Eligibility for Section 1603 Payments Set to Expire Soon

A recent Reuters article succinctly summarizes some of the chief arguments in support of extending the Section 1603 Renewable Energy Grant Programs that were, arguably, the driving force behind the burgeoning alternative energy development of the past couple of years.  While the tax credits for constructing qualifying projects will not expire until 2016, the renewables industry benefits from the almost immediate grants that can be used to fund project costs.  Barring an extension, this industry-driver will expire in about six weeks. 

Financial Incentives for Solar Energy - Section 1603 In a Nutshell

By now, much has been written about the American Reinvestment and Recovery Act of 2009.  In fact, this legislation has spawned such abbreviations and acronyms such as:  ARRA, the Recovery Act, or quite simply, the "Stimulus".  Whichever your preference, the purposes of this legislation included the preservation and creation of jobs, the promotion of economic recovery in the near term, and the investment in infrastructure that will provide long-term benefits. 

Of the Recovery Act's initiatives, most people are familiar with the $8,000 homebuyer credit that just expired on April 30, 2010 or a deduction for sales taxes on qualifying new car purchases.  For the real estate development community or proponents of renewable energy, one of the Recovery Act's mandates has generated (no pun intended) little press but packs a big punch. 

Section 1603 of the Recovery Act appropriated grant monies to reimburse qualified applicants for up to 30% of the construction costs for specified renewable energy property.  Provided that the property is placed into service by the termination date provided in the Recovery Act, the Treasury Department will pay the credit amount to applicant within 60 days of the date the application is deemed complete.  Applicants can also assign their rights to the payment to a bank or financial institution. 

But, the window is rapidly closing on this extraordinary financial opportunity.  The application filing deadline expires on October 1, 2011.  However, construction on a project must commence in 2010 in order to qualify for the Section 1603 payment, even though the application may not be submitted. 

Constructing Solar Panels On Capped Landfills - Can You Turn a Negative into a Positive?

Several South Jersey communities are exploring the feasibility of solar panel projects on land formerly used as landfills. In a time of economic downturn, the notion of “turning lemons into lemonade” can take on many faces. Although the headlines have been dominated recently with health care related issues, energy issues and the “Green” movement appear to have some staying power. While constructing solar panels is believed to be a viable source of alternative energy, obtaining an approval from the state and local governments for such facilities is not without its challenges. Navigating the extensive regulatory landscape governing solar energy is a delicate balance of public and private concerns. The tightening of the credit markets over the past year has diminished the available capital for such projects; however with care and consideration a project may qualify for grants and incentives from state and federal agencies.

The Borough Council of the Borough of National Park (Gloucester County) recently passed a resolution designating a prospective redeveloper of a closed landfill on property formerly utilized for the disposal of demolition material and local household waste. The parcel is the only undeveloped tract of land in National Park Borough.   As noted by the article published in the August 23, 2009 edition of The Gloucester County Times, although the project is in its infancy stages it appears to have the support of the local community.  According to the proposal submitted by Westfield Energy, the prospective redeveloper, the former landfill could eventually house a 30-acre field of solar panels as well as over 130,000 square feet of office and retail space with an increasing focus on environmentally sustainable buildings.  

It is noteworthy that last fall, Governor Corzine unveiled New Jersey’s latest Energy Master Plan which would provide the blueprint for the state’s energy policies for the next decade. If you need a crash course or even a refresher, follow this link and continue to the bottom of the page for an article by Steven Goldenberg, Esq. of Fox Rothschild LLP which was published in the June 2009 edition of the Mercer Business Journal

 

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New Law Authorizes "Green" Building Code

On August 6, 2009, Governor Jon Corzine signed into law legislation that authorizes the incorporation of “green building” requirements into New Jersey’s Uniform Construction Code

P.L. 2009, Ch. 106 (the “Act”) authorizes the Commissioner of Community Affairs to amend the Uniform Construction Code’s energy subcode to establish enhanced energy-saving construction requirements, which requirements “may exceed the requirements of national model codes.”

While the Act specifically adds the International Energy Conservation Code as one of the model code alternatives to be used as a basis of the energy subcode (thus ensuring that the State’s code will be based on national standards), it also provides that the Commissioner may amend or supplement this energy subcode at any time, although only once, prior to 2012. 

In amending the subcode, the commissioner must rely upon 10-year energy price projections provided by an institution of higher education, and the added costs of such construction requirements must be “reasonably recoverable” through energy conservation over a period of not more than seven (7) years. 

Legislation in support of Solar and Wind energy

The New Jersey Legislature has passed and is considering a number of bills to promote and facilitate the siting and development of solar and wind energy systems. They are Senate bills 1299, 1303 and 2528. S1299 permits the location of cetain renewable energy facilities in districts zoned for industrial use. A  "renewable energy facility" is a facility that engages in the production of electric energy from solar technologies, photovoltaic technologies, or wind energy. Under the bill which became P.L. 2009 c. 35, a renewable energy facility is a permitted use in all industrial zones in every municipality provided the land consists of at least 20 contiguous acres. S1303 would make wind, solar or photovoltaic energy facilities "inherently beneficial uses". The bill if passed would have the effect of having all renewable energy facilities satisfy the positive criteria for the grant of a variance under N.J.S.A. 40:55D-70 and thereby facilitate such facilities siting and location throughout New Jersey municipalities. S1303 has passed the Senate and has been favorably reported out of committee in the Assembly. S2528 provides for the regulation of small wind energy systems and prohibits municipalities from adopting ordinances or resolutions that unreasonably limit or hinder the installations of such systems. Small wind energy systems are those that generate power that is to be used primarily for on-site consumption.  Prohibitions in the proposed bill include: (i) prohibiting small wind energy systems in all districts; (ii) restricting tower height that does not address the typical tower height required for such systems; (iii) requiring a setback from a property boundary that is greater than 150 percent of the system height; and (iv) setting a noise limit lower than 55 decibels at the site property line. S 2528 was introduced February 2, 2009. These bills demonstrate that our legislature understands the importance of promoting renewable energy and green building initiatives.    

LEED 2009 Requires More Bang for Your Buck

LEED 2009 was rolled out by the U.S. Green Building Council this week. The new rating system seeks to do the following

  • make credits and prerequisites consistent across all commercial and institutional rating systems,  LEED commercial and institutional rating systems,
  • weight points based on the environmental impact each strategy will make on the project, and
  • incentivize the achievement of credits that address geographically specific environmental priorities. 

In essence, LEED 2009 now requires developers to earn more bang for their buck. Points are no longer awarded in a vacuum. Instead, the weighted point system ensures each building being certified meets a certain level of positive environmental impact. It should come as no surprise that the most heavily weighted credits are those involving energy use and CO2 emission.

 

The most interesting change (in this humble blogger’s opinion) is the new geographical bonus points. Previous versions of the LEED rating system did not take into consideration the geographical region of development. Each credit was awarded equally whether the project was located in downtown Los Angeles or located in downtown Denver (aside from certain Sustainable Site points for proximity to mass transit stations, density, etc). 

 

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All Hands on Deck! Northeast Energy Efficiency Partnership, Inc. Releases a Report Commenting on New Jersey Energy Master Plan. New Jersey is Primed to Plant Itself as one of the Leaders of Energy Efficient Buildings, but at what cost?

On April 16th, the New Jersey Board of Public Utilities accepted the Northeast Energy Efficiency Partnerships, Inc.’s (“NEEP”) report entitled “An Energy Efficiency Strategy for New Jersey, Achieving the 2020 Energy Master Plan Goals. This report advances an ambitious agenda proposed by NEEP characterized by its statement that “an all-hands-on-deck approach” will be required to achieve the 2020 energy consumption reduction goals proposed by Governor Corzine’s Energy Master Plan. The NEEP report outlined ten strategies to direct New Jersey towards a path of a “new more sustainable energy future.”

In delivering its report, NEEP focuses on the N.J. Energy Master Plan’s goal to “place New Jersey at the forefront of a growing clean energy economy with aggressive energy efficiency and renewable energy goals and action items, and the development of a 21st Century energy infrastructure.” Accordingly, the EMP proposes a reduction in projected energy demand by 20% in 12 years. The report predicts that New Jersey residences, businesses and institutions will realize collectively $16.8 billion in net savings by 2020. However, there will be an investment of $11.2 billion representing funds collected through the BPU rate structure and other sources, and $4.4 billion of direct investment by residents and businesses.

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