Aggregate-site, solar energy project financing transactions for municipalities, school districts and other local governments in New Jersey have had a successful beginning in the state. This solar financing model was formulated to achieve lower and stabilized electricity costs through economies of scale in both the procurement and roll-out of renewable energy. This article addresses how those leveraged local government transactions served as the base from which to launch an analogous program structured to achieve similar results for nonprofit entities in New Jersey.
Since the so-called “Morris model,” commenced in 2008 and closed in February 2010, several of these aggregate local government solar transactions have been financed, many are in construction and a few are operational, producing 3-10 MW of solar power each. Most importantly, power purchase agreement (PPA) savings off of present tariff rates have locked in savings for local governments from one- to two-thirds off present market rates for a state maximum allowable contract period of 15 years. One of the keys to the success of the Morris model was finding a way to essentially unlock the federal tax benefits that are available to a private solar developer, but not directly available to the site hosts, allowing nontax-paying local governments to gain the benefit of this renewable energy source at below-market cost.
