advantage of the state’s commercial rooftops, parking lots, landfills and brownfields — to bring affordable, pollution-free energy to New Jersey energy users, especially low- to moderate-income households. BPU only awarded projects that ensured 51% of the energy they produced would be provided to low- and moderate-income households. This ensures underserved households and environmental justice communities will save on energy expenses they pay the utility while supporting clean-energy deployment in their communities.
Sen. Troy Singleton wrote in a recent NJ Biz op-ed about the inequities of clean-energy access in New Jersey: “Low-income families spend three times as much on energy bills as a percentage of their income than other households. And air pollution from fossil fuels and other heavy industry has had a detrimental effect on their health. New Jersey’s low-income and environmental justice communities were already living in crisis, well before this pandemic.”
Electricity generation in New Jersey is responsible for 19% of the state’s net greenhouse gas emissions, and also contributes to criteria air pollutants, including nitrogen oxides, sulfur oxides, particulate matter and volatile organic compounds. Electricity generated from natural gas power plants represents nearly all the state’s electricity sector greenhouse-gas emissions. In contrast, solar energy produces zero greenhouse-gas emissions or other criteria air pollutants.
Given the social equity and environmental benefits associated with New Jersey’s community solar program, hosting a project allows commercial property owners the chance to accelerate their own sustainability and environmental, social, and governance goals. By sponsoring a solar project on available roof spaces, unproductive lots or parking lots, commercial property owners are supporting socially and environmentally conscious energy development while receiving the benefit of long-term reliable lease income.
We’re currently leasing commercial roof-tops throughout New Jersey for community solar projects. Contact us today to receive a complimentary lease rate estimate for your facility.