The New Jersey Board of Public now WAIVES the requirement of N.J.A.C. 14:8-2.3(a) that the percentage of the electricity sold for EY 2026 that must come from Class I renewable energy sources increase from 35% to 38% and ORDERS that the RPS Class I REC requirement for EY 2026 shall remain at 35%.
The Board of Public Utilities froze the amount of Class 1 RECs procured in energy year 2026 at 2025 levels starting June 1, 2025. The schedule for Class 1 compliance was scheduled from 35% to 38%. The law calls for Class 1 compliance for New Jersey to increase to 50% by 2030.
Class 1 compliance is satisfied first by RECs from solar sited in NJ. This satisfies about 23%. The remaining 77% are RECs from landfill gas and wind of which 99.6% is procured from RECs from out-of-state. Out-of-state RECs are procured because New Jersey has poor wind resources on land to produce electricity.The majority of RECs are purchased from wind owners in Illinois, Indiana, Ohio and Pennsylvania. In recent years the out-of-state payments have been 300 to 400 million dollar as year. New Jersey ratepayers will pay approximatelly $800 million to $1 billion dollars ($35 to $40 Class 1 Rec Price) when the 50% requirement under law comes into effect in 2030.
Class 1 REC prices have dropped from $35 earlier this year to under $25 at the end of May. New Jersey's law requiring energy providers to produce Class 1 recs is much more stringent than other states in the PJM grid. This in turn has increased Class 1 prices for all other states in PJM especially ones with an RPS such as Maryland, DC Virginia and Pennsylvania. The surprise recommendation by the New Jersey BPU to freeze Class 1 compliance starting in June 2025 is the reason why Class 1 REC prices have dropped 28%.
Finally, Staff recommends a waiver of the provision of the Board’s rules increasing the RPS Class I REC requirement for EY 2026 from 35% to 38%. As set forth above, the Legislature has established as a goal for the State a 50% RPS by January 1, 2030, and the Board has codified in its rules a schedule of gradually increasing RPS percentages as steps on the path to that goal. However, recent developments have impacted both the supply and demand sides of New Jersey’s energy market. Although Staff’s conclusion that the Cost Cap will not be breached means that the Board is not statutorily required to adjust the RPS requirement or take other steps to prevent exceedance of the cap, Staff is concerned about the impacts on New Jersey ratepayers of recent increases in electricity prices and of the contribution of the RPS requirement and the cost of Class I RECs to those costs, and recommends the Board use all available levers to control these costs. The expansion of artificial intelligence and the data centers needed to support it has produced a sharp increase in the demand for energy across the country, including New Jersey. This jump in demand has come at a time when for several years the increase in energy supply, and in particular the increase in RE supply, has been severely constrained. Several factors contribute to this constraint, including in significant part the ongoing interconnection queue delays in PJM Interconnection, LLC (“PJM”).45 As a result of this delayed PJM interconnection process, there is currently a shortage of generation facilities creating energy eligible to serve as the basis for a Class I REC, which has sharply increased the cost of Class I RPS compliance. That cost is ultimately borne by ratepayers, who are also bearing increased costs based on the results of the latest PJM capacity market auction. Although PJM has been making some changes to address these issues following advocacy by the Board and other stakeholders, additional time is needed to see the results of the changes, and action to control costs for ratepayers is needed in the immediate term. It is for this reason that Staff recommends a change to the RPS requirement. Specifically, Staff recommends that, in light of the sharp increase in the cost of Class I RECs and in the context of other energy cost increases, the Board waive its rule that increases the RPS requirement to 38% for EY 2026, allowing the RPS to remain at 35% for the coming energy year. The State would benefit from allowing Class I REC prices stabilize in the near term and take advantage of potentially lower prices closer to the 50% compliance date in 2030. In addition, Staff recommends that the Board direct Staff to conduct a public stakeholder proceeding to examine and, if necessary, recommend changes to the Board’s rules that establish the schedule of increases in the RPS for EY 2027 through 2031.
Solar owners in New Jersey who have already earned SRECs for 15 years generate class 1 RECs. They sell them on Flett Exchange to energy companies who need to procure them to satisfy the 30% Class 1 compliance.
Most ratepayers in New Jersey procure their energy through the annual BGS auction. Each year energy companies compete to provide the lowest price of electricity in this auction. The renewable energy requirements have become a large part of this compliance. According to this BPU report New Jersey ratepayers will pay $1.67 billion dollars in environmental costs. The Class 1 freeze will have very little impact on the price that ratepayers pay for electricity in the next 3 years since these prices were already locked in on previous BGS auctions. The real beneficiaries are the energy companies who are required to purchase these Class 1 RECs. If the 28% drop in Class 1 RECs from the result of this freeze is maintained the energy companies will profit hundreds of millions of dollars. 28% of the 2026 cost as provided in the BPU report would equate to $195 million energy company added profits.
It is expected that future cuts to the Class 1 will happen because it was stated in the BPU report:
The Board, therefore, DIRECTS staff to conduct a stakeholder proceeding to examine the increases in the RPS from EY 2027 through EY 2031 to determine how the cost to the ratepayer may best be mitigated in the achievement of the statutory goal.
New Jersey Class 1 REC prices are expected to continue to drop since buyers will wait for clarity on future requirements.
At the May 21, 2025 New Jersey BPU meeting the Board announced the following:
Class I RPS Target Deferred
The Board confirmed that the Class I Renewable Portfolio Standard (RPS) will remain at 35%, deferring the previously planned increase to 38% in Energy Year (EY) 2026.
New Jersey Class 1 prices have dropped $5 in response.
Class 1 prices probably move off $10 due to this
Class 1 compliance at $35 = $655 million
Class 1 compliance at $25 - $468 million
The BPU just gave the energy suppliers a $187 million windfall since the rates are already locked in under BGS
The decrease should have been put in for energy years 2029 and later to save the ratepayer.
Also, by decreasing the RPS it decreases the chances of energy companies paying the ACP. ACP gets refunded to the ratepayer so this virtually eliminates ACP payments going back to the ratepayer.
The majority of Class 1 payments go to owners of wind farms outside of New Jersey.
Solar owners in New Jersey earn and sell class 1 recs on Flett Exchange after they have outlived their 15 or 10 year life to earn SRECs.
Energy Prices have risen significantly in New Jersey and have become a political liability going into this year's governors election. The Murphy administration had increased the requirements for green energy in New Jersey significantly in the last eight years. New Jersey does not have any significant on-shore wind resources so these requirements force energy suppliers in New Jersey to procure the environmental attributes from wind facilities in other states or pay a fine. These costs have increased utility bills in New Jersey and if not changed may increase costs from the current few hundred million a year to over a billion a year.
The RECs have a price cap of $50 each and in recent years have moved from under $10 to over $30.
A few weeks ago when two bills were introduced in the New Jersey Legislature to decrease payments to New Jersey homeowners and businesses who already invested in solar the class 1 prices started dropping. It has been suspected that the Class 1 requirements to send money to out-of-state wind farms would be decreased before cutting payments to New Jersey residents. It appears that these moves are being taken now.
The BPU has the authority to decrease payments to out-of-state windfarms but a change in legislation is required for them to decrease payments to solar owners.
The 2013 SREC law created a competitive solar renewable energy credit (SREC) program for businesses and homeowners to shift the state’s energy policy from fossil fuel to clean energy. Homeowners, business, schools and municipalities took advantage of this program by purchasing and leasing rooftop solar systems. Payback plans coincide with the ten-to-fifteen-year SREC payment schedule. The legacy SREC program reduces each year and terminates in approximately six years. 121,781 New Jersey Solar facilities rely on the legacy SREC program for payments each month. The Murphy Administration, through the BPU, is calling for legislation to terminate or drastically reduce the legacy SRECs program prematurely in June 2025. This action will shortchange homeowners, schools, public buildings and businesses who currently use SREC revenues to pay down debt service for their solar arrays. Such a reversal in policy diminishes the public’s faith in government and creates significant economic hardship for both solar and non-solar homeowners, businesses, schools and municipalities. Taxpayers will have to pick up the lost SREC revenues needed to pay down public bonds for solar on schools and other public buildings.
Recently introduced S4300 and A5460 would either eliminate the legacy SREC program or drastically reduce the SREC payments in June 2025. This action would raise ratepayer costs $550 million for the next three years and grant an $850 million windfall profit for energy suppliers while reducing or eliminating SREC payments to residents, school districts and municipalities who made this investment.
This proposed legislation would financially impact 116,074 residential solar installations with 48% of homeowners relying on SREC payments for their loans or leases, leaving them with approximately 35% outstanding financial exposure. Additionally, 5,568 business, school, and municipal solar installations would face renegotiated PPAs and budget changes, with taxpayers assuming bond debt service currently covered by SREC payments.
To learn more about the detailed impacts on New Jersey homeowners, businesses, schools, municipalities, and ratepayers click the link for our complete analysis.
New Jersey Class 1 prices dropped $4 in the past week. Class 1 RECs are mostly purchased from out-of-state wind farms in PJM by New Jersey Energy Energy Companies.
Both of these bills were introduced by the legislators because the New Jersey BPU wants to eliminate payments to investors in New Jersey Solar that have already installed their panels. The BPU under Governor Murphy has in the past in both oral and written form has said that the panels are already installed and the money should be taken from the investors so that new solar can be installed at fixed payments. The aim is to lock in profits for solar investors at the expense of the ratepayers in New Jersey instead of using the competition of the market to determine prices. The introduction of these bills has created a chill in the energy investment community overnight.
The view is that if the New Jersey BPU is willing to disenfranchise New Jersey homeowners, businesses and schools that installed solar the payments that go to out-of-state wind farms will most likely be the next target.
New Jersey power prices have skyrocketed in the past year. Prices have risen mostly because back-up gas power plants that are needed to balance the grid during times of increased demand during extremely hot or cold days have been shut down by the Murphy backed BPU and Energy Master Plan of the last 8 years. The BPU is now scrambling to find money to keep installing new solar and has decided to eliminate SREC payments to New Jersey homeowners, businesses, and schools who have already borrowed money to install solar panels.
Solar installed in New Jersey prior to 2017 generate SRECs for 15 years. After that time they generate Class 1 RECs. SRECs are worth $200 or more. Class 1 RECs trade for $30 today and go only as high as $50.
It is confusing as to when your system is going to convert from SRECs to Class 1 RECs. Here is what you need to do to figure this out.
Look up your initial online date for your solar facility on GATS. This is listed under the facility and it is also on each SREC as “Vintage (Utility Interconnection Date), ex. 05/2009.
New Jersey law says that a solar array generates SRECs for 15 full energy years. This means that you get SRECs for up to 15 years and eleven months, depending on what month your array went online.
Energy years start in June and end in May.
Here is a Key:
If your array went online from June 2008 and up to and including May 2009 the last SREC you will mint is May 2024. Your first Class 1 REC will be your June 2024 generation.
If your array went online from June 2009 and up to and including May 2010 the last SREC you will mint is May 2025. Your first Class 1 REC will be your June 2025 generation.
And so on…
When you produce Class 1 RECs you sell them the same way on Flett Exchange. You can either check the price on the Flett Exchange website https://www.flettexchange.com/ and transfer them on GATS to Flett Exchange, LLC or you can list them for sale on the Flett Exchange trading platform and transfer them on GATs to Flett Exchange,LLC. when you are filled.
Since Class 1 RECs are lower priced we suggest to wait 6 months to a year to sell them in bulk. Class 1 RECs are only good for 3 energy years so do not wait too long or they will go worthless. SRECs are good for up to 5 energy years.
It is very important to enter your meter readings within 30 days after your system gets converted to a class 1 facility. If you do not put in your meter readings within 30 days all of the months that you deserve to earn SRECs will be created as Class 1 recs. You may lose thousands of dollars!!!
(As of this writing we believe GATS is fixing this issue but we cannot confirm. Best practice is to make sure the meter reading is entered in a timely fashion.)
GATS will send you an email that says the following:
“Your solar electric generation facility's NJ SREC eligibility period will reach the end of its qualification life within Energy Year ("EY") 2021 which ends on May 31, 202X. All generation should be entered prior to the last business day in June. Facility eligibility will be changed from Solar (SREC) to Class I (REC) on July 1, 202X. “
Flett Exchange is the largest exchange for New Jersey Solar Class 1 RECs. Many energy companies compete to purchase SRECs and Class 1 RECs on our exchange which ensures you get the going market price.
All RECs registered in GATS from solar and wind facilities in PJM installed after January 1, 2003 can be used for New Jersey Class 1 compliance. Also, New Jersey Solar facilities that have outlived their SREC qualification of 15 years (or 10 years if the SRP registration for the solar project was filed on or before October 29, 2018) qualify as Class 1 RECs. These can be purchased by energy companies to satisfy their class 1 compliance. The life of the Class 1 rec is three energy years. Energy years run June to May. Compliance is done in the fall of each year.
How do I sell my Class 1 RECs?
If your New Jersey solar facility no longer qualifies for SRECs you can sell them as Class 1 RECs on Flett Exchange. It is the same process as you did with your SRECs except you sell them on the Class 1 market of Flett Exchange. If you have an account with Flett Exchange you can transfer them on GATS to the Flett Exchange account. Enter the Class 1 sell-now price published on the www.flettexchange.com homepage. We will process the trade, email you a confirmation and issue payment the next day.
New Jersey Class 1 REC Value
The range for Class 1 RECs in New Jersey is $0 to $50. $50 is the Alternative Compliance Payment (ACP), or fine, that energy companies in New Jersey have to pay if they do not procure enough Class 1 RECs. The value for Class 1 RECs is $30 at the beginning of 2024 and is expected to move up to the $40 to $45 levels during the 2025 to 2030 timeframe. This rise is expected because New Jersey law requires energy companies to either produce more renewable energy or buy more Class 1 RECs in the coming years.