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NJ committee moves to exempt certain solar projects from permitting fees

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Essential Energy Insights - February 2021

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NJ committee moves to exempt certain solar projects from permitting fees

The New Jersey Senate Energy and Environment Committee approved a bill that would exempt solar projects installed on buildings from construction permit fees. Senate bill 607 reinstates an exemption for permitting fees that had been in place under an expired statute from 1985. The exemption would apply to renewable energy systems serving commercial, residential, industrial or mixed-use buildings.

During a June 18 committee hearing, Sen. Bob Smith, one of the co-sponsors of S. 607, said the bill will make it easier for solar companies to do business in the state. Specifically, it would reduce "soft costs," or nonhardware costs such as labor, permitting, financing, taxes and installation costs.

Soft costs account for a growing share of overall solar installation costs as the price of solar cells and panels continues to fall. Between 2010 and 2017, soft costs made up between 59% to 68% of the overall costs to install residential and commercial photovoltaic systems, up from between 33% to 50% in 2010, according to a September 2017 report from the National Renewable Energy Lab.

The bill, which will now move on for consideration by the full Senate, gained support from environmental groups such as the New Jersey Sierra Club and Environment New Jersey.

In opposition was the New Jersey League of Municipalities, which represents the interests of the state's 565 municipalities. "Exempting these fees would have an impact on other fees ... as construction officials rely on these fees to fund what they do," said Frank Marshall, a staff attorney at the New Jersey League of Municipalities, during the hearing. Local officials might charge higher fees on other types of projects in order to make up for exempting fees on solar systems, Marshall said.

A related bill, S. 2716, would address property taxes on renewable energy systems. That bill did not get a vote. Taken together, "it appears these bills would reduce the costs associated with solar installation, and provide some standard way of applying taxation to solar projects," said Dan Whitten, a spokesman for the trade group, the Solar Energy Industries Association, a solar industry trade group. "These are needed and appropriate state-based responses to President Trump's import tariffs."

Planned solar projects took a blow after President Trump in January approved 30% tariffs on imported solar cells and panels in an attempt to deter imports of low-cost Chinese equipment.

New Jersey has just under 2,500 MW of solar installed through April 2018, according to data from the state's regulator, the Board of Public Utilities' Clean Energy Program.