Allows value of SREC-IIs to be included in cost-benefit calculations under energy savings improvement programs.

2026-2027 Regular Session Introduced by Linda Greenstein and 1 co-sponsor

The bill allows SREC-II values to be included in ESIP savings calculations to determine if energy projects can self-finance through projected savings.

Referred to Senate Budget and Appropriations Committee

Bill overview

S 4061 (Session 222, New Jersey) amends the energy savings improvement program (ESIP) authorized for boards of education under P.L.2009, c.4. The core change is to allow the value of Solar Renewable Energy Certificates—specifically SREC-IIs—to be included in the calculation determining whether the anticipated energy savings from an ESIP will be sufficient to cover the program’s energy conservation measures.

Main purpose and intent

To align ESIP savings calculations with current renewable energy economics by recognizing the value of SREC-IIs as part of projected savings.

To ensure that the aggregate savings, rebates, tax credits, and SREC-II value are considered when evaluating whether an ESIP can self-finance through realized energy savings.

Key provisions and changes

Section 1 of the 2009 ESIP statute (C.18A:18A-4.6) is amended to include in the energy savings calculation:

The current value of a SREC-II, defined under P.L.1999, c.23 (C.48:3-51).
Rebates and tax credits must still be included, but the energy audit and savings verification costs are excluded from the savings calculation.

The bill retains the existing ESIP framework:

ESIP may be financed via lease-purchase agreements or energy savings obligations.
Provisions for cost recovery through expected energy savings, with requirements for verification, open bidding, and compliance.

Public contracting and workforce rules remain in place:

Public bidding requirements apply to public works activities, with classification and prequalification standards for workers and subcontractors.
Prevailing wage requirements and Public Works Contractor Registration apply to subcontractors.

Governance and oversight:

Verification by a qualified third party is required at key milestones (e.g., post-project commissioning).
The Board of Public Utilities (BPU) posts the energy savings plan; the plan includes audit results, risk assessment, and cost-savings projections.

Adjustments related to SREC-IIs:

SREC-IIs are explicitly allowed to be used in the savings calculation, while other environmental attributes tied to renewables are not included in the savings calculation (beyond SREC-IIs).
Standards for interest rates, escalation, life-cycle cost analyses, and net present value formats are to be set by the BPU.

Who is affected

Boards of education (local, regional, consolidated, vocational, and charter school boards) authorized to participate in ESIPs.

Energy services companies (ESCOs) engaged to develop and implement ESIPs.

Public contracting and procurement personnel, including the Division of Property Management and Construction.

The Board of Public Utilities (regulatory oversight and posting of plans) and the Directorates of Local Government Services and the State Treasurer (guidelines and rules).

Procedural and timeline aspects

Effective date: immediate upon enactment.

Process flow remains: audit, plan development, third-party verification, procurement, implementation, commissioning verification, and ongoing reporting.

BPU approval/availability of SREC-II value is incorporated into the savings calculation framework; specific standards to be set by the BPU.

Potential impact

By recognizing SREC-II values, ESIPs may demonstrate sufficient cost savings more readily, potentially enabling more districts to finance energy projects self-sustainably.

Maintains rigorous public procurement, wage, and verification safeguards.

Provides a clearer framework for incorporating renewable energy certificate value into long-term ESIP finance and planning.